Comparative Guides

Welcome to Mondaq Comparative Guides - your comparative global Q&A guide.

Our Comparative Guides provide an overview of some of the key points of law and practice and allow you to compare regulatory environments and laws across multiple jurisdictions.

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4. Results: Answers
Cartels
1.
Legal and enforcement framework
1.1
Which legislative and regulatory provisions apply to cartels in your jurisdiction?
UK

Answer ... The legal basis of the cartel prohibition in the United Kingdom is set out in:

  • Section 2 of the Competition Act 1998, which sets out the civil offence for companies (also known as the ‘Chapter I prohibition’); and
  • Section 188 of the Enterprise Act 2002, which sets out the criminal offence for individuals.

The Competition and Markets Authority (CMA) must also apply Article 101 of the Treaty on the Functioning of the European Union (TFEU) when applying the Chapter I prohibition to conduct which may affect trade between EU member states.

The legal basis may change post-Brexit, depending on the manner in which the United Kingdom leaves the European Union. Under the currently negotiated withdrawal agreement, European competition laws will continue to apply for an initial transitional period (originally intended to end on 31 December 2020). In the event that the Irish backstop comes into effect, the CMA will continue to apply provisions mirroring those under the TFEU. As things stand, at the end of the transitional period, the CMA will no longer be required to apply the competition provisions under the TFEU.

In the event of a no-deal Brexit, the CMA (or a concurrent regulator) will no longer apply Article 101 TFEU and will no longer be subject to EU Regulation 1/2003. The legal basis for the CMA (or other concurrent regulator) will be the Chapter I prohibition only, subject to certain transitional rules as set out in the CMA’s March 2019 “Guidance on the functions of the CMA after a ‘no deal’ exit from the EU”.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP
1.2
Do any special regimes apply to cartels in specific sectors?
UK

Answer ... The Competition Act excludes certain agreements from the Chapter I prohibition, such as agreements:

  • relating to the production and trade of agricultural products; and
  • subject to competition regulation under other legislation, including the Financial Services and Markets Act 2000, the Broadcasting Act 1990 and the Communications Act 2003.

The secretary of state may also order that the Chapter I prohibition not apply where there are exceptional and compelling public policy reasons.

No sector-specific exemptions apply to the criminal offence.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP
1.3
Which authorities are responsible for enforcing the cartel legislation?
UK

Answer ... The CMA, along with sectoral regulators (eg, the Office of Communications, the Gas and Electricity Markets Authority, the Water Services Regulation Authority, the Civil Aviation Authority, the Payment Systems Regulator and the Financial Conduct Authority (FCA)), enforce the civil prohibition. In February 2019 the FCA published its first decision which found that three asset management firms had breached competition law by sharing information on initial public offerings before share prices had been set. The parties involved received fines totalling over £400,000.

The CMA and the Serious Fraud Office enforce the criminal offence in England, Wales and Northern Ireland; while the Crown Office Procurator Fiscal Service enforces such offence in Scotland.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP
1.4
How active are the enforcement authorities in investigating and taking action against cartels in your jurisdiction? What are the statistics regarding past and ongoing cartel investigations? What key decisions have the enforcement authorities adopted most recently?
UK

Answer ... The CMA is increasingly active in investigating and addressing cartel activity in the United Kingdom. In 2017/2018 the CMA opened 10 new investigations, representing a 60% increase over the annual average across the 2010–2015 period, and fined UK businesses nearly £10 million for cartel-related infringements. The CMA’s cartel enforcement is limited, however, by the United Kingdom’s parallel involvement in the EU competition regime.

The CMA continues to run a national awareness campaign for businesses with a view to increasing awareness of competition law and what is considered anti-competitive behaviour. As part of this process, there has been an increased focus on promoting the CMA’s leniency programme – contacts to the CMA’s cartel hotline doubled between 2014 and 2018, according to the CMA’s figures. The CMA has also flagged that the themes that it will give priority to are:

  • protecting vulnerable consumers;
  • improving trust in markets;
  • promoting better competition in online markets; and
  • supporting economic growth and productivity.

During the course of 2018, the CMA opened investigations into potential cartel activity in the building and construction, musical instruments, estate agency and financial services sectors. The most notable CMA infringement decision resulted in a fine for Heathrow Airport Limited (and its parent company, Heathrow Airport Holdings Limited) of £1.6 million in relation to anti-competitive restrictions on the lease of Arora’s Sofitel Hotel at Terminal 5. This included a clause restricting how parking prices should be set by Arora for non-hotel guests.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP