The Office of Fair Trading (OFT) has released prioritisation criteria aimed at making sure that it concentrates its resources on work that will have the highest impact.
The OFT receives around 1,200 complaints each year alleging that there has been a breach of UK or EC competition law, but it only has the resources to open investigations into around 25-40 of those complaints. Consequently, the OFT is seeking to focus its resources on matters having the greatest public interest. Its approach is to target those cases with real merit and to reach decisions on cases more quickly.
A ‘Preliminary Investigations Unit’ has also been created recently, which is responsible for sifting through and prioritising competition cases in keeping with the OFT's Competition Prioritisation Framework.
The Framework prioritises competition enforcement cases on the basis of a number of factors, including:
- The likely consumer detriment arising from the anti-competitive behaviour and an estimate of direct consumer benefit that would arise from intervention;
- The likelihood of success;
- The resources required to achieve the desired outcome;
- The nature and seriousness of the alleged infringement (for example, allegations of price fixing or market sharing will generally be given priority);
- Any aggravating factors (e.g. repeat offenders) or mitigating features (e.g. conduct has ceased); and
- The precedent or policy value of the case.
Comment
The Framework, in conjunction with the OFT's new ‘markets-based’ organisational structure, is designed to enable the OFT to look more systematically at particular markets and cross-industry issues. It is also intended as a discouragement to companies to look to the OFT for competition law remedies in relation to commercial disputes and an encouragement to them to pursue their claims in the courts. Moreover, the OFT is hoping that the discretions contained in the Framework will help insulate it from actions for judicial review by complainants frustrated that their complaint has not been investigated.
CAT confirms OFT's discretion on penalties
The Competition Appeal Tribunal (CAT) has dismissed an appeal by Achilles Paper Group Limited against the fine imposed on it by the OFT and in doing so, has confirmed the OFT's margin of discretion in setting appropriate penalties for breaches of competition law.
The CAT found in favour of the OFT in the appeal by Achilles against the fine imposed on it for its part in a price fixing and market sharing cartel in the market for the supply of stock check pads in the UK.
The CAT unanimously dismissed the appeal by Achilles and found that the penalty of £127,848.75 imposed by the OFT was appropriate having regard to Achilles' cartel behaviour. It confirmed that, in relation to serious breaches of competition law, the OFT must impose penalties which act as an effective deterrent.
The appeal concerned the OFT's March 2006 decision, which found that Bemrose Group Limited, together with its subsidiary BemroseBooth Limited and Achilles, had colluded to share the market and fix prices for the supply of stock check pads in the UK.
The OFT imposed financial penalties on each of the parties. However, after providing the OFT with information which uncovered the cartel, both Bemrose Group Limited and BemroseBooth Limited had their penalties reduced by 100%. The penalty imposed on Achilles was reduced by 50%, as Achilles also provided the OFT with evidence relating to the cartel.
Achilles did not challenge the findings on infringement but claimed that the OFT had erred in concluding that the fact that Achilles would potentially become insolvent as a result of the fine did not warrant a further reduction in the level of the fine. Achilles commented that, in reaching this decision, the OFT had failed to follow its own Guidance as to the Appropriate Amount of a Penalty.
The OFT argued that Achilles' potential insolvency, whilst being one of a variety of factors that the OFT should take into account, is not necessarily a reason for reducing the fine.
Comment
The CAT considered that the OFT is not bound to follow its own Guidance in all respects (although it should give reasons where it departs significantly from the Guidance) and, in particular, that it has a margin of appreciation in setting financial penalties at a level that will operate as an effective deterrent. This gives the OFT an assurance that it continues to enjoy a margin of discretion and that this includes situations where the possible insolvency of the addressee of the decision may follow.
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