Court of Appeal confirms the CMA has the power to require overseas companies to produce documents and information
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UK
I am a partner in our Competition & EU Law team in London with over 18 years' experience at the cutting edge of UK and EU competition law and policy having worked at regulators, competition authorities, in academia and private practice, with a particular focus on regulated sectors such as payment systems as well as sport, retail, consumer, financial, technology and communications markets more widely.
Dispute Resolution Knowledge & Development Lawyer
UK
As the knowledge and development lawyer in our International Dispute Resolution team in London, I play a key role keeping my colleagues at the forefront of legal developments, trends and case law – covering litigation and international arbitration – for the benefit of our clients.
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In a significant judgment the English Court of Appeal has recently confirmed that the Competition and Markets Authority (“CMA”) has the power to require overseas companies to produce documents and information when it is investigating suspected anti-competitive conduct.
In reaching its decision, the Court of Appeal stated that without such an extraterritorial power, the CMA would become “largely toothless when confronting international cartels”. Without this extraterritorial power there would be a “perverse incentive for conspirators to move offshore to organise cartels directed at harming the UK market and they would be more or less immune from investigation” – something that would be easy to achieve in the digital era.
In particular, the Court of Appeal recognised the covert and ever more international and digital nature of cartels in which competitors exploit modern technology and conduct illicit communications via burner phones and encrypted channels. The Court of Appeal concluded that the CMA’s power to request information which was located outside the jurisdiction was explicitly intended by Parliament and can be seen in key provisions containing explicit extraterritorial language.
Parliament’s intention when drafting the competition legislation was at the heart of the Court of Appeal’s judgment, which assessed the “scheme, context and purposes” of the competition legislation and concluded that the CMA’s power to request information was intended by Parliament to be extraterritorial.
The Court of Appeal also confirmed that in cases where a subsidiary does not independently determine its own conduct on the market, any formal separation between companies as a result of separate legal personality is not relevant for the purposes of applying competition rules. Under competition law, the concept of an “undertaking” is wide and covers any entity engaged in an economic activity, irrespective of the legal status of that entity and the way in which it is financed, even if in law that economic unit consists of several natural or legal persons. To that end, the Court of Appeal held that Parliament intended to impose an obligation upon the widest possible array of entities when drafting competition legislation.
Factual Background
As part of its investigation into suspected anti-competitive conduct in relation to the recycling of end-of-life vehicles, launched in March 2022, the CMA believed that certain important aspects of the alleged cartel were “agreed abroad before being implemented in the UK”.
The CMA therefore issued statutory requests for documents and information on the German parent companies of BMW and VW (respondents to the appeal), their indirect subsidiaries in the UK, and any other legal entities forming part of the same “undertaking”.
In December 2022, the CMA fined BMW AG for failing to comply with its request for information. BMW’s UK subsidiary had stated that it did not have the ability to access or call for any documents held by the parent company outside the UK.
The German parent companies of BMW and VW then challenged the notices at the Competition Appeal Tribunal (“CAT”) and the…
