UK: Court of Appeal confirms the CMA has the power to require overseas companies to produce documents and information
Contacts
Partner
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
I am the knowledge and development lawyer in our London International Dispute Resolution team. I play a key role in keeping my colleagues updated so that they are at the forefront of legal developments, trends and case law in the litigation and international arbitration arenas for the benefit of our clients.
Associate
UK
I am a newly-qualified associate in our Intellectual Property team in London, working with clients across a broad range of intellectual property rights.
In a significant recent judgment, the English Court of Appeal has 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.
According to the Court of Appeal, without such an extraterritorial power the CMA would become “largely toothless when confronting international cartels”, and 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.
After assessing the “scheme, context and purposes” of the competition legislation, the Court of Appeal concluded that it was Parliament’s intention for the CMA’s power to request information to be extraterritorial.
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.
To delve further into how the Court of Appeal came to its decision, please see the full article here.
If you need more information or further guidance in this area, please contact Dr Saskia King or Louise Lanzkron.
