What’s on the horizon for antitrust in the current UK competition law review?
United Kingdom | Video | October 2021 | 11:59
Video Details
| Ian Giles |
Richard, really good to see you again for the continuation of our “Let’s talk antitrust” series, and in person after the lifting of the COVID restrictions. What we are going to talk about in this video is the current UK consultation on reform of the competition regime, which obviously follows on from Lord Tyrie’s paper and a number of other probes that have been carried out in recent years about the shape of the regime and, importantly, in the post Brexit environment where there is more freedom for the Government to depart from the EU approach. First of all, I wanted to talk about how BEIS are focusing on reforms of the markets regime and the Competition Act investigations regime, and both of those areas are areas where there is quite a lot of political focus and has been some criticism of how CMA has been operating. Looking at markets first, what the BEIS proposals seem to be pushing for is a reduction of the timeframe of the investigation, so more focus on the market study phase, greater powers in terms of ability to impose remedies at the end of the market study phase and also, and this has generated a lot of interest, the power to impose interim measures to freeze the competitive position at the outset whilst the investigation is being carried out. What are your thoughts on some of these proposals? |
| Richard Whish QC | Well, it’s a fascinating time isn’t it? There is an awful lot going on at the moment and remember this is a quinquennial review which is required by the Act of 2013, a bit delayed because of all the interesting things that have been going on. But, yes, there is a desire to streamline processes and make these investigations quicker. I mean, in principle, that’s a good idea but, of course, that should never happen at the expense of quality, so I think one has to be careful about that. On the question of market studies, we, of course, have market studies and we have market investigations so these are two different but related animals, and a proposal floated by BEIS is that perhaps at the end of a market study the CMA should have the power to impose remedies to deal with problems as identified. I must say, I am not sure that that’s a very good idea myself because a market study is – it’s almost like, sort of, upstream research and development where the CMA can look at a market, educate itself, go out to stakeholders, listen to views and then decide what to do next. I have an anxiety that if you then attach to that the power at the end of 12 months to impose a remedy, I think it might, as it were, create a more adversarial feel to the market study, it might, sort of, potentially make it have a greater tendency towards litigation. I rather think it might be better to leave things as they are. Of course, you can then have market investigations and the CMA does say, I see in its response to BEIS, that it will basically try to avoid doing a market study that leads to a market investigation because you can get repetition in those circumstances, but I think there is a lot to be said for leaving the two systems separate as they are at the moment. Interim measures, I have felt for a long time that, somehow, competition authorities generally have been overly reticent about using interim measures, especially because we do know that markets change quickly and that they can tip because of network effects and so on and so forth, so I think, in principle, an interim measures power is a good idea. But, of course, it would have to be set very carefully because one mustn’t over intrude in markets. On the other hand, I think there may be some cases where it is appropriate to have the power, so I think, in principle, it’s a good idea, but it’s got to be worked out very carefully. |
| Ian Giles | The interim measures proposals… because obviously those powers exist already under the Competition Act and are very rarely used, and the CMA’s view seems to be that the burden is too great on them, that they need to prepare access to file, that there are all of these complications. But, it does seem to me, in the context of a market investigation or market study, where there is no allegation of wrongdoing on the companies, that there should be a high standard because there is no right to damages either. So if there is an intervention using interim measures which goes wrong or is ultimately proven not to have been justified, then those companies will have suffered a material detriment without much recourse to mend that. |
| Richard Whish QC | No, of course that’s right, and that’s why I say it has to be thought through and the grounds for intervention have to be very carefully defined. But I still think, in principle, that it’s an appropriate power for them to have. |
| Ian Giles | You think there’s obviously situations where that must be the case… |
| Richard Whish QC | The point you raise, incidentally, about the lack of damages, this did arise in a House of Lords judgment in, I think 1975, after the report into Librium and Valium, where there was a proposal to cap the prices of Hoffmann La Roche’s drugs and the whole issue came up there about “what if it’s wrong and what about the damages we will have suffered etc.” And the House of Lords did examine that and said that there are circumstances in which the public interest does mandate or at least require intervention. |
| Ian Giles | Interesting, I haven’t read that one… Now, moving from markets to investigations, there is a similar concern that seems to be coming out of the BEIS proposals which is that the number of cases under the Competition Act isn’t moving fast enough, that they want to be able to, again, have more effective use of interim measures in carrying out those investigations, and that they are concerned about the CAT and the full merits rights of appeal that exist at the moment. How do you feel about the proposals that are being made there? |
| Richard Whish QC | Well, are any proposals being made or is this being discussed as an issue? I mean, it is a very interesting thing this business of appeals, judicial reviews to the CAT and, of course, it is different under the markets and mergers regime than it is under the antitrust regime. But there are two sets of criticisms at the moment, one is from the law firms and the defendants, if we might call them that, who say “we go to the CAT and repeatedly lose and it’s all a bit of a waste of time” and then we hear the CMA saying “we never thought that these appeals were going to be so intrusive and it’s terribly expensive and it’s making our lives much more difficult”. So we seem to have equal and opposite reactions from the two sides of the table and I have to say, this may sound glib, but it makes me think that maybe the situation is about right as it is at the moment. Having said that, I do wonder whether there are possibilities for increased streamlining of CAT procedures – maybe some of these hearings are turning out to be longer than had been anticipated and maybe… I don’t know, this is complicated stuff, but I think that’s where you get all the relevant stakeholders together and have a serious think about what can be improved. But changing the standards of appeal/review, I’m not really sure about that. I notice John Penrose basically said “why doesn’t everyone get locked in a room together to thrash it out” and I’ve got sympathy for that actually. |
| Ian Giles | I’ve seen some data on this which showed that, I think, it’s 3 per cent of CMA decisions have been overturned by the CAT on appeal over the past 10 years or so, back to 2008. And when you look at the relative time periods of the appeal versus the investigation, it’s clearly the case that the investigation is the vast majority of that. Now, I guess, there’s an argument that the investigation takes longer because of the threat of the appeal. But I do feel a bit sceptical that shortcuts should be made such that the case-makers aren’t confident that they would win. |
| Richard Whish QC | No, I agree with that. But, I mean, going back a little way there, the CMA does sometimes complain that the CAT has been too intrusive. But, as you say, if you look back, especially if you look back over the last couple of years, CMA has scored a series of very significant victories. Of course, they get the occasional setback as well, Pfizer/Flynn being an obvious example of that. But, I mean, for the most part the CMA has had a pretty good run for its money, it seems to me, in recent times. |
| Ian Giles | One final question on this topic area, which is, there seems to be quite a lot of, I guess unsurprisingly, political push behind some of these suggestions, and there’s a question from BEIS also around should the Government be giving more frequent strategic steers to the CMA, trying to push them in particular directions. And my experience, and I think a lot of practitioners’ experience over recent years, is that, particularly on the markets side, a lot of the cases are quite politically motivated and are not necessarily focused on competition concerns, but perhaps more consumer concerns, and there is talk in the proposals about strengthening consumer powers. Do you think that it is something that is a real opportunity? |
| Richard Whish QC | Well there’s two different points there. One is about the strategic steer and should the Government give more frequent steers than it does at the moment – I hope the answer to that is no. I think there’s even, you know, should there be a strategic steer every year? I think that would be unhelpful and I suspect that you would find that next year’s steer is almost a repetition of this year’s steer, so what’s the point of that? Alternatively, next year’s steer might be radically different from this year’s. Well, it’s very difficult to make a 200,000 tonne super tanker change course in the English Channel, so I would leave the situation as it is. On the other point about the consumer reforms, I actually think this is the more important part of the consultation, because I have always thought it’s really rather odd that you have markets where there is a failure – this may be because of an infringement of competition law – ok, get on with it, investigate, impose fines if appropriate, or it may be that the information in the market is misleading or the terms and conditions of the contracts are unfair. Well then, what can the CMA do? Go to court and ask the court to tell the firm in question not to do it again. Well, this seems to me to be bizarre, quite frankly, because I think the consumer powers have every bit as much importance in this area as the competition powers. And, so to my mind, in principle, the CMA should have the same powers under consumer law that is has under competition law and I hope, myself, that the Government will take that side of the consultation forward. |
| Ian Giles | Thank you very much, Richard. There’s a lot there for us to see how it plays out over the coming months. |
| Richard Whish QC | Indeed, interesting times. |
| Ian Giles | Indeed, thank you. |
Head of Antitrust and Competition, Europe, Middle East and Asia
Email
ian.giles@nortonrosefulbright.com