No grounds for action and risky communications

Mark Daniels: Hi Richard, great to see you again.  

Richard Whish KC: Hello.

Mark Daniels: So, today we are talking about the CMA’s recent no grounds for action decision in a case concerning suspected bid-rigging. And, actually, a case that raises an interesting point about the dangers around misleading communications sent by employees. But, before we get on to all of that, perhaps you could just start by explaining what is a no grounds for action decision and how does that differ to the other ways that the CMA can conclude an investigation?

Richard Whish KC: Well, it’s interesting isn’t it? So, a competition authority is doing a case, what are the possibilities? One is that it adopts an infringement decision and imposes fines, where appropriate. Then you can get so-called settlement decisions which, of course, are infringement decisions, but they arise in cases where the defendant or defendants put their hands in the air and say, yes, we admit it, we did it, let’s truncate this procedure, and the defendants get a reduction in their fine accordingly. Then one has commitments decisions, where one is accused of infringing competition law, but offers remedies to the competition authority that their behaviour will be changed in the future, that will be legally binding upon them, and so the case gets closed on the basis of commitments without any finding of infringement. Also, without a finding of no infringement, but on the basis of legally binding commitments and the CMA has just adopted commitments very recently in a case to do with educational software. Another possibility is that the authority says, we’ve had a look at this, and we’ve decided that it’s just not within our range of priorities, it’s a fairly low level case, there’s nothing particularly interesting about it, there’s no major public policy impact here, so we’re going to close the case on prioritisation grounds. But there’s another possibility, and that’s what we’re dealing with here, where the CMA says we’ve had a look at this case, we have decided that there are no grounds for action. It doesn’t mean that they’ve said there’s no infringement, but they’ve said that there are no grounds for taking this any further and that’s what this decision is.

Mark Daniels: OK. CMA no grounds for action decisions are quite rare. I think this is perhaps only the fourth since the CMA was formally launched in April 2014, although the CMA’s predecessor organisation, the Office of Fair Trading, issued a few more. Why are these decisions so rare, and do you think we might see more of them in future?

Richard Whish KC: Well, look, what I would say is to that, you’re correct, there haven’t been very many of them. I don’t particularly want to speculate as to why there haven’t been many in the past. I mean, one can think of possible reasons, but that is speculation and who am I to speculate? What I would say is that, I think, in principle, no grounds for action decisions are very useful, because I often think we can learn as much about competition law, policy and procedure from cases that are publicised in which no action was taken as we can from infringement decisions and commitment decisions. So, what I would say is, I welcome the fact that the CMA has done this and I’ve read the decision and it’s very interesting, and it gives me insights into process and decision-making that I otherwise would not have had.

Mark Daniels: So, turning to the CMA’s decision, this concerns suspected bid-rigging around a procurement process for contracts regarding certain immigration removal centres. So, what happened in this case and why ultimately did the CMA not have a concern?

Richard Whish KC: Well, it’s interesting. Yes, there are invitations to tender, for a contract, to do with immigration removal centres at Heathrow Airport and on Derwentside, where the Home Office wants certain services to be provided and it goes out to tender. And we learn that Mitie, who are very much involved in this kind of space, they were going to tender and another company, called PAE, was minded to tender and consultants were brought in, etc. And, at a certain point in time, PAE withdrew from the tender process and they actually wrote to the Home Office, which was responsible for the contract in the first place, and they say in a letter, they say PAE Corporate have identified a conflict of interest. The incumbent, Mitie, is a JV partner with PAE in a company called Landmark, and Mitie have requested PAE not to respond to this tender. So, they’re saying there’s an agreement between the two of us, contemplating making a bid, they asked us not to, and we haven’t. Well, I have to say, that looks rather like an agreement or a concerted practice, it’s bid-rigging, serious stuff, it’s the Home Office. The CMA, obviously concerned about situations where the public purse, if you like, is being harmed, and this is drawn to the attention of the CMA and so they opened an investigation.

Mark Daniels: And, competition authorities are, I think, sometimes criticised for reading evidence in the worst possible way, but here you’ve got a case where you had, sort of, seemingly smoking gun evidence, but ultimately the CMA found that that evidence wasn’t supported by anything else, there was a plausible alternative explanation. I mean it’s interesting, isn’t it?

Richard Whish KC: On the facts of the case, the CMA did investigate. So, they get in touch with Mitie, they get in touch with PAE, what’s going on here? And it emerges, actually, that really the point was that PAE wasn’t in a good position to bid at all. There was opposition within PAE to bidding. PAE, I didn’t think PAE wanted it to be known, either on Mitie’s part or on the Home Office’s part, that it may not be able to perform the task expected of it, and so it sends this letter saying we’re withdrawing. Now, the CMA gets the evidence, talks to the people concerned and, as the story unfolds, comes to realise that, yes, there’s this incriminating withdrawal message, there were two actually, that’s incriminating, but, actually, it isn’t what really happened. And, so eventually, the CMA said, actually, there’s no grounds for action here, and so they closed the case and published this decision. Certainly, this is an interesting example of the CMA looking and realising, once they get into the evidence, there was no problem.

Mark Daniels: And, I guess, as a final point for companies, perhaps the most important point is it, kind of, really the emphasises the dangers of employees not knowing about the risks of sending misleading communications that hint at anti-competitive conduct. I think that’s where it’s quite rare for an authority to have that kind of clear statement of an anti-competitive agreement and then to accept that isn’t actually the case.

Richard Whish KC: Well, this is an interesting one because, obviously, competition law compliance is incredibly important and Mitie and PAE end up on the end of an investigation.  It took 11 months, a relatively short period of time compared to some cases, but, nevertheless, that means that for 11 months an awful lot of management time would have gone into this and, I dare say, a lot of legal fees as well. How did the problem arise?  Because somebody sent a message to the Home Office saying, we were asked not to bid and so we have withdrawn. Well, it has to be said, that looks careless and maybe a bit of competition law compliance would have prevented that having been sent in the first place. I just thought I would mention there’s an interesting recent Ofcom decision where the Police Digital Service, which sits under the auspices of the Home Office, went out to competitive tender for the provision of certain devices in the radio services sector. It went out to tender, only two companies capable of responding, Motorola and Sepura, and what we’re told in this decision is that, on the afternoon of 5 September, two senior employees of Sepura and Motorola exchanged commercially sensitive information when competing for a contract to supply communications devices to the emergency services. So, that was one afternoon, in response to an invitation to tender, exchange of information, then Motorola blew the whistle to Ofcom and Ofcom fined Sepura £1.5 million for exchange of information, one afternoon. So, if anything serves to demonstrate the importance of competition law compliance training, I think that’s the one.

Mark Daniels: Thank you, Richard. Very interesting.