Gallaher & Somerfield v CMA

30 Jan 2015

The CMA have successfully resisted claims for judicial review brought by Tobacco manufacturer Gallaher and high street retailer Somerfield Stores, each of whom sought to challenge the lawfulness of the CMA’s refusal to repay penalties which they paid having admitted certain competition infringements at the culmination of the OFT’s Tobacco Investigation. The OFT concluded that a number of  tobacco manufacturers and retailers had been engaged in indirect retail price maintenance in relation to the retail sale of tobacco products. Some of those found to have infringed Article 101/the Chapter 1 Prohibition appealed to the Competition Appeal Tribunal. Gallaher and Somerfield did not having instead entered into Early Resolution Agreements pursuant to which, having admitted the infringements, they received substantial reductions to the penalties payable.

During the settlement process, the OFT was said to have given an assurance to another Early Resolution party to the effect that it could take the benefit of any successful appeals brought by any appealing party. That assurance was not given to any other Early Resolution party. As a result of successful appeals brought by Imperial Tobacco and others, the OFT felt obliged to make a payment to the party who was given the assurance. Gallaher and Somerfield claimed that the OFT’s failure to extend that assurance to any other Early Resolution party (and thus the refusal to make any similar repayments) was unfair and a breach of the principle of equal treatment. In finding that the assurance was in fact made and that that the principle of equal treatment applied in these circumstances, Collins J nevertheless dismissed the claims on the basis that the OFT made a mistake in giving the assurance insofar as it was inconsistent with the principles of legal certainty and finality as they applied to competition infringement decisions. The principle of equal treatment did not now require the CMA to replicate that mistake by way of the repayment of penalties paid by Gallaher and Somerfield.

Please click to view the judgment in Gallaher and Somerfield v CMA