Major New Judgment on Competition Act penalties – Success for Rob Williams QC and the CMA

The CAT has handed down a significant judgment which considers many aspects of the fining regime under the Competition Act 1998.  In doing so, the CAT has dismissed FP McCann’s appeal against the £25million penalty imposed by the CMA for FP McCann’s participation in the pre-cast concrete drainage products cartel.

FP McCann made a wide ranging challenge to the fine imposed by the CMA.  Its challenge included the contention that the CMA’s Penalty Guidance is ultra vires, because (FPM argued) fines should be assessed on a range from zero to the statutory maximum of 10% of global turnover, rather than using the CMA’s established penalty methodology.  The CAT rejected that argument and upheld the CMA’s interpretation of the statutory scheme – namely that the cap must be respected in the final analysis when imposing a penalty, but need not be treated as the top end of a range.

The CAT also considered:

• the extent to which the CMA must take into account evidence that the infringement had no effects when imposing a penalty for an object infringement;
• whether the CMA should have based its penalty on average turnover over the infringement period and not the turnover in the final year, given variability in FPM’s turnover over time;
• the application of discounts for co-operation and compliance activities
• the approach to the proportionality under the CMA’s guidance, including how far penalties should be reduced where the infringer’s business has grown through acquisitions since the infringement took place; and
• the relevance of delay to the investigation in assessing a Competition Act penalty – and in particular, whether a penalty may be reduced where the turnover on which the fine is based has increased as a result of delay to the investigation.  In this regard, the CAT departed from the EU jurisprudence, but rejected the contention that there had been unreasonable delay on the facts of the present case.

It remains for the CAT to determine whether the first statutory condition for disqualifying the directors of FP McCann is satisfied, which issue was transferred to the CAT by the High Court of Northern Ireland.

Rob Williams QC acted for the CMA.

The Judgment can be found here.