On 15 February 2019 the UK Court of Appeal upheld the December 2016 decision of the UK Competition and Markets Authority ("CMA") imposing a fine of £130,000 on Balmoral Tanks ("Balmoral") for engaging in illegal information exchange at a single meeting with other suppliers of galvanised steel tanks. The Court of Appeal confirmed that a one-off exchange of pricing information may constitute an infringement of competition "by object". It also confirmed that Balmoral's refusal to join a cartel involving the other suppliers did not prevent it from nonetheless being found liable for a separate competition law infringement in respect of the exchange of sensitive information.
| what you need to know - key takeaways |
- Attendance at a single meeting where competitively sensitive information is disclosed may be sufficient to constitute an infringement of competition law "by object".
- If you are present at a meeting where discussions begin to stray into sensitive areas, you should clearly state your objections (and ensure they are recorded) and leave the meeting immediately.
- Exchanging pricing information with members of a cartel may constitute a separate competition law infringement, even if you are not part of the underlying cartel.
|
In December 2016 the CMA adopted an infringement decision finding that four suppliers of galvanised steel tanks had participated in a customer allocation and price-fixing cartel (the "Main Cartel Decision"). In that decision, the CMA found that Balmoral had actively refused to be part of this cartel despite pressure to join, but nonetheless adopted a second decision (the "Information Exchange Decision"), finding that Balmoral had infringed competition law by sharing commercially sensitive information regarding current and future pricing intentions at a meeting with three of the cartel members in July 2012. The CMA fined Balmoral £130,000 in respect of this infringement, but did not impose any additional fines on the cartel participants.
The CMA's Information Exchange Decision was upheld on appeal to the UK Competition Tribunal in November 2017 (see our earlier newsletter article). On further appeal to the Court of Appeal, the court confirmed the decision. In particular, it held that:
- Although the two infringements which the CMA found to have been committed had elements in common, it was nonetheless appropriate to distinguish between them, as they were "different animals". As such, there was no inconsistency in finding that Balmoral was not a party to the main cartel but had nonetheless infringed competition law by exchanging pricing information at the July 2012 meeting.
- A one-off exchange of pricing information at a single meeting may constitute an infringement of competition "by object" in circumstances where it creates conditions of competition which do not correspond to the normal conditions of the market in question. In this case, a single indication as to future pricing could affect a material number of bids and a material value of potential work, over a significant period into the future.
- The fact that Balmoral in fact continued to compete vigorously on price following the meeting did not change the fact that at the meeting it had given clear indications that it was not intending to push prices down.
- The CMA was entitled to decide to impose a fine solely on Balmoral in respect of the information exchange infringement, in circumstances where large penalties had already been imposed on the other suppliers (relative to their size), which were attributable to anti-competitive behaviour over a period that encompassed the July 2012 meeting, and where no additional deterrent effect was deemed necessary.
