First UK fine for failure to respond to market study information request

AppNexus Europe Limited ("AppNexus") has been fined GBP 20,000 for failing to comply with an information request issued by the UK Competition and Markets Authority ("CMA").  The fine relates to an information request imposed by the CMA as part of its ongoing market study into online platforms and digital advertising – the first fine in the UK relating to market study information request.

On 3 July 2019, the CMA launched a market study into online platforms and the digital advertising market.  Market studies enable the CMA to educate itself about a market in order to inform a decision whether or not to launch a full market investigation (for further information on the UK markets studies regime, see the Ashurst Quickguide).  In its interim report of 18 December 2019, the CMA stated that it is not minded to propose a market investigation reference at this stage.  The CMA's final report is due in July 2020.

Under the Enterprise Act 2002 ("EA02"), the CMA is able to collect documents and information, or require the attendance of witnesses, as part of a market study.  A failure to comply with such a request without reasonable excuse can result in a penalty of up to GBP 30,000.

On 24 July 2019, the CMA sent a draft version of a notice requiring the production of documents and information to AppNexus.  The draft notice suggested a deadline for AppNexus' response of 23 August 2019 but, at AppNexus' request, the deadline was subsequently set at 6 September 2019, when the final notice was issued on 22 August (the "Notice").  A further extension was later granted until 11 September 2019.

On 10 January 2020, the CMA published a decision imposing a penalty of GBP 20,000 on AppNexus for failing to comply with the Notice without reasonable excuse. 

In its decision, the CMA noted that:

• AppNexus had provided an initial response to parts of the Notice on 7 October 2019, more than three weeks after the extended deadline;
• AppNexus had only provided certain internal documents and data requested by the Notice on 26 and 27 November, over 10 weeks after the extended deadline;
• AppNexus had received multiple warnings from the CMA over its failure to comply with the Notice; and
• AppNexus' non-compliance had an adverse impact on the market study, which is subject to statutory time limit).

S.174(A) EA02 provides that a penalty can be imposed if a failure to comply is "without reasonable excuse".  The CMA's guidance on administrative penalties (CMA4, Administrative penalties: Statement of Policy on the CMA's Approach), states that reasons will be considered on a case-by-case basis but, in particular, it will consider whether a "significant and genuinely unforeseeable or unusual event and/or an event beyond [the party's] control" has occurred, absent which the failure would not have occurred. 

In its decision, the CMA stated that AppNexus had put forward a number of reasons to explain why it was unable to comply with the Notice, including that: 

• there were 250 questions in the Notice requiring expert knowledge;
• it only had two lawyers in the EMEA region and it was the holiday season;
• AppNexus was a global organisation, meaning that the response required several phases of review before submission, and a number of key stakeholders were located in the USA; and
• AppNexus was also responding to similar questionnaires from other authorities.

The CMA concluded that these reasons did not individually or collectively constitute a reasonable excuse.  In particular, the CMA noted that:

• AppNexus had been sent a draft Notice and so had ample time to consider the timing requirements and arrange appropriate resource. It had also requested and was granted an extension of the deadline in the draft notice;
• AppNexus only asked for a further extensive extension for the entirety of its response two days before the deadline; and
• once AT&T (AppNexus' parent company) had taken over responsibility for responding to the Notice, the remaining outstanding documents and information were swiftly provided.

This is the first occasion in which an administrative penalty has been imposed for a failure to comply with a request for information in a market study or market investigation since the CMA was given enhanced information gathering and fining powers in 2013.  The case shows that, whilst the CMA will respond to reasonable requests for extra time, parties must take information requests and the deadlines for responses seriously.  The CMA's decision notes that the AppNexus in-house lawyer who was responsible for co-ordinating the response to the Notice is no longer employed by AppNexus.

The penalty on AppNexus follows a number of recent cases in merger and investigation contexts in which similar administrative penalties have been imposed by the CMA, including a fine of GBP 27,000 imposed on Rentokil in August 2019 (see the Ashurst summary) and a fine of GBP 20,000 for Sabre Corporation in October 2019.