CN15 - CMA proposes changes to guidance on settlements in antitrust investigations
13 October 2021
On 31 August 2021, the CMA launched a public consultation on the settlement chapter of its 'Guidance on the CMA's investigation procedures in Competition Act 1998 cases' (the "Guidance"). The amendments would require that, as a condition of settlement, businesses under investigation will not challenge or appeal the CMA's infringement decision.
Key takeaways
- Under the proposed amendments, the CMA would make settlements conditional on businesses under investigation agreeing not to appeal the CMA's infringement decision, including the financial penalty imposed.
- The changes aim to bring finality to settlement cases by ensuring that they cannot easily be re-opened and to achieve procedural efficiencies and resource savings for the CMA.
Background to the proposals
The CMA has powers to enter into settlements with parties that are being investigated under the Competition Act 1998. The CMA will typically consider the settlement procedure where the evidential standard for giving notice of its proposed infringement is met and settlement is likely to achieve procedural and resource efficiencies. These efficiency savings, in part, include the CMA not being required to defend an appeal against its decision before the UK Competition Appeal Tribunal (the "CAT").
The proposals partly stem from a recent judgment by the CAT in April 2021, which rejected an appeal brought by Roland against a penalty imposed by the CMA in a recent settlement case. The CAT found that Roland breached its agreement not to challenge the CMA's decision and revoked the 20% settlement discount that Roland had received (see our May 2021 newsletter).
The CMA welcomed the CAT's judgment, but did not consider removing the settlement discount alone to be, in and of itself, sufficient to ensure a settlement is in the public interest.
Overview of the amendments
The outcome of the Roland case has informed the CMA's proposed amendments to the Guidance, under which settling parties must confirm, as part of their settlement agreement, that they will not challenge or appeal the CMA's infringement decision to the CAT and that a successful appeal to the CAT is no longer an exception to the settlement decision remaining final and binding.
The changes are likely to limit the ability of parties to appeal settled cases, which corresponds with the CMA's stated objective of ensuring that settlement brings finality to an investigation and that settled cases cannot easily be re-opened by settling parties. The CMA considers these proposed changes to be in line with the law on waiving a right to a fair and public hearing, which is valid when it is voluntary, informed and unequivocal, due to the voluntary nature of the settlement process and the parties' ability to withdraw from settlement discussions at any time.
As the proposals relate to the CMA's Guidance, they can be made without the need to change primary or secondary legislation, and therefore have the potential to be published once the responses to the consultation, which closed on 28 September, have been reviewed.
Comment
At the time of the CAT's ruling in Roland, CMA officials commented that the judgment reinforces the CMA's view that settlements should be final. The proposed changes to the Guidance is further confirmation that the CMA intends for the settlement process to be final and, assuming the proposals are taken up, businesses under investigation by the CMA should have this expectation in mind when considering whether to settle a case.
With thanks to Olivia Spong of Ashurst for her contribution.
