As effective from 1 April 2014, a broad reform of the UK Competition Law substantially increases regulatory risks to businesses. In particular, the UK’s new laws on competition comprise the introduction of a unified regulator, changes to antitrust-enforcement rules, the widening of powers in market investigations and strengthened powers to issue interim measures, an increased role of competition supervision over sectoral regulation, and a broadening of the scope of the criminal cartel offence. The Competition and Markets Authority (“CMA”) is the UK’s new and unified regulator to ensure a coherent and effective application of UK competition laws. Vis-à-vis individuals, the CMA will be vested with powers which allow it to require those who are connected to a corporation under investigation to respond to its questions. In order to stimulate a more stringent enforcement by competition laws, sectoral regulators are urged to consider whether competition law enforcement is the most appropriate form of action before using their sectoral powers, leading to a concurrent recourse to and application competition laws by sectoral regulators. With regards to interim measures, the CMA’s powers have been expanded considerably: The authority may now adopt interim measures suspending further integration at its discretion. The threshold for such intervention has been lowered and the CMA may revert to it at an earlier stage of acquisition procedure, preventing certain conduct which depends on the outcome of its investigations. The CMA’s powers are backed up by hefty financial penalties (up to 5% of group worldwide turnover) which it may impose on participants that do not comply with its interim orders or other formal requirements. The most contentious and ambiguous piece of reform relates to a revision of the “dishonesty” element in the test for the criminal cartel offence. In the course of the reform, the “dishonesty” element has been removed without replacement. Any reciprocal agreement on price- or market-arrangements between businesses that operate in the same sector at an equal level in supply or production markets is now covered by the criminal cartel offence. – Regardless of potential effects on competition or justifying arguments on causes of efficiency. Thus, the UK criminal cartel offence may criminalize conduct permissible under civil competition law. Perfectly legitimate commercial agreements that require for an allocation of territories or customers (e.g. R&D agreements; production joint ventures; etc.) may be deemed illegal. Yet, alongside the new test for the criminal cartel offence, new statutory exclusions and defenses have been decreed. For neither legislation nor the CMA’s prosecution guidance specify how the defenses are meant to operate, significant legal uncertainty emerges. For a more extensive summary of the new regime by Baker & McKenzie UK click here
