A
party that had paid reduced penalties through the UK's early resolution
procedure could not appeal the penalties after the competition authority's case
had collapsed and following successful appeals by other parties to the
investigation.
Somerfield and Gallaher entered into a settlement agreement with the OFT by way of resolution of its investigation under Chapter I of the UK Competition Act 1998. The CMA's predecessor had alleged that the tobacco manufacturers had agreed with retailers to limit discounting and had indirectly communicated with each other through the retailers.
Six of the 13 parties who were alleged to have participated in the infringement agreed to settle the case in 2008 and paid reduced penalties. At the time there was very limited guidance on the settlement procedure.
A number of companies (not including Somerfield and Gallaher) successfully appealed the OFT's decision to the Competition Appeal Tribunal in 2011. The OFT agreed to refund TM Retail £2.6 million because the settlement had assured it that other companies would not successfully challenge the OFT's decision. The Court of Appeal overruled the CAT's decision to give Somerfield and Gallaher leave to file a late appeal because they argued that they had been treated unfairly. Gallaher and Somerfield argued that the OFT had breached its duty of equal treatment and fairness by paying a refund to TM Retail.
The High Court refused to reopen the settlement. The judgment may be regarded as an endorsement of the finality of settlement or early resolution of competition investigations. The companies had admitted the infringement and received expert legal advice. The Court refused to accept their argument that they were also entitled to benefit from the successful appeals brought by the other parties. However, the Court also criticised two named OFT officials for accepting the argument of TM Retail that a successful appeal on liability by other parties could have an effect on the position of non-appealing settling parties and giving assurance to that effect. The CMA is considering the implications of the judgment for its ongoing enforcement practice. The case will no doubt also prompt some soul searching amongst officials at the UK regulators given the criticism meted out in this case to named individuals.
Gallaher v Competition and Markets Authority [2015] EWHC 84 (Admin)
Somerfield and Gallaher entered into a settlement agreement with the OFT by way of resolution of its investigation under Chapter I of the UK Competition Act 1998. The CMA's predecessor had alleged that the tobacco manufacturers had agreed with retailers to limit discounting and had indirectly communicated with each other through the retailers.
Six of the 13 parties who were alleged to have participated in the infringement agreed to settle the case in 2008 and paid reduced penalties. At the time there was very limited guidance on the settlement procedure.
A number of companies (not including Somerfield and Gallaher) successfully appealed the OFT's decision to the Competition Appeal Tribunal in 2011. The OFT agreed to refund TM Retail £2.6 million because the settlement had assured it that other companies would not successfully challenge the OFT's decision. The Court of Appeal overruled the CAT's decision to give Somerfield and Gallaher leave to file a late appeal because they argued that they had been treated unfairly. Gallaher and Somerfield argued that the OFT had breached its duty of equal treatment and fairness by paying a refund to TM Retail.
The High Court refused to reopen the settlement. The judgment may be regarded as an endorsement of the finality of settlement or early resolution of competition investigations. The companies had admitted the infringement and received expert legal advice. The Court refused to accept their argument that they were also entitled to benefit from the successful appeals brought by the other parties. However, the Court also criticised two named OFT officials for accepting the argument of TM Retail that a successful appeal on liability by other parties could have an effect on the position of non-appealing settling parties and giving assurance to that effect. The CMA is considering the implications of the judgment for its ongoing enforcement practice. The case will no doubt also prompt some soul searching amongst officials at the UK regulators given the criticism meted out in this case to named individuals.
Gallaher v Competition and Markets Authority [2015] EWHC 84 (Admin)
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