Financial Conduct Authority issues first competition fines

The Financial Conduct Authority (FCA) has issued its first ever competition law infringement decision, imposing fines on two asset management firms for unlawful information exchange in breach of the Chapter I prohibition of the Competition Act 1998 and/or Article 101 TFEU.

The decision comes almost four years after the FCA obtained concurrent competition law powers in April 2015.

The FCA imposed a fine of GBP306,300 on Hargreave Hale and a fine of GBP108,600 on River and Mercantile Asset Management.  Newton Investment Management as the leniency applicant escaped a penalty.

The FCA found that the three firms shared strategic information bilaterally, including on their bidding intentions for public offerings and placings and which undermined a competitive bidding process.

The decision shows that the FCA will use its competition enforcement powers.  Even before this decision the FCA has had a number of competition law investigations underway, although they have not been concluded with final enforcement action and penalties.
An unusual feature of this case was the FCA’s parallel enforcement action under financial services sector regulation arising out of the same facts.  Earlier in February 2019 the FCA imposed a GBP32,2000 fine on Paul Stephany, formerly a manager of Newton Investment Management, for his role in the arrangements

CMA provisionally finds extensive competition concerns in Sainsbury’s/ Asda merger

CMA provisionally finds extensive competition concerns in Sainsbury’s/ Asda merger

The Competition and Markets Authority has provisionally found wide ranging and significant competition concerns arising from the proposed merger between Sainsbury’s and Asda.  The CMA finds that the merger could lead to a worse experience for shoppers through increased prices and a reduction in the quality and range of products offered and across in-store and online services.  It also expects that prices could rise at the 100 or so petrol stations owned by the merging parties.

The CMA has set out potential solutions ranging from blocking the merger outright or divestments of a large number of the parties’ overlapping stores.  Remedies could extend to selling off one of the companies’ brands so as to create an independent competitor in the market.

It is not unheard of for the CMA to reverse its provisional findings, but that will be challenging against the concerns that it has identified.  Even if there are potential remedies that would be acceptable to the CMA, it remains to be seen whether these would be viable for the merging parties without scuppering the commercial rationale of the deal.

The CMA has invited comment on its provisional findings by 13 March and is due to release its final report by 30 April 2019.

Source: CMA press release, 20 February 2019:  https://www.gov.uk/government/news/sainsburys-asda-merger-could-push-up-prices-and-reduce-quality

CMA rewards for information on potential cartels

CMA rewards for information on potential cartels

The Competition and Markets Authority has published a response to a freedom of information (FOI) request on the rewards it paid for information about potential anticompetitive activity.

In March 2014 the CMA confirmed the policy of the Office of Fair Trading according to which rewards of up to £100,000 may be granted to informant individuals who provide information about potential cartels.

On 13 February 2019 the CMA stated that it does hold information falling within the scope of the FOI request but considers that the information is exempt from disclosure under section 30(2) of the Freedom of Information Act 2000 (FOIA).

Section 30(2) applies if the information requested was obtained or recorded by the CMA for the purposes of its functions in relation to certain relevant investigations and proceedings, and it relates to the obtaining of information from confidential sources.  The CMA considers that the balance of public interest weighs in favour of withholding disclosure of the information.

The CMA also stated that it considers that the information requested is exempt under sections 31(1)(g) and 31(3) of the FOIA because disclosure would be likely to prejudice the exercise of its functions.

There has been much speculation about the extent to which the CMA actually receives information under its rewards policy and whether rewards have been paid.  The CMA’s statement does not reveal any more meaningful information on this other than that the policy remains in force and the CMA holds relevant information.

Commission consults on Vertical Restraints Block Exemption and Guidelines

Commission consults on Vertical Restraints Block Exemption and Guidelines

The European Commission has invited public views on its assessment of Regulation 330/2010, the vertical agreements block exemption regulation (VBER) and accompanying Guidelines on Vertical Restraints (Vertical Restraints Guidelines) .

The current VBER, which was adopted in 2010, will expire on 31 May 2022.  In November last year the Commission invited feedback following publication of an evaluation and fitness check on the VBER .

The Commission is considering whether to allow the block exemption to lapse, extend its duration or revise its scope to take account of new market developments since 2010.

The consultation takes the form of a survey where it invites respondents to answer specific questions on the operation of the VBER and VR Guidelines.  The Commission invites responses to the questionnaire by 27 May 2019.

For details of the consultation see here:

https://ec.europa.eu/info/law/better-regulation/initiatives/ares-2018-5068981/public-consultation_en