Financial Conduct Authority issues statement of objections in money transfer price fixing case

 

Financial Conduct Authority issues statement of objections in money transfer price fixing case

The Financial Conduct Authority (FCA) has issued its second known statement of objections alleging that three international money transfer service providers violated competition law when they colluded to set the rates they charged Scottish customers for wiring funds to Pakistan.

A statement of objections gives firms notice that the FCA considers that they have infringed competition law and the opportunity to respond by making written and oral representations.

The FCA’s statement of objections was addressed to the Glasgow branches of Dollar East, Hafiz Bros Travel & Money Transfer and LCC Trans-Sending and accused the companies of price fixing for the conversion of pounds to Pakistani rupees between February and May 2017.

The FCA further maintains that the companies conspired to fix the flat rate transaction fee they charged customers for sending money to Pakistan through the service operated by LCC Trans-Sending’s parent company, Small World Financial Services Group.

Since 1 April 2015, the FCA has had concurrent competition law enforcement powers, including powers under the Competition Act 1998 and the Enterprise Act 2002 in relation to the provision of financial services.

The FCA has launched five investigations into potential competition law breaches since it gained concurrent competition powers.  However, the FCA has only ever proceeded to the statement of objections state in one other case that concluded with fines in 2019.

The FCA notes that the alleged infringements meant that customers in Glasgow may have been overcharged for the relevant transactions.  It may be that the FCA is using a relatively localised case to reinforce the message that competition law applies across and within the UK.

https://www.fca.org.uk/news/press-releases/fca-issues-statement-objections-3-money-transfer-firms#:~:text=A%20statement%20of%20objections%20gives,the%20law%20has%20been%20broken

CMA intends to launch a market study into house-building

 

CMA intends to launch a market study into house-building

The Competition and Markets Authority has informed the Secretary of State at the Department for Levelling Up, Housing and Communities, that it intends to launch a market study into the housebuilding sector.

Market studies are industry wide probes where there are concerns that markets may not be working as well as they should but where the problem does not appear to be related to unlawful action by individual companies.  However, they can result in remedies that are intrusive, including changes in legislation or a wider market investigation.

The CMA has been conducting consumer work in relation to unfair practices connected with leasehold homes.  It expects that the promotion of competition in the accommodation sector will be a focus area over the next year.

The CMA considers that a market study into the housebuilding sector will be core to securing the right environment for delivering homes to people in need.

The proposed market study is aligned with the CMA’s goal to "consistently focus action on the core areas of consumer spending and time" as set out in the CMA's draft Annual Plan 2023/24.

The CMA’s focus for its market study is not surprising against the backdrop of the cost-living crisis and its work on consumer protection.   It also aligns with the government's support for the CMA's consideration of a market study in the housebuilding sector set out in the Secretary of State’s letters of May and November 2022.

It is expected that a formal proposal to launch a market study will be put to the CMA Board in the coming weeks.  Meanwhile, builders and providers to the housebuilding sector and other interest groups including advisers to consumers will want to follow these developments to determine where their interests lie and how they can engage with the study.

https://www.gov.uk/government/publications/letter-from-sarah-cardell-to-rt-hon-michael-gove-mp-on-homebuilding

European Commission adopts whistleblowing procedure in merger control and state aid cases

 

European Commission adopts whistleblowing procedure in merger control and state aid cases

Knowledge from insiders can be useful to regulators and investigators seeking to root out and prove unlawful practices. 

On 9 January 2023, the European Commission announced that it has extended its anonymous antitrust whistleblower tool to include mergers and state aid matters (see its Commission Daily News MEX/23/103).

The tool was originally introduced in 2017 to allow any person to make an anonymous report to the Commission about cartels and other antitrust infringements. The Commission finds that since its launch, the procedure has allowed it to detect unlawful practices earlier and it has contributed to the success of the Commission’s investigations. The Commission reports that it tends to receive about 100 messages a year through this tool.

The Commission believes that the expanded scope of the tool will bring synergies in its enforcement armoury.  The expanded scope covers merger-related infringements, such as "gun jumping" (implementation of a notifiable merger before clearance by the Commission) and unlawful state aid.

The tool provides a mechanism for persons with knowledge of competition law infringements to send an anonymous message to the Commission. The messaging system is specifically encrypted and will allow for the Commission to ask for clarifications. It is run through a third party service provider which acts as an intermediary between the disclosing party and the Commission.

Whistleblowers are protected in the EU by DIRECTIVE (EU) 2019/1937 of 23 October 2019 whereby a person may not be punished or lose protection for reporting their concerns directly to the Commission.

Some observers remain sceptical about the quality and reliability of the information that such a tool can provide. Concerns have been raised that disgruntled employees and competitors may use the tool to report matters where they have an ‘axe to grind’. These are all factors that the Commission will weigh in the balance when assessing the reliability of the information. For now, at least, this development represents another risk factor for businesses to consider when determining their risk of the authority finding out about business practices which might otherwise go undetected.

https://competition-policy.ec.europa.eu/cartels/whistle-blower_en