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

 

 

 

European Commission accepts commitments from Amazon to end marketplace and Buy Box probes

 

European Commission accepts commitments from Amazon to end marketplace and Buy Box probes

The European Commission has decided under Article 9 of Regulation 1/2003, to accept commitments offered by Amazon, to address competition concerns in two investigations.

The first concerns the Amazon Marketplace where the Commission had provisionally concluded that Amazon's use of sensitive data from independent retailers violates Article 102 of the TFEU.

The second concerns Amazon Buy Box and Prime where the Commission had provisionally found that the arrangements for the Buy Box and Prime unduly favour Amazon's own retail and connected businesses.

Following consultation on proposed commitments in July 2022 the Commission has now decided to accept revised commitments.

Among the commitments Amazon has agreed that it will: 1) refrain from using non-public data relating to, or derived from, the activities of independent sellers on its marketplace, for its competing retail business; 2) apply non-discriminatory conditions and selection criteria for offers to appear in the Buy Box; 3) set non-discriminatory conditions and criteria for the qualification of marketplace sellers and offers to Prime; 4) refrain from using any information obtained through Prime about the terms and performance of third-party carriers, for its own logistics services.

Amazon must implement the commitments by June 2023. Some are heralding the commitments as a win for Amazon as the Commission rarely reverts to a commitments procedure after the issue of a statement of objections.

Meanwhile, the UK Competition and Markets Authority also launched a parallel abuse of dominance investigation into Amazon’s use of merchant data and the criteria for sellers to appear in its Buy Box.

https://ec.europa.eu/commission/presscorner/detail/en/ip_22_7777

CMA finds BMW for failure to respond to information request in competition investigation

 

CMA finds BMW for failure to respond to information request in competition investigation

The Competition and Markets Authority (CMA) has imposed a fine on BMW AG for failing, without reasonable excuse, to comply with a formal request for information issued under section 26 of the Competition Act 1998. The CMA has imposed a fixed penalty of £30,000 and a daily penalty of £15,000 (the maximum amounts possible), which it considers to be appropriate and proportionate in this case.

The CMA issued an information request to BMW AG in its ongoing investigation into whether certain vehicle manufacturers and trade associations have breached the Chapter I prohibition of the Competition Act 1998 as a result of anti-competitive practices relating to the use of recycled materials in cars and the associated arrangements for recycling old or written-off vehicles.

The CMA believes that elements of the arrangements were agreed outside but implemented in the UK.  The CMA formally required information from BMW Group, including its parent company BMW AG.

The wider BMW Group failed to respond to the CMA’s information request claiming that the CMA does not have jurisdiction to request information from a non-UK company. The CMA refutes this claim and considers that BMW AG has intentionally failed to provide information that is important to the CMA’s investigation.

The daily penalty will continue until BMW Group provides the requested information, the CMA issues an infringement decision or the case is closed.

Should the Digital Markets, Competition and Consumer Bill be passed in is current form, which is expected early next year, the CMA will be able to impose fines of up to 1% of a company’s global turnover if they fail to comply with information requests.

The case is interesting in a post-Brexit environment where the CMA can no longer rely on the arrangements for cooperation within the European Competition Network which allow EU competition authorities to obtain information from companies located in another Member State.

 

https://www.gov.uk/government/news/bmw-fined-for-failing-to-comply-with-cma-information-request

CAT adds season ticket holders to train operators collective action

 

CAT adds season ticket holders to train operators collective action

The Competition Appeal Tribunal has granted a request by Justin Gutmann to include season ticket holders in his £93 million collective action against two train operators -  South Western Railway and London & South Eastern Railway - for allegedly overcharging commuters travelling outside of London.

The CAT rejected the defendants’ objections to the amendment and warned against over-complicating the class definition in an attempt to try to exclude certain categories of case where loss had been incurred.

The CAT noted that, in view of the wide range of tickets and the wide variety of individual circumstances in which rail tickets are purchased, it would not be productive to seek more elaborate refinement of the class definition at this stage.

Justin Gutmann v London & South Eastern Railway Limited and Justin Gutmann v First MTR South Western Trains Limited and Stagecoach South Western Trains Limited, [2022] CAT 49, ruling on amendment, 10 November 2022

Permission to appeal partially granted in trucks cartel litigation

 

Permission to appeal partially granted in trucks cartel litigation

The Competition Appeal Tribunal (CAT) has granted limited permissions to appeal in challenges brought in the UK trucks cartel litigation (UK Trucks Claim Limited v Fiat Chrysler Automobiles N.V. and Others and Road Haulage Association Limited v Man SE and others).

In June 2022 the CAT granted and refused collective proceedings orders (CPO) in the claims, under section 47B of the Competition Act 1998.

The litigation follows on from the European Commission’s 2016 trucks cartel decision.

The CAT previously ruled that both the UK Trucks Claim (UKTC) and Road Haulage Association (RHA) claims were suitable for collective proceedings, but the RHA opt-in claim was more practical despite more risks from a funding perspective.

UKTC sought permission to appeal the ruling on the basis that the CAT had incorrectly refused the opt-out application or should have accepted it to the extent not covered by the RHA opt-in application.

While the CAT dismissed the majority of the UKTC appeal grounds, it granted permission to appeal based on the assessment of the inclusion of new and used trucks in the RHA class definition, and the argument that if the RHA CPO had been confined to used trucks only, it should be considered whether the UKTC application should be allowed.

The CAT did not say that it had erred in its conclusion but reflected that it had considered multiple applications.  At this relatively new time in the development of the UK class action regime, the CAT considered this merits review by the Court of Appeal.

The CAT also granted defendants MAN and DAF permission to appeal against the certification decision on one limited ground relating to the suitability of the RHA’s claim to proceed on a collective basis.

As a result, the CAT stayed the opt-in collective damages claim to allow the competing claimant group to challenge its certification decision.

UK Trucks Claim Limited v Fiat Chrysler Automobiles N.V. and others and DAF Trucks NV and others and Road Haulage Association Limited v MAN SE and others and Daimler AG [2022] CAT 48, ruling (permission to appeal)