MIL-OSI United Kingdom: CMA wins appeal on legal challenge to overseas information requests

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Source: United Kingdom – Government Statements

In a unanimous judgment, the Court of Appeal has confirmed that the Competition and Markets Authority (CMA) has the power to require overseas companies to produce documents and information when it is investigating suspected anti-competitive conduct.

In December 2022, the CMA imposed a fixed penalty of £30,000 and a daily penalty of £15,000 on BMW AG for failing to comply with an information request issued as part of a competition law investigation involving the car manufacturer.

Both BMW AG and VW AG – which was also subject to a formal information request – issued legal challenges. When a combined judgment from the Competition Appeal Tribunal (CAT) and the High Court found in favour of the firms, the CMA took the case to the Court of Appeal and has today won on all grounds.

The Court of Appeal stated that the CMA’s ability to conduct competition investigations would be compromised were it unable to obtain information from overseas, saying it would create “a perverse incentive for conspirators to move offshore to organise cartels directed at harming the United Kingdom market”.

The Court of Appeal also found that nothing in “logic, policy, case law or legislative history” supported the restrictive interpretation adopted by the CAT and High Court.

Sarah Cardell, Chief Executive of the CMA, said:

We are very pleased with today’s important ruling which confirms that the CMA can secure information from overseas businesses when investigating suspected breaches of competition law.

Our cases increasingly involve cross-border, multi-national businesses and information requests are a key tool by which we can investigate whether those businesses have been engaged in unlawful conduct.

Today’s unanimous judgment strengthens the CMA’s ability to investigate, enforce against and deter any anti-competitive conduct that harms consumers, businesses and markets in the UK.

For more information, see the CMA’s case page: Suspected anti-competitive conduct in relation to the recycling of end of life vehicles.

Notes to editors

  1. For media queries, please contact the press office on press@cma.gov.uk or on 020 3738 6460.
  2. Information requests are legal tools used by CMA to obtain documents and information for its investigations into suspected anti-competitive conduct and can include copies of emails, minutes of meetings and/or information about internal roles and responsibilities. The CMA regularly issues mandatory information requests to ensure its investigations are robust and evidence based.
  3. In March 2022, the CMA launched an investigation into a number of vehicle manufacturers and trade associations over suspected breaches of competition law. The investigation relates to suspected coordination with regard to the use of recycled materials in cars, their recyclability, and the arrangements for recycling old or written-off vehicles.
  4. The CMA believes that important aspects of the suspected conduct were agreed outside the UK and implemented in the UK. It suspects that VW AG and BMW AG, both of which are based in Germany, or other VW or BMW Group companies based outside the UK, hold information which the CMA considers important to its investigation. The CMA therefore wrote to both the VW Group and BMW Group formally requiring them to produce information, including from their parent companies VW AG and BMW AG. VW AG and BMW AG both issued legal proceedings, challenging the CMA’s request.
  5. The legislation relevant to the CMA’s investigation is the Competition Act 1998 (CA98). The Chapter I prohibition of the CA98 prohibits agreements between undertakings, decisions by associations of undertakings, and concerted practices which have as their object or effect the prevention, restriction, or distortion of competition within the UK or a part of it and which may affect trade within the UK or a part of it unless they are excluded or exempt.
  6. Section 26 CA98 empowers the CMA, in the context of a CA98 investigation, to require any person, including ‘undertakings’, to produce specified documents and information which it considers relates to any matter relevant to its investigation.
  7. The quashed CAT ruling had held that only entities with a “UK territorial connection” were under a duty to comply with a formal information request under section 26 CA98, and that even they were only required to provide information and documents in their possession or over which they had legal control. On this basis, it found that VW AG and BMW AG had been justified in refusing to respond to the CMA’s information request. The Court of Appeal has rejected the CAT’s restrictive interpretation of the CMA’s powers.
  8. Volkswagen AG (VW AG) is the ultimate parent company of the undertaking formed by the VW group of companies (VW Group). Volkswagen Group United Kingdom Limited (VW UK) is part of the VW Group.
  9. Bayerische Motoren Werke AG (BMW AG) is the ultimate parent company of the undertaking formed by the BMW group of companies (BMW Group). BMW (UK) Limited (BMW UK) is part of the BMW Group.
  10. Both VW AG and BMW AG have applied for permission to appeal to the Court of Appeal.

MIL OSI United Kingdom