The Competition and Markets Authority (“CMA”) commenced an investigation under section 25 of the Competition Act 1998 into suspected anti-competitive agreements by vehicle manufacturers and trade associations relating to the recycling of cars and vans. It served notices across the sector pursuant to its power under section 26 of the 1998 Act to require “any person”, the definition of which included “any undertaking”, to produce documents and information relevant to a section 25 investigation. The addressees included two subsidiary companies registered in England and their parent companies, who were incorporated and domiciled in Germany. One of the German parent companies appealed from the imposition of a penalty against it by the CMA for failure to comply with the notice. The other sought judicial review of the decision to issue the notice. Both the appeal and the judicial review claim were brought on the ground that the CMA’s power under section 26 to require the production of documents did not include within its scope entities based outside of the United Kingdom. The Competition Appeal Tribunal allowed the appeal and claim for judicial review, holding that section 26 did not have extraterritorial effect, and notices could only be served on a natural or legal person with a connection to the territory of the UK, and even then, such entities were required only to provide information and evidence in their possession or over which they had legal control. Accordingly, the section 26 notices were ineffective against the German parent companies. The CMA appealed on the ground, inter alia, that read in the light of the substantive prohibition on cartels in section 2 of the 1998 Act and the enforcement regime set out in section 25, section 26 had extraterritorial effect.
On the appeal—
Held appeal allowed. (1) Since the obligation under section 26 of the Competition Act 1998 to produce a specified document was imposed on “any person”, prima facie it brought within its embrace a person located outside the jurisdiction. Section 26 fell under the umbrella of section 25, which was extraterritorial and facilitative of the prohibition in section 2, which was also extraterritorial. The section 26 power thus proceeded from, and was an implementation of, two separate building blocks both of which were extraterritorial. For section 26 not to be extraterritorial there would need to be some clear indication, in legislative form, that it was intended by Parliament to have a different territorial ambit to sections 2 and 25. There was no such indication of a contrary intent. The scheme, context and purpose of section 26 supported the conclusion that Parliament intended it to have extraterritorial effect. It could not be inferred that Parliament intended to avoid that effect simply because, in exercising investigative and enforcement powers, there was a theoretical risk to comity. Section 26 conferred a power, not a duty, therefore the decision maker could exercise its discretion in a manner which observed principles of comity. Accordingly, section 26 did have extraterritorial effect (paras 52–55, 63–64, 74, 97, 101).
(2) When Parliament used the expression “any person” or “undertaking” it intended to impose an obligation on the widest array of entities. There was no basis for reading it down to mean a person who was a natural or legal person having a proper connection to the UK. Moreover, there was nothing in logic, policy, case law or legislative history that supported the proposition that Parliament intended the concept of “undertaking” to be understood as shorn of its defining characteristic of joint and several liability and responsibility as firmly established under EU law. The CMA could exercise its section 26 power against a natural person or legal person, an undertaking, or a combination thereof. When it served a notice on an entity, it did so on the basis that the entity had access to all the documents and information of the undertaking as a whole. Importantly, the exercise of the section 26 power was always subject to a requirement on the CMA to respect fundamental, including procedural, rights. In the present case the CMA had adopted a sensible course of action which was, in each case, to serve the notice in a manner bringing it to the attention of the UK subsidiaries and the German parents making it also clear that it applied to the legal entities comprising the undertaking as a whole. There had been no suggestion that that formulation violated any procedural or other fundamental right (paras 79, 83, 84, 88, 100).
Marie Demetriou KC, Tristan Jones and Richard Howell (instructed by Competition and Markets Authority) for the Competition and Markets Authority.
Sarah Abram KC and Andrew McIntyre (instructed by Norton Rose Fulbright LLP) appeared for Bayerische Motoren Werke AG.
Brian Kennelly KC and Jason Pobjoy (instructed by Freshfields Bruckhaus Deringer LLP) for Volkswagen AG.