UK: ABA 2007 Antitrust Year In Review: UK Section

A. Legislative And Administrative Developments

In parallel with similar work being done by the European Commission on private enforcement (with the Green Paper in 2005 and a White Paper expected in early 2008), the UK Office of Fair Trading (OFT) published a discussion paper on facilitating effective redress for consumers and businesses that have been harmed by breaches of competition law. The OFT has suggested that to increase the incentives for compliance with competition law, private actions should be possible both on a stand-alone basis and as follow-on actions.¹

B. Mergers

The Secretary of State for Trade and Industry (SoS) referred BSkyB's acquisition of a 17.9% stake in ITV to the Competition Commission. This followed the first ever intervention by the SoS in an investigation by the OFT on grounds of public interest in media ownership.² The Competition Commission subsequently confirmed its provisional findings that BSkyB's acquisition of a 17.9% stake in ITV constitutes a merger situation and restricts competition.³ The Commission required BSkyB to reduce its shareholding in ITV to below 7.5%. The Competition Commission's decision has been challenged at the Competition Appeal Tribunal by both BSkyB and its competitor Virgin Media.

C. Cartels

In August 2007, British Airways was fined a record GBP121.5 million after it admitted colluding with Virgin Atlantic to raise fuel surcharges on tickets between August 2004 and January 2006. Virgin Atlantic received immunity from fines as the whistleblower on the cartel, in line with the OFT's Leniency Policy.⁴ This illustrates a clear policy shift to much larger fines.

The OFT also carried out an on-site search at a private address for the first time as part of its criminal investigation into the alleged marine hoses cartel.⁵

Finally, the OFT issued a statement of objections to five major supermarkets and certain dairy producers setting out a provisional finding that they colluded to raise the price of dairy products between 2002 and 2003 by sharing commercially sensitive pricing information. The OFT estimated that this alleged infringement cost consumers approximately GBP270 million.⁶ Continuing the trend towards higher fines as noted above, the OFT entered into "early settlement agreements" in December 2007 with most of the recipients of the Statement of Objections in return for the payment of fines totalling over GBP116 million. Investigations into the remaining undertakings accused of cartel conduct in this case are ongoing.

D. Anti-Competitive Practices

The OFT launched new market investigations in 2007 into retail bank pricing⁷ and personal current accounts,⁸ distribution of medicines in the UK⁹ and the housebuilding industry.¹⁰ The Competition Commission also launched an investigation into the leasing of rolling stock for franchised passenger services.¹¹ In addition, the Competition Commission published its provisional findings in relation to the inquiry into the supply of groceries by retailers in the UK.¹² Whilst the Competition Commission did not find it necessary to order store divestitures or break up so-called land banks, it did recommend certain changes in the planning regime to take account of competition issues and certain improvements in how grocery retailers above a certain size deal with their suppliers.

E. Competition Litigation

In the first case of its kind, a representative action for damages on behalf of consumers was initiated by a consumer association before the Competition Appeal Tribunal (CAT). The matter involves an action against JJB Sports which was found guilty of fixing prices of replica football kits.¹³ Purchasers of electrical and mechanical carbon and graphite products also filed a claim at the CAT for damages against the members of the price-fixing and market-sharing cartel relating to carbon and graphite products.¹⁴ The CAT is also now dealing with an action for damages brought by JJ Burgess & Sons following the CAT's decision that a funeral company had abused its dominant position by refusing the claimant access to a crematorium that the former owned and maintained. The claimant is requesting damages for loss of revenues and costs incurred as a result of this abuse of a dominant position.¹⁵

Footnotes

1. Office of Fair Trading, Private Actions in Competition Law: Effective Redress for Consumers and Business (2006), available at http://www.oft.gov.uk/shared_oft/reports/comp_policy/oft916.pdf. As part of the 2007 pre-budget report, the UK Finance Minister announced that the UK government intended to consider measures to facilitate redress of losses flowing from breaches of competition law.

2. Press Release, Government News Network, British Sky Broadcasting/ITV Statement (May 24, 2007), available at http://www.gnn.gov.uk/Content/Detail.asp?ReleaseID=286812&NewsAreaID=2.

3. Competition Commission, Final Report (December 14, 2007), available at http://www.competition-commission.org.uk/rep_pub/reports/2007/fulltext/535.pdf; see also Competition Commission, Provisional Findings Report (October 4, 2007), available at http://www.competition-commission.org.uk/inquiries/ref2007/itv/pdf/prov_find_report.pdf.

4. Press Release, Office of Fair Trading, British Airways to Pay Record £121.5m Penalty in Price Fixing Investigation (August 1, 2007), available at http://www.oft.gov.uk/news/press/2007/113-07.

5. Press Release, Office of Fair Trading, OFT Launches Criminal Investigation into Alleged International Bid Rigging, Price Fixing and Market Allocation Cartel (May 3, 2007), available at http://www.oft.gov.uk/news/press/2007/70-07.

6. Press Release, Office of Fair Trading, OFT Issues Provisional Decision Against Supermarkets and Dairies over Price Fixing (September 20, 2007), available at http://www.oft.gov.uk/news/press/2007/170-07; see also Press Release, Office of Fair Trading, OFT Welcomes Early Resolution Agreements and Agrees over £116m Penalties Investigations Continue Against Other Supermarkets and a Dairy Processor (December 7, 2007), available at http://www.oft.gov.uk./news/press/2007/170-07; see also Press Release Office of Fair Trading, OFT Statement of Objections Against Supermarkets and Dairies Clarification (December 13, 2007), available at http://www.oft.gov.uk/news/press/2007/175-07; see also Press Release, Office of Fair Trading, Lactalis McLelland Agrees Early Resolution in Dairy Retail Price Initiatives Investigation (February 15, 2008), available at http://www.oft.gov.uk./news/press/2008/22-08.

7. Press Release, Office of Fair Trading, OFT Announces 'Quick Fix' on Bank Charges Will Disadvantage Customers (March 29, 2007), available at http://www.oft.gov.uk/news/press/2007/54-07.

8. Press Release, Office of Fair Trading, OFT Launches Market Study into Personal Current Accounts (April 26, 2007), available at http://www.oft.gov.uk/news/press/2007/67-07. See also Office of Fair Trading, Personal Current Accounts in the UK (2007), available at http://www.oft.gov.uk/shared_oft/reports/financial_products/oft918.pdf.

9. Office of Fair Trading, Distributions of Medicine in the UK (2007), available at http://www.oft.gov.uk/shared_oft/reports/comp_policy/oft914.pdf.

10. Press Release, Office of Fair Trading, OFT Launches Groundbreaking Study into UK Housebuilding Market (June 22, 2007), available at http://www.oft.gov.uk/news/press/2007/90-07. See also Office of Fair Trading, Home Building - Reasons for a Market Study (2007), available at http://www.oft.gov.uk/shared_oft/reports/comp_policy/oft934.pdf.

11. Press Release, Competition Commission, Rolling Stock Market Investigation Issues Statement (August 17, 2007), available at http://www.competition-commission.org.uk/press_rel/2007/aug/pdf/49-07.pdf.

12. Competition Commission, Provisional Findings Report (October 31, 2007), available at http://www.competition-commission.org.uk/inquiries/ref2006/grocery/prov_findings/prov_find_report.pdf; http://www.competition-commission.org.uk/inquiries/ref2006/grocery/provisional_findings.htm; see also Provisional Decision on Remedies (February 15, 2008), available at http://www.competition-commission.org.uk/inquiries/ref2006/grocery/provisional_decision_remedies.htm.

13. Consumers' Association v. JJB Sports, 078/7/9/07 (Competition App. Trib.) Notice of Claim, available at http://www.catribunal.org.uk/documents/Note1078Consumers050307.pdf.

14. Emerson Electric and others v. Morgan Crucible and others, 1077/5/7/07 (Competition App. Trib.) Application, available at http://www.catribunal.org.uk/documents/Application1077Emerson090207.pdf.

15. JJ Burgess & Sons v W Austin & Sons (Stevenage) Limited v Harwood Park Crematorium Limited, 1088/5/7/07 (Competition App. Trib.) Notice of Claim for Damages, available at http://www.catribunal.org.uk/documents/Notice_Appeal1088Burgess230807.pdf.

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