Documents at dawn: What an FOI request tells us about the CMA's enforcement tactics
Locations
In January, Fieldfisher sent a freedom of information request to the CMA in relation to the application of its dawn raid powers.
The CMA's response revealed that of the raids that took place between 2019 and 2022, none have yet resulted in an infringement decision.[1] 20 raids took place in 2019, with seven closing without reaching an infringement decision and 13 are ongoing. In 2022, 11 raids took place, with three closing before an infringement decision was reached and eight remain ongoing. It is not uncommon for competition enforcement cases to last for multiple years and so the number of cases concluding in a particular year does not necessarily reflect the amount of work undertaken in that year.
The CMA conducted no dawn raids in 2020 or 2021. This might seem unsurprising in the first instance, given the impact of the COVID-19 pandemic. [2] However, it was in contrast to other global competition authorities, who ran virtual raids as an alternative and who were therefore 'quicker off the mark' in adjusting their practices to the realities of home and, subsequently, hybrid working. This allowed the French competition authority to carry out one dawn raid in 2020 and two in 2021, while Germany's regulator undertook two raids in 2020 and another two in 2021.[3] The European Commission did not carry out any dawn raids in 2020, but did, at least in part, 'go virtual' in 2021 with four dawn raids.[4]
The Commission no longer has jurisdiction to carry out dawn raids in the UK or to direct the CMA to execute raids on its behalf. However, there are clear indications that, despite Brexit, the CMA will work informally with the European Commission when it comes to dawn raids concerning parallel investigations. In March 2022, the CMA and Commission conducted parallel dawn raids at the business premises of several firms active in the automotive sector that are suspected of breaching competition laws governing how end-of-life vehicles are recycled in both the UK and the EU.[5] In March 2023, the Commission, in collaboration with national competition authorities in the UK, the US and Switzerland, carried out a series of dawn raids at four of the world's leading fragrance suppliers.[6]
Looking to the future
Greater investigative flexibility for the CMA in the age of remote working is a theme in the Government's recently published Digital Markets, Competition and Consumer Bill (the "Bill").[7] Central to reform is a proposal to extend the powers currently granted to the CMA[8] to 'seize-and-sift' documents when inspecting under a warrant on business premises, to inspections carried out on domestic premises.[9] Another element of the Bill seeks to strengthen the CMA's powers to obtain electronic information stored remotely (e.g. in the cloud), to safeguard the CMA's ability to conduct its investigations effectively, given the increasing trend for businesses of all sizes to store documents and other information remotely.[10]
It follows that going forward, refusing to turn over a personal device to an investigating authority, or deleting material from the device before doing so, could fall squarely into the category of obstructing anti-trust enforcement proceedings. Director disqualifications of up to 15 years are very real sanctions, which the CMA has in recent years shown itself willing to enforce. Nor can criminal sanctions for non-compliance be ruled out. It will therefore become even more critical in the coming years that employees exercise caution when communicating electronically. Anti-trust compliance training within business will need to reflect this and make sure that employees, as well as employers, are made aware of the risks.
When it comes to mutual co-operation with the Commission more broadly, it seems increasingly likely that more formalised arrangements will come about in medium-term. For example, while not addressed in the Bill, Sarah Cardell, chief executive of the CMA, has recently called on the UK Government to prioritise a formal cooperation agreement with the European Commission to counter potential divergence on enforcement in digital markets.[11] Such an agreement would follow in the wake of the Memorandum of Understanding which the CMA entered into with competition authorities in Australia, Canada, New Zealand and the US in 2020.[12]
With thanks to Trainee Solicitor Adam Newton, co-author of this article.