current penalties guidance

By Jonathan Parker and Calum Warren

On 2 August 2017, the UK Competition and Markets Authority (CMA) launched a consultation on proposals to amend the Office of Fair Trading’s 2012 guidance as to the appropriate amount of a penalty for infringements of the prohibitions against anti-competitive agreements and an abuse of a dominant position contained in the Competition Act 1998 (the Current Penalties Guidance). The consultation proposes the following four main changes to the Current Penalties Guidance, most of which are clarifications to the CMA’s current policy based on its existing decisional practice. The CMA has not proposed any amendments in relation to the adjustment for duration (step 2) or the adjustment to prevent the maximum penalty being exceeded and to avoid double jeopardy (step 5).

1. The starting point for calculating fines (step 1). The Current Penalties Guidance provides that the starting point for a fine may be up to 30% of an undertaking’s turnover in the relevant product and geographic market in the last business year. Whilst the CMA does not consider detailing a starting point for every type of infringement appropriate, and confirms that there is no pre-set “tariff” for different infringements, the CMA proposes to amend the Current Penalties Guidance to state that it will generally use a starting point of:

(i) Between 21-30% for the most serious types of infringement (i.e., those which the CMA considers to be so-called “object” infringements, such as cartel offences, as well as excessive and predatory pricing)

(ii) Between 10-20% for certain less serious object infringements and for infringements by “effect” (i.e., those for which the CMA must carry out an assessment to establish that the behaviour in question has had an anti-competitive effect on the market)

(iii) Less than 10% may be applied if the assessment of the specific circumstances of the case leads to a downwards adjustment. If more than one undertaking has taken part in an infringement, the CMA proposes clarifying that it will expect to apply the same starting point for each undertaking.