FCA set to make firms own up to competition law infringements


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In preparation for its new powers to enforce competition law, which commence on 1 April, the FCA has published a Consultation Paper on its draft Guidance on Competition Concurrency, including proposals to amend its Handbook. The FCA’s new competition enforcement powers will bring the FCA into line with other sector regulators, such as Ofcom and Ofgem, which have “concurrent” (or parallel) powers to enforce competition law, particularly the Competition Act 1998 (CA98), alongside the Competition and Markets Authority (CMA).


Key points in the Consultation Paper include:


The FCA proposes to introduce a new rule, SUP 15.3.32 R, that:

  • a firm must notify the FCA if it has or may have infringed any applicable competition law;
  • the firm must do so in writing immediately it becomes aware, or has any information which reasonably suggests, that an infringement has or may have occurred; but notification can be made orally where the firm has made, or will make, an oral application for leniency or immunity covering the same subject matter to any competition authority (e.g. the CMA or European Commission); and
  • such notification will not constitute an application for leniency or immunity from penalty in any subsequent competition investigation.

The FCA considers that the obligation to disclose is not new and reflects existing disclosure obligations under Principle 11.

However, the proposed disclosure rule has no materiality threshold – it appears that firms must notify any infringement of competition law, whether very serious (such as participation in a price-fixing cartel) or relatively minor. The proposed rule appears to catch previous infringements, as well as those which are or may be ongoing when the rule takes effect.

The FCA intends to operate a settlement policy under which firms can admit liability for breach of competition law, end their infringement, and pay a reduced penalty. The discount for settlement will be up to 20% before issue of a Statement of Objections and up to 10% after a Statement of Objections. These discounts are consistent with the CMA’s settlement policy.

The FCA can chose whether to conduct market studies under FSMA or the Enterprise Act 2002; either way, it can use its powers under FSMA to impose remedies on firms it regulates.

The FCA has invited comments on its proposals by 13 March 2015.

Issues raised:

The interaction between disclosure to the FCA and applications for immunity or leniency raises several issues:

  • The FCA will not prosecute the criminal cartel offence, so cannot give immunity from it. Those seeking immunity from that offence, which no longer requires proof of dishonesty, should apply to the CMA. The FCA will apply the CMA's leniency policy when imposing fines under CA98. But if, under the new compulsory disclosure requirement, a party to an alleged cartel has already given written notice of the relevant infringement to the FCA, will immunity be available to it or other parties? In contrast an oral notification to the FCA will not prevent the notifying party making a subsequent oral application for leniency or immunity – and can only be made if the notifying party has made or intends to make a subsequent oral application for immunity or leniency.
  • Firms will have to act quickly once they have information which suggests that an infringement has or may have occurred. If they notify the FCA in writing, they may lose the chance to obtain immunity for the relevant infringement, but if they take time to decide whether to apply for immunity or leniency, or to investigate the issue more thoroughly, they may risk infringing the new compulsory disclosure rule. Given the practical difficulties of carrying out investigations, these requirements may well present serious challenges.

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