The FCA was granted ‘concurrent’ powers to enforce UK and EU competition law and investigate markets alongside the Competition and Markets Authority (the “CMA”) on 1 April 2015.
On 28 April 2016, the CMA published an annual report (the “Report”) assessing the operation of the concurrent powers by the FCA and other sector regulators over the period April 2015 – 31 March 2016 (the “2015/16 Period”).
Highlights - An active year
Enforcement action – the FCA opens its first antitrust investigation
The FCA has taken various enforcement steps in the last year:
- As previously announced by Deb Jones, Director of competition at the FCA, in a speech in March, the Report notes that the FCA has recently opened its first investigation under the Competition Act 1998. Details of the behaviour and firms under investigation, and what prompted the regulator to investigate, remain confidential.
- The FCA also issued during the 2015/16 Period two ‘on-notice’ letters to pension providers in relation to behaviour that came to light in its Retirement Income market study. ‘On-notice’ letters warn firms that there is evidence they are involved/have been involved in a potential infringement of competition law, and ask them what action they propose to address the concerns raised. In this case, the FCA notes that in response to its letters “the firms have undertaken a number of initiatives to strengthen competition law compliance”.
- The FCA has issued three advisory letters to firms in the last year. Such letters are educational in nature and intended to increase the recipient firms’ awareness of, and compliance with, competition law.
- Finally, the Report notes that the FCA is liaising with the European Commission’s Directorate-General for Competition “in relation to a number of cases of a mutual interest”.
In terms of the source of potential enforcement cases, the Report reveals that the FCA received no competition law complaints during the 2015/16 Period.
In July 2015, the FCA published an update to Principle 11 of the FCA Handbook in respect of the obligation for authorised firms to report significant infringements of competition law (for details, see our earlier article Trivial Confessions Not Required - FCA publishes final guidance on its competition powers). The FCA does not consider that this has altered firms’ disclosure obligations. However, the FCA reports that – perhaps unsurprisingly – it received a greater number of Principle 11 notifications relating to competition issues during the 2015/16 Period than in the 12 months to 31 March 2015.
The CMA notes in the Report that it hopes to see a greater number of cases opened by the concurrent sector regulators (including the FCA) in the year ahead. This follows criticism by the National Audit Office in a report in February this year regarding the relative lack of competition investigations by sector regulators, including the FCA.
Given that the concurrent regulators have been given their competition law powers on a ‘use it or lose it’ basis, this may be a real spur for greater enforcement action in future.
Market studies – the FCA is in information gathering mode
The FCA has not opened or closed any market studies in the last year using its Enterprise Act competition law powers. However, it has been proactive in studying the competitive dynamics of several financial markets using its sectoral powers under FSMA, including in relation to credit cards, investment and corporate banking, and asset management.
The FCA has also issued calls for inputs in relation to mortgages and the use of Big Data in the general insurance sector.
Cooperation with the CMA and other sector regulators
The CMA states in the Report that the 2015/16 Period has seen a “clear increase in joint working between the CMA and the sector regulators”. In relation to the FCA, this has included the secondment of specialist staff to provide sector-specific input into the CMA’s retail banking market investigation and relevant merger control investigations.
The Report stresses that officials from the FCA meet regularly with those from the CMA and the other sector regulators, including through the UK Competition Network (the “UKCN”).
Topics discussed by the UKCN over the last 12 months included the sharing of legally privileged documents between regulators, the restrictions on the use of leniency information shared between the regulators and the use of digital forensics and other tools in investigations.
Whether this cooperation by the FCA and other regulators, and their apparent focus on their information sharing and other procedural powers, gives rise to greater enforcement action in the coming year remains to be seen.
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BLP’s Antitrust & Competition team has considerable experience advising financial services clients. Please contact one of the authors for more information.