Court of Appeal holds CMA has extra-territorial document production power

18/01/24

The Court of Appeal (Sir Julian Flaux C, Coulson & Green LJJ) yesterday handed down an important judgment on the scope of the power of the Competition and Markets Authority (“CMA”) to require documents and information from “any person” by notice under s.26 of the Competition Act 1998 (“CA 1998”).

The CMA appealed against a joint judgment of the Administrative Court and Competition Appeal Tribunal (“CAT”) handed down on 8 February ([2023] CAT 7; [2023] Bus LR 754). That judgment was given in (i) a claim for judicial review of a notice under s.26 of CA 1998 brought by Volkswagen AG (“VW AG”); and (ii) an appeal by Bayerische Motoren Werke AG (“BMW AG”) against a penalty imposed on it by the CMA under s.40A of CA 1998 for failure to comply with a s.26 notice.

VW AG and BMW AG are both incorporated in Germany and have no UK branch or office. However, they own and control indirect subsidiaries incorporated in the UK. These subsidiaries are said to form part of the same undertakings as their respective parent companies for the purpose of UK competition law. Both undertakings are under investigation by the CMA. It issued them with notices under s.26 of CA 1998. VW AG challenged the notice issued to it by way of judicial review. BMW AG appealed against the penalty subsequently imposed on it by the CMA for failing to comply with the notice. The Administrative Court and the CAT held that the notices imposed no obligation on VW AG and BMW AG, made a declaration to that effect as concerns VW AG, and quashed the penalty imposed upon BMG AG.

Following a hearing in November last year, the Court of Appeal has unanimously reversed the decision of the Administrative Court and the CAT. The Court of Appeal held that the words “any person” in s.26(1) of CA 1998 were not subject to any implied territorial limitation. It further held that by virtue of the definition of “person” in s.59(1) of CA 1998 as including “any undertaking”, a s.26 notice can be given to an undertaking as such and imposes an obligation on the undertaking as a whole to comply.

The judgment of the Court ([2024] EWCA Civ 1506) is here.