Stop right there, thank you very much: CAT and Administrative Court rule on territorial scope of CMA’s powers

09/02/23

The Competition Appeal Tribunal (CAT) and the Administrative Court have found that the Competition and Markets Authority (CMA) did not have the power to require BMW AG or VW AG, German companies, to produce documents held by them in Germany.

The CMA issued notices under s.26 of the Competition Act 1998 to the undertakings of which those companies formed part. BMW AG did not produce the documents requested and  the CMA imposed the maximum statutory penalty on BMW AG for failure to comply with the notice issued to its undertaking. BMW AG appealed to the CAT against the imposition of that penalty. Separately, VW AG brought a claim for judicial review of the notice issued to its undertaking. BMW AG’s appeal was heard together with VW AG’s judicial review (on a rolled-up basis), with Marcus Smith J. sitting in a dual capacity as President of the CAT and Judge of the Administrative Court.

In an important judgment, the CAT and the Administrative Court ruled that the CMA’s document production power in s.26 of the Competition Act 1998 cannot be exercised in respect of persons without a UK territorial connection. The CMA had argued that it was sufficient that the BMW and VW undertakings were present in the UK by virtue of the presence of indirect subsidiaries in the UK.  It was held, however, that a s.26 notice issued to an undertaking did not impose an obligation on persons within the undertaking which did not themselves have a UK territorial connection.

The CMA’s further argument that a s.26 notice can be addressed to any person anywhere was also rejected.

The judgment is here.