The Court of Appeal in London ruled on Wednesday that Britain’s antitrust regulator, the Competition and Markets Authority (CMA), can compel companies based outside the United Kingdom to provide information. This ruling comes as a result of a case initiated by German carmakers BMW and Volkswagen, challenging the CMA’s authority to request documents and information for an investigation into alleged anti-competitive conduct in the recycling of old or written-off vehicles.
Bayerische Motoren Werke AG (BMW), the ultimate parent company of the BMW group, faced a fine of £30,000 ($37,991) in December 2022, with an additional daily penalty of £15,000, for failing to comply with the CMA’s information requests related to the recycling investigation. The Competition Appeal Tribunal (CAT) overturned this fine last year, asserting that the CMA lacked the power to demand information held outside the UK from companies situated beyond its jurisdiction. Volkswagen’s legal challenge to a CMA request for information was also successful in the CAT.
However, the Court of Appeal has now reversed the CAT’s decision, emphasizing the critical need for the CMA to have the authority to request information from companies located outside the UK. The court argued that without such power, there would be “a gaping lacuna” in the CMA’s ability to investigate and address anti-competitive practices that could harm the United Kingdom market.
The ruling highlighted the potential for a perverse incentive if the CMA could not extend its reach to overseas companies. It suggested that such a limitation would create an environment in which conspirators might relocate offshore to organize cartels specifically aimed at harming the UK market, rendering them nearly immune from investigation.
“The absence of such a power would create a perverse incentive for conspirators to move offshore to organise cartels directed at harming the United Kingdom market, and they would be more or less immune from investigation,” the court stated in its written ruling.
This decision is expected to have far-reaching implications, reinforcing the CMA’s ability to investigate and address anti-competitive behavior, even when involving companies headquartered outside the UK.