On 22 April 2024, the UK High Court handed down its judgment that the Competition Appeal Tribunal had erred in legislation when it beforehand refused to grant the Competition & Markets Authority a warrant to go looking a home property (the “High Court Judgment”).
Background
In October 2023, the European Commission (the “EC“) and UK Competition & Markets Authority (“CMA“) launched parallel cartel investigations – one among solely a handful since Brexit – into the availability of chemical substances to the development trade. As a part of this investigation, the CMA utilized, beneath its powers within the Competition Act 1998 (“CA98“), to the Competition Appeal Tribunal (“CAT“) for warrants to go looking business and home premises. While the CAT granted the previous, it denied the latter on the premise that the CMA wanted to show that the occupier of the home premises had a ‘propensity’ to destroy or conceal proof held inside them (the “CAT Judgment“) (see our protection of this in our Dawn Raid Analysis Quarterly, right here). In November 2023, the CAT later held that the CAT’s Judgment ought to be revealed, which was notably unpalatable to the CMA given its designation by the CAT as a ‘guideline judgment’ (i.e. one which might be cited earlier than any court docket).
Soon after, the CMA challenged the CAT Judgment and the CAT’s designation of it as a tenet judgment to behave as ‘steerage in future circumstances’1, sustaining that it could considerably hamper its potential to analyze suspected cartel exercise.
The High Court Judgment
The CMA’s energy to enter business and home premises beneath a warrant – if granted by the CAT – are ruled by sections 28 and 28A of the CA98, respectively.
As the CMA doesn’t have a proper of enchantment beneath the CA98, its solely recourse for enchantment was via judicial evaluate. The CMA’s key arguments had been:
- it could be ‘very uncommon’ for the CMA to have proof of an individual’s ‘propensity’ to destroy or conceal paperwork on the launch of an investigation;2
- since 2017, there have been 9 warrants permitted for home premises, none of which resulted within the judgment being revealed, or designated a tenet judgment; and
- in designating the CAT Judgment as a tenet judgment, the CAT had exceeded its powers.
The High Court agreed with the CMA on all grounds. Importantly, it concluded that beneath part 28A, demonstrating an individual’s ‘propensity’ to destroy proof is just not at all times required (however slightly would depend upon the ‘information and circumstances of every explicit case’).3 It adopted from this error of legislation that the CAT Judgment ‘shouldn’t be handled as a tenet judgment or adopted in future circumstances by the CAT (or certainly any court docket).4
Implications
As the CMA had indicated that it didn’t intend to go looking the home of the individual(s) in any case, some could surprise why the CMA bothered litigating over an ‘educational’ level. However, what is obvious is that the CMA had critical issues concerning the precedent setting nature of the ‘guideline judgment’ and the affect it could have on future CA98 investigations. The CMA was understandably eager to make sure that, going ahead, its powers to raid home searches weren’t unduly fettered because the CAT Judgment would have materially impeded the CMA’s potential to analyze legit issues about anti-competitive conduct. Indeed, it’s potential that people concerned in such exercise might need determined to make sure that all collusive behaviour was carried out from their home premises because the probability of a search warrant being issued for his or her houses would have been materially decrease.
As the High Court Judgment successfully prevents the CAT Judgment from being cited once more in court docket, it’s a important victory for the CMA. It will seemingly embolden the CMA to use for warrants to go looking home premises – which, given the ubiquity of digital communications and hybrid working, are sometimes seen by competitors authorities as being more likely to harbour materials proof referring to cartel exercise.
The judgement of the High Court resets the bar. So, homeworkers – beware!
1 Paragraph 10(2) of the CAT Judgment, available right here.
2 Paragraph 17 of the High Court Judgment, available right here.
3 Paragraph 58 of the High Court Judgment, available right here.
4 Paragraph 59 of the High Court Judgment, available right here.
