Competition Markets Authority
Original script, which may differ from delivered version.
Introduction
As the principal public enforcer of competition law in the UK, the CMA has a central interest to ensure that the enforcement regime as a whole works effectively to deter anti-competitive conduct, to hold to account those parties who breach the law and to ensure that those parties who suffer loss as a result of such conduct can obtain redress.
While the CMA principally discharges its functions through public enforcement, this does not stand by itself as the only deterrent from breaching competition law. Private enforcement, whilst aimed at compensating those harmed from breaches of competition law, can also have a deterrent effect.
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private enforcement can increase the breadth of cases through which enforcement activity of some kind is pursued, and increase the costs of infringing competition law
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the opportunity for redress can incentivise third parties to bring potentially anticompetitive conduct to light
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private enforcement can increase and refine the body of precedent available to businesses seeking to comply with the law and improving legal certainty
In turn, public enforcement is also an enabler of private enforcement, to the extent that a public enforcement process can confer on claimants the advantages of making a follow-on claim. It follows that public and private enforcement are both important parts of the UKs single overall competition law regime. When they work well together, the regime as a whole can be strengthened. And of course, at the CMA, we support the basic principle underlying private enforcement that those who suffer harm from breaches of competition law should obtain effective redress.
In recent years, the private enforcement of competition law in the UK has steadily been on the rise, through a mixture of private damages actions following-on from competition law infringement findings, and standalone actions, particularly, through collective proceedings. At the same time, the demands on the CMA are possibly at an all time high, including given the impact of Brexit on the scale and scope of our competition law enforcement responsibilities.
Given these developments, I want in my remarks today to talk a little about the CMAs part in ensuring the relationship between public and private enforcement works well in the future and how, more broadly, we can ensure that public and private enforcement work optimally alongside one and other to ensure that the enforcement regime as a whole functions as effectively as possible.
The CMAs role
I want to touch on 2 particular aspects of the CMAs role in public and private enforcement working well-together.
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first, I want to talk about the role that private enforcement may play in our own selection and prioritisation of cases for public enforcement
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second, I want to talk about how the CMA plans to engage with private enforcement that is under way
Case selection
In relation to case selection, the complementary nature of private actions and public enforcement can be highly relevant. The CMA has finite resources; which it has to deploy across all of its non-discretionary and discretionary tools. For the public enforcement of competition law, we prioritise cases that we believe will generate the most impact and carry the greatest strategic significance in terms of the benefits that are expected to be felt by people, businesses and the UK economy.
If there is a prospect that a particular private action will overlap to a material degree with a potential public enforcement case, this will be a relevant factor in our assessment of where our resources can be put to most effective use. For example, when deciding between which of 2 potential public enforcement cases to launch, if one of the cases overlaps with an existing or prospective private action, we may take that into account in our prioritisation decision, potentially leading us to launch public enforcement in the case with no overlapping private action.
However, the overlap with a private action will always just be one factor amongst the range of other considerations we take into account when deciding how to use our resources. Indeed, there may well be cases where, notwithstanding overlapping private enforcement, public enforcement would achieve outcomes which justify the CMA taking action in parallel.
For example. there may be particular value in the CMA setting out our approach to certain cases where we can draw from our perspective as the economy-wide competition regulator. In terms of deterrence, the CMA can impose financial sanctions. Censure by an authority acting in the public interest may also have an important role in deterrence. A public enforcement process may also put the CMA in a stronger position to seek orders disqualifying individuals from acting as company directors.
In discussing the selection of public enforcement, we should also bear in mind that there is a process of case selection which takes place in respect of private enforcement. Indeed, a striking feature of the collective proceedings currently before the Tribunal is the number which are backed - and to some extent made possible - by litigation funding firms.
These firms represent investors in litigation. Their interest is, naturally, in making a return on their investment. And the ability for a third party to make such a return can play a role in providing access to justice.
However, these funding arrangements may encourage private enforcement to focus its attention in certain areas. Namely, those cases where funders anticipate the largest returns. It may, therefore, be more likely that private enforcement (and especially collective proceedings) will focus on conduct which has allegedly caused significant and/or widespread harm by a defendant with deep pockets. The consequence may be that abuse of dominance claims are more likely to be selected by funders for standalone collective actions and that, absent public enforcement, private enforcement action by default sets the development of competition law policy in these cases.
Given the CMAs central interest in effective competition law policy as a whole, which includes the development of the law, and the fact that it will also look at the likely harm caused by the conduct in deciding whether to prioritise enforcement action, there may well be circumstances where there is some overlap in the types of cases that are taken forward in public and private enforcement. Giving too much weight to the presence of private enforcement in our case-selection would risk any biases in the focus of private enforcement having systematic effects on the overall balance of public enforcement.
Intervening in private proceedings
Under the Tribunals rules, the CMA can intervene in proceedings to submit written observations to the Tribunal on issues relating to the application of Chapter I or II of the Competition Act 1998. With the permission of the Tribunal, the CMA may also make oral observations.
Given the growing trend of private actions, and the overall complementary pursuit of deterring anti-competitive conduct, the CMA regularly monitors private actions to consider the merits of interventions. The CMA has now intervened in 5 private competition law proceedings, all of which are current cases before the Tribunal.[1]
I want to provide some more colour on the different scenarios in which we might consider intervening in proceedings.
Concurrent cases
The first and most obvious case will be where the Tribunal is considering conduct which is the same or closely related to conduct under consideration by the CMA in ongoing or anticipated public enforcement. This raises certain risks for the CMAs public enforcement, including the possibility that the Tribunal will come to consider the merits of a private action before, or around the same time as, the CMA issuing a decision on similar or related issues. This could lead to the potential for diverging positions, and the inefficient and duplicative use of public resources. Intervening in proceedings allows the CMA to manage these risks.
To give an example, the CMA intervened last year in the collective proceedings against Apple alleging an infringement of the Chapter II prohibition on the basis of Apples terms for the distribution of mobile apps via its App Store.[2] Part of the CMAs rationale for intervention was that the collective proceedings involved issues which were similar to those arising in our mobile ecosystems market study and our ongoing investigation under Chapter II of the Competition Act in relation to the distribution of apps on iPhones and iPads.
Related cases
The second case is where the conduct may be distinct from the subject of any anticipated or live public enforcement, but the Tribunal will nevertheless be considering a point of law which is directly relevant to the CMAs anticipated, ongoing or past enforcement activities.
Last year, the CMA submitted written observations to the Tribunal in collective proceedings against BT. The class representative alleged that BT had charged unfair prices to certain customers, in an infringement of the Chapter II prohibition.[3] The CMAs decision to intervene reflected our particular inte