CMA PUBLISHES DRAFT GUIDANCE ON COMPETITION INVESTIGATIONS

356-Vince-Cable2-688x344The Competition and Markets Authority (CMA) has published a consultation document setting out its draft Guidance and Rules of Procedure for investigation procedures under the Competition Act 1998 (the Guidance and Rules of Procedure). The document is part of a wider consultation about how the CMA will work in practice and how it will interact with businesses and individuals when it takes over the functions of the OFT on 1 May 2014. A previous blog post discussed the draft prosecution guidance on the criminal cartel offence.

The Guidance and Rules of Procedure largely mirrors the current OFT guide to investigation procedures in competition cases, but in addition covers a series of new powers granted to the CMA under the Enterprise and Regulatory Reform Act 2013. These include:

  • Giving the CMA the power to interview individuals;
  • Replacing the current criminal sanctions for failing to comply with investigations with civil financial sanctions;
  • Giving the CMA the express power to publish a notice of investigation, which may name a party or parties to an investigation;
  • Lowering the threshold for the CMA to impose interim measures; and
  • Introducing new statutory factors to be taken into account in fixing a penalty.

The most controversial of these powers is the new power under section 26A of the Competition Act 1998 to require any individual who has a connection with a business which is a party to an investigation to answer questions on any matter relevant to the investigation. The OFT has said that the new power is designed to make the CMA’s investigations more robust and efficient by enabling it to obtain information orally that it would otherwise either not be able to obtain or only be able to obtain through written requests. However, concerns have been raised that it will be used to carry out ‘fishing expeditions’ for information during investigations and that individuals’ rights may not be adequately protected.

The CMA must provide both the person and the undertaking with a formal notice which will ordinarily state the time and place at which the person must be available for questioning. However, the Guidance and Rules of Procedure state that in certain circumstances the CMA may interview an individual using its formal powers immediately after giving the notice. This is likely to be during a dawn raid where the CMA is of the view that a delay in conducting the interview may compromise the investigation.

A person being formally questioned may request that a lawyer be present. The CMA will only permit a legal adviser who is also acting for the undertaking under investigation to attend the interview if it is satisfied that this will not risk prejudicing the investigation (for example because it would increase the risk of destruction of evidence or reduce the incentive for individuals being questioned to speak openly and honestly). If this is the case, then the person can request another lawyer and the CMA will delay questioning for a reasonable time to allow a legal adviser to attend. However, the Guidance and Rules of Procedure define “a reasonable time” as such period of time as the officer considers is reasonable in the circumstances. The wide discretion granted to the relevant CMA officer raises the possibility that people may be formally interviewed without a lawyer present or without being fully aware of their rights.

The definition of connected individuals is also very wide, covering not only directors and employees, but also consultants, volunteers, contract staff and professional advisers.

The consultation closes on 11 November

This entry was posted in Leniency, OFT, UK by Michael O'Kane. Bookmark the permalink.

About Michael O'Kane

Michael O’Kane is a partner and Head of the Business Crime team at leading UK firm Peters & Peters. Described as ‘first-rate’ (Legal 500 2012), he “draws glowing praise from commentators” (Chambers 2013) for handling the international aspects of business crime, including sanctions, extradition and mutual legal assistance. Called to the Bar in 1992 and prior to joining Peters & Peters he was a senior specialist prosecutor at the Crown Prosecution Service Headquarters(CPS). At CPS HQ he was a key member of a small specialist unit responsible for the prosecution of serious and high profile fraud, terrorist and special interest criminal matters including the Stansted Airport Afghan hijacking and the prosecution of Paul Burrell (Princess Diana’s butler). Michael joined Peters & Peters in 2002. He became a partner in May 2004, and Head of the Business Crime team in May 2009. Since joining Peters & Peters, Michael has dealt with a wide range of business crime matters. He has particular expertise in international sanctions, criminal cartels, extradition, corruption, mutual legal assistance, and FSA investigations. Described as“ an influential practitioner in fraud and regulatory work, so much so that he is top of the referral lists of many City firms for independent advice for directors” (The Lawyer’s Hot 100 2009), he was recognised as one of the UK’s most innovative lawyers in the 2011 FT Innovative Lawyer Awards and included in the list of the UK's leading lawyers in 'The International Who's Who of Asset Recovery 2012. In 2012 he was the winner of the Global Competition Review Article of the Year. Michael regularly appears on television and radio to discuss his specialist areas and he is the author of the leading textbook on the UK Criminal Cartel Offence “The Law of Criminal Cartels-Practice and Procedure” (Oxford University Press 2009). Recent/Current Sanctions Work • Representing 109 individuals and 12 companies subject to designation by the European Council under targeted measures imposed against Zimbabwe. This is the largest and most complex collective challenge to a sanctions listing ever brought before the European Court. • Acting for a former Egyptian Minister and his UK resident wife, challenging their designation by the European Council of Ministers under targeted measures brought against former members of the Egyptian Government. • Advising a company accused in a UN investigation report to have breached UN sanctions imposed in relation to Somalia. • Advising a UK company in relation to ongoing commercial relationships with an Iranian company listed under both EU and UN sanctions. • Advising an individual in relation to a UK investigation for alleging breaching nuclear export controls.

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