On 22 April 2024, the UK High Court handed down its judgment that the Competition Appeal Tribunal had erred in law when it previously refused to grant the Competition & Markets Authority a warrant to search a domestic 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 of only a handful since Brexit – into the supply of chemicals to the construction industry. As part of this investigation, the CMA applied, under its powers in the Competition Act 1998 ("CA98"), to the Competition Appeal Tribunal ("CAT") for warrants to search business and domestic premises. While the CAT granted the former, it denied the latter on the basis that the CMA needed to demonstrate that the occupier of the domestic premises had a 'propensity' to destroy or conceal evidence held within them (the "CAT Judgment") (see our coverage of this in our Dawn Raid Analysis Quarterly, here). In November 2023, the CAT later held that the CAT's Judgment should be published, which was particularly unpalatable to the CMA given its designation by the CAT as a 'guideline judgment' (i.e. one which can be cited before any court).
Soon after, the CMA challenged the CAT Judgment and the CAT's designation of it as a guideline judgment to act as 'guidance in future cases'1, maintaining that it would significantly hamper its ability to investigate suspected cartel activity.
The High Court Judgment
The CMA's power to enter business and domestic premises under a warrant – if granted by the CAT – are governed by sections 28 and 28A of the CA98, respectively.
As the CMA does not have a right of appeal under the CA98, its only recourse for appeal was by means of judicial review. The CMA's key arguments were:
- it would be 'very rare' for the CMA to have evidence of an individual's 'propensity' to destroy or conceal documents at the launch of an investigation;2
- since 2017, there have been nine warrants approved for domestic premises, none of which resulted in the judgment being published, or designated a guideline judgment; and
- in designating the CAT Judgment as a guideline judgment, the CAT had exceeded its powers.
The High Court agreed with the CMA on all grounds. Importantly, it concluded that under section 28A, demonstrating an individual's 'propensity' to destroy evidence is not always required (but rather would depend on the 'facts and circumstances of each particular case').3 It followed from this error of law that the CAT Judgment 'should not be treated as a guideline judgment or followed in future cases by the CAT (or indeed any court).4
Implications
As the CMA had indicated that it did not intend to search the home of the individual(s) after all, some may wonder why the CMA bothered litigating over an 'academic' point. However, what is clear is that the CMA had serious concerns about the precedent setting nature of the 'guideline judgment' and the impact it would have on future CA98 investigations. The CMA was understandably keen to ensure that, going forward, its powers to raid home searches were not unduly fettered as the CAT Judgment would have materially impeded the CMA's ability to investigate legitimate concerns about anti-competitive conduct. Indeed, it is possible that individuals involved in such activity might have decided to ensure that all collusive behaviour was conducted from their domestic premises as the likelihood of a search warrant being issued for their homes would have been materially lower.
As the High Court Judgment effectively prevents the CAT Judgment from being cited again in court, it is a significant victory for the CMA. It will likely embolden the CMA to apply for warrants to search domestic premises – which, given the ubiquity of electronic communications and hybrid working, are often seen by competition authorities as being likely to harbour material evidence relating to cartel activity.
The judgement of the High Court resets the bar. So, homeworkers – beware!
1 Paragraph 10(2) of the CAT Judgment, available here.
2 Paragraph 17 of the High Court Judgment, available here.
3 Paragraph 58 of the High Court Judgment, available here.
4 Paragraph 59 of the High Court Judgment, available here.
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