Here cometh the CMA …

The UK’s Competition and Markets Authority (CMA) is now up and running, albeit in ‘shadow form’, and will receive its full powers in April next year, taking over the combined competition powers of the OFT and Competition Commission. This change, brought in through the Enterprise and Regulatory Reform Act 2013, is one of a number of changes to the UK regime.  It is part of the government’s ongoing initiative to enhance the UK's reputation as a premier jurisdiction for competition law enforcement, and to enhance the efficiency and expediency of UK proceedings.

The CMA has already indicated that it is likely to focus its attention in the first few years on, among other things, emerging sectors and business models, including online (no surprises there, given that the OFT has already declared similar goals).  Given that we can expect the CMA to be more interventionist and likely to take on a greater number of investigations, it promises to be an interesting few years for those innovating with online business models.  Helen Hopson and Libby Amos discuss further in "Here cometh the CMA ..."

Helen Hopson

Every little bit helps: with luck, the new groceries code adjudicator will effect real change

Grocery retailing has undergone revolutionary change over the last few decades.  As the traditional quartet of the local butcher, baker, candlestick maker greengrocer and fishmonger has given way to the omnipresent national supermarket chain, retailer buyer power vis-à-vis suppliers has increased tremendously.  Belatedly, the regulation of the groceries sector is catching up.

This year saw the establishment of the Groceries Code Adjudicator, with the aim of effecting real change in the regulation of the sector. Christine Tacon, whose position as the Adjudicator was announced in January this year, formally took up her role in June.  It is hoped this move will enhance levels of compliance with the groceries supply code, which has been in force since February 2010.  Ms Tacon is charged with investigating complaints of breaches of the code, adjudicating in disputes, and providing advice to retailers and suppliers.  Pat Treacy and David George discuss this significant milestone for the sector in their longer article in Competition Law Insight.

Pat Treacy and David George

US eBooks judgment: a view from across the Atlantic

In July 2013, District Court Judge Denise Cote handed down a detailed judgment finding that Apple had conspired with five publishers (Penguin, Simon & Schuster, HarperCollins, Macmillan and Hachette) to raise the retail price of e-books in the US in breach of section 1 of the Sherman Act.

Apple is appealing the judgment, which has given rise to significant controversy.  The circumstances of the case were unusual, involving: a new market entrant which initially had no market share; ‘hub-and-spoke’ style collusion; most favoured nation clauses (MFNs) and a nascent and fast evolving industry, which was apparently oblivious to antitrust norms.  The judgment is a major victory for the Department of Justice; the parallel European proceedings culminated in commitments decisions but no findings of liability.

However, beyond condemning Apple’s specific conduct, the judgment provides little guidance as to what behaviour will give rise to antitrust concern.  In particular, businesses may need to think carefully about whether MFN provisions – which ostensibly bring about lower prices – might impede competition.  On this side of the Atlantic, the OFT’s September 2012 research paper on price relationship agreements, “Can ‘Fair’ Prices be Unfair?”, makes it clear that this issue is complex.

Given the defeat in the US, it seems Apple did well to settle the parallel European Commission investigation through commitments.  The saga demonstrates the difficulty of applying conventional antitrust theories of harm and analytical frameworks to the continuously evolving online universe.  Both  the US judgment and the EU commitments are a gentle reminder that many of the practices which are prevalent in the digital content world (agency models, MFNs, price caps, pricing tiers and any information exchange among players) must all continue to be considered carefully in the digital context.  Guidance is particularly sparse in the EU given that Commission did not proceed to a formal infringement decision.  Only time, litigation and investigation will tell which practices, individual or combined, may give rise to genuine antitrust concern...

See full article: US eBooks judgment: a view from across the Atlantic, CLI, September 2013

Osman Zafar and David George