Introduction

The case of Allergan PLC & Ors v Competition and Markets Authority (CMA) ([2024] EWCA Civ 1023) presents a significant development in the interpretation and enforcement of competition law within the United Kingdom. The appeal centers on whether the CMA appropriately presented its case to the witnesses of the appellants—Allergan and its associated companies—when contesting the CMA's infringement decision dated 15 July 2021 in Case 50277.

The primary legal issues involve the alleged abuse of a dominant market position and anti-competitive agreements related to the supply of hydrocortisone tablets. Specifically, the case examines agreements between Auden, Waymade, and AMCo concerning the supply and non-entry into the market of certain pharmaceutical products.

Summary of the Judgment

The Court of Appeal delivered a comprehensive judgment addressing multiple layers of the initial Tribunal's decision, which had previously provisionally dismissed the companies' appeals based on findings of dishonesty and procedural lapses. The key outcomes of the Court of Appeal's decision are as follows:

• The CMA's appeal against the Tribunal's decision in H3 was allowed.
• The CMA was granted permission to appeal the provisional findings in H2, and its appeal was subsequently allowed.
• The companies' applications for permission to appeal the provisional findings in H2 were dismissed.
• A final order was made dismissing the companies' appeals from the CMA's original decision.

The judgment underscored that the Tribunal had erred by conflating anti-competitive behavior with allegations of dishonesty, thereby imposing unnecessary procedural burdens that ultimately weakened the CMA's case.

Analysis

Precedents Cited

The judgment references several critical precedents that influenced the Court's reasoning:

• Bayer AG v. European Commission (C-201 P & C-301 P): Clarified that a tacit agreement requires mutual understanding and cannot be based solely on unilateral policies.
• Snook v. London & West Riding Investments Ltd [1967] 2 QB 786: Provided insights into the interpretation of "sham" agreements within competition law.
• CMA v. R (VW AG) and BMW AG [2023] EWCA Civ 1506: Reinforced the necessity of crossing the line between undertakings to establish an anti-competitive agreement.
• Toshiba v. European Commission (Case T-519/09): Affirmed that the existence of an anti-competitive understanding suggests a competitive relationship and potential liability.

These precedents collectively informed the Court's stance on the interpretation of agreements under the Competition Act 1998, particularly concerning the necessity (or lack thereof) of proving dishonesty in anti-competitive practices.

Legal Reasoning

The Court of Appeal meticulously dissected the legal framework surrounding the Chapter I prohibition under the Competition Act 1998. The core legal principles established in the judgment include:

• Strict Liability Standard: Infringements of the Chapter I prohibition do not require proof of intent or dishonesty; rather, the focus is on the nature of the agreement and its effects on competition.
• No Necessity to Prove Dishonesty: The Court clarified that allegations of dishonesty or misconduct are not prerequisites for establishing anti-competitive agreements. The Tribunal's conflation of anti-competitive behavior with dishonesty was deemed inappropriate and legally unfounded.
• Tacit Understanding: For an agreement to be anti-competitive, there must be a mutual understanding or an implicit agreement that restricts competition. This does not entail explicit misconduct or dishonesty but rather the collective intention to limit competitive dynamics.
• Sham Agreements: The term "sham" was interpreted to mean that the written agreements concealed the true anti-competitive purpose but did not inherently imply dishonest intentions.

The Court emphasized that the Tribunal should have focused on whether a meeting of minds existed that restricted competition, without indebting the case to the lack of dishonesty. The failure to appropriately challenge the evidence regarding the tacit understanding undermined the Tribunal's findings.

Impact

This judgment has profound implications for future competition law cases in the UK:

• Clarification on Liability: Reinforces that anti-competitive agreements are subject to strict liability, alleviating the need for demonstrating dishonesty.
• Procedural Standards: Establishes stricter boundaries on how Tribunals should handle procedural aspects, particularly concerning the presentation of the CMA's case to witnesses.
• Enforcement Consistency: Ensures that competition authorities like the CMA can pursue anti-competitive practices without being encumbered by the necessity to prove personal misconduct unless explicitly required.
• Witness Examination: Guides future Tribunals on the appropriate scope and depth of cross-examination, focusing on the substance of anti-competitive agreements rather than extraneous allegations of dishonesty.

Overall, the judgment fortifies the regulatory framework, empowering the CMA to effectively challenge anti-competitive practices while maintaining fair procedural integrity.

Complex Concepts Simplified

Chapter I Prohibition

The Chapter I prohibition refers to the legal restrictions under Section 2 of the Competition Act 1998, which prohibits agreements, decisions, or concerted practices that may affect trade within the UK and have as their object or effect the prevention, restriction, or distortion of competition.

Strict Liability

Strict liability in this context means that certain anti-competitive behaviors are prohibited regardless of intent or negligence. The mere existence of an agreement that restricts competition is sufficient to constitute an infringement.

Tacit Understanding

A tacit understanding implies an implicit agreement between parties to restrict competition, without formal or explicit terms. It involves an unspoken mutual understanding that affects market dynamics.

Sham Agreements

Sham agreements are contracts that appear legitimate on the surface but conceal an underlying anti-competitive purpose. They serve to mask the true intent of restricting competition from third parties or market observers.

Conclusion

The Court of Appeal's decision in Allergan PLC & Ors v Competition and Markets Authority marks a pivotal moment in the enforcement of competition law within the UK. By affirming that anti-competitive agreements do not necessitate proof of dishonesty, the judgment streamlines the investigative and prosecutorial processes for regulatory bodies like the CMA.

Furthermore, the ruling underscores the importance of procedural correctness and clarity in legal proceedings, ensuring that Tribunals remain focused on the substantive aspects of competition infringements rather than conflating them with unrelated allegations of misconduct.

This decision not only benefits regulatory authorities by providing a clearer framework for action but also serves as a precedent for future cases involving complex anti-competitive arrangements. It reinforces the principle that the integrity of competitive markets must be upheld through objective analysis of agreements and their effects, independent of the personal characteristics or alleged dishonesty of the parties involved.

In summary, the judgment fortifies the legal mechanisms designed to maintain fair competition, ensuring that the market remains a level playing field for all participants.