When Does A Discussion Infringe Competition Law? Lessons From The UK's Competition Appeal Tribunal In Balmoral V CMA

The recent judgment of the Competition Appeal Tribunal (CAT) in Balmoral v CMA[1] brings into sharp relief when and how a company should appropriately distance itself from anti-competitive conduct taking place in its market. It also provides a salutary reminder as to the broad reading of what will constitute a "hardcore" breach of the competition rules, and the need for the appropriate training of staff who interact with their competitors.

The case arose as an appeal by Balmoral Tanks Limited and its parent company Balmoral Group Holdings Limited (together, "Balmoral") against the decision[2] of the Competition and Markets Authority (CMA) concerning Balmoral's role in an exchange of information between competitors (the "Information Exchange").

The CMA held that the Information Exchange took place during and after a single meeting (the "Meeting") between three individuals from competitor firms active in the supply of cylindrical galvanised steel tanks in the UK. The meeting was covertly filmed by the CMA as part of its then ongoing criminal investigation into arrangements between competitors (the "Main Cartel"), meaning that a substantial recording of the meeting was available, which was carefully reviewed by the CAT during the appeal.

Although the CMA held that Balmoral had not participated in the Main Cartel, it found that Balmoral had infringed UK and EU competition law by participating in the Information Exchange, during which competitors shared commercially sensitive information on their pricing strategies.

In upholding the CMA's findings on appeal, the CAT has provided guidance as to when discussions between competitors cross the line from innocuous conversation to competition law infringement. In so doing, the judgment confirms the need for companies to ensure that they "publicly distance" themselves from any anti-competitive contact, and that their employees are effectively trained to enable them to identify and confidently close down any such situations.

Hot topics: what did the Information Exchange address?

While the Main Cartel had been in operation for a number of years, Balmoral had recently entered the market, and was winning orders.

Members of the Main Cartel sought to include Balmoral in their existing arrangements, and arranged the Meeting with this as their agreed agenda[3]. For its part, Balmoral was aware that the existing suppliers had a "cosy" relationship, and had regular meetings with each other.

During the Meeting, Balmoral's representative made clear that it would not participate in the Main Cartel. However, Balmoral's representative then made the fatal error of remaining at the Meeting for more than an hour, and engaging in the Information Exchange. The CMA considered that Balmoral's representative did so with a view to stabilising prices within the market at a higher level.

The CMA relied upon specific topics discussed during the Meeting to evidence that the...