Argos Ltd & Anor v Office of Fair Trading

A concerted practice may arise where competing retailers knowingly coordinate future prices through a common supplier. It is sufficient that one retailer intends its confidential pricing information to be passed to another, the recipient understands the circumstances of disclosure, and the recipient uses the information when setting prices. Reciprocity strengthens the inference.

For penalties under the Competition Act 1998, the Competition Appeal Tribunal has full jurisdiction to make its own assessment. The statutory guidance remains relevant but does not bind the Tribunal. In a price-fixing case, the relevant product market may be identified on a reasonable, properly reasoned and commercially realistic basis without a formal substitutability analysis.

The Office of Fair Trading found price-fixing infringements of the Chapter I prohibition in two investigations. In Toys and Games, Hasbro, Argos and Littlewoods were found to have coordinated catalogue prices for Hasbro products. In Football Shirts, JJB, Umbro and Sports Soccer were found to have coordinated the retail price of England replica shirts.

The Competition Appeal Tribunal upheld the material liability findings in [2004] CAT 24 and [2004] CAT 17. It reduced the penalties in [2005] CAT 13 and [2005] CAT 22. Argos, Littlewoods and JJB appealed on liability and penalty. The central issues were whether indirect retailer-to-retailer communications through a supplier established the necessary consensus, and whether the Tribunal had adopted a lawful approach to penalties, market definition and equal treatment.

1. All appeals were dismissed. The Tribunal was entitled to find that JJB, Umbro and Sports Soccer participated in a trilateral concerted practice. JJB deliberately pressured Umbro to stop Sports Soccer discounting, supplied confidential pricing information knowing that it would be used for that purpose, and was informed when Sports Soccer agreed to raise its prices. The participants knowingly substituted practical cooperation for competition: paras [92]–[106].

2. A complaint does not, without more, make its author party to an anti-competitive arrangement. Its significance depends on its nature, context and intended response. Here, JJB's vigorous and repeated complaints, backed by commercial pressure, were intended to cause Umbro to procure higher prices from Sports Soccer. JJB could not avoid responsibility by observing that Umbro might theoretically have responded lawfully: paras [72]–[90].

3. The broad proposition that reasonable foreseeability alone always establishes a trilateral concerted practice went too far. The sufficient, narrower rule was that retailer A disclosed future prices intending the supplier to influence other retailers; the supplier passed the information to retailer C; C understood the circumstances and used it in setting prices. Reciprocity made the case stronger. The findings concerning Argos, Hasbro and Littlewoods satisfied that rule: paras [140]–[145].

4. The Tribunal was entitled to characterise the arrangements between Hasbro and Argos as more than an exchange of information. Argos indicated that it would price materially at Hasbro's recommended prices in the expectation that it would not be undercut. The absence of legal enforceability, certainty or a guarantee did not prevent an agreement or concerted practice: paras [136]–[137].

5. The Tribunal had full jurisdiction to assess penalties independently. It was not statutorily bound to follow the published guidance, although it properly took the guidance into account and used it as a cross-check. The Court of Appeal would hesitate before interfering with the assessment of an expert specialist tribunal: paras [160]–[165], [182] and [229]–[231].

6. A formal market analysis or SSNIP test was unnecessary when identifying the relevant product market for a Chapter I price-fixing penalty. The OFT and Tribunal nevertheless required a reasonable and properly reasoned basis. They could adopt a broad commercial view of the trade affected, including associated products reasonably affected by the infringement: paras [166]–[173].

7. The principle of equal treatment prohibited treating comparable situations differently without objective justification. Argos and Littlewoods could raise Hasbro's immunity despite Hasbro's absence because its conduct was central to the same investigation. However, review was confined to the material available when immunity was confirmed and was analogous to judicial review. The appellants failed to show that the decision fell outside the range rationally open to the OFT: paras [247]–[290].

• Court of Appeal: Dismissed the liability and penalty appeals of Argos, Littlewoods and JJB: [2006] EWCA Civ 1318.
• Competition Appeal Tribunal: Upheld the material Toys and Games liability findings in [2004] CAT 24 and reduced the Argos and Littlewoods penalties in [2005] CAT 13.
• Competition Appeal Tribunal: Allowed JJB's Football Shirts liability appeal in part in [2004] CAT 17 and reduced its penalty in [2005] CAT 22.
• Office of Fair Trading: Found infringements of the Chapter I prohibition in the Toys and Games and Football Shirts investigations and imposed financial penalties, subject to Hasbro's immunity.