Crest Nicholson Plc v Office of Fair Trading

Enforcement authorities have wide discretion in designing and conducting competition investigations, including voluntary penalty-reduction schemes. That discretion remains subject to fairness and equal treatment. Authorities must engage with a credible claim that a party is objectively different from other participants and must take that difference into account when later fixing any penalty. They need not disclose the gist of the evidence merely to support an early settlement offer, and they need not reopen a closed offer after issuing a Statement of Objections if doing so would give preferential treatment to parties who accepted without that material. A party cannot fairly be pressured into making a blind admission of serious wrongdoing simply as a commercial decision.

The claimant, an historic indirect parent of Pearce Midlands, sought judicial review of the OFT’s refusal to extend or reopen a 25 per cent penalty-reduction Fast Track Offer. The offer concerned suspected bid rigging in historic construction tenders and required tender-specific admissions and limited cooperation.

The claimant said that, after the relevant business and records had been sold, it could not investigate the allegations or make an informed admission. It alleged unequal treatment and procedural unfairness because other parties had been able to investigate their own conduct before accepting the offer. The central issues were whether the OFT had to provide further evidential detail, reopen the offer after the Statement of Objections, or otherwise accommodate the claimant’s objectively different position.

1. Judicial review allowed in substance. The OFT’s refusal to engage with the claimant’s prima facie objectively different position breached the principles of fairness and equal treatment. The claimant was an historic indirect parent whose former subsidiary, business records and relevant personnel were no longer available to it.
2. The OFT retained a wide discretion under the Competition Act 1998 in organising its investigation and designing penalty-reduction arrangements. The Fast Track Offer was not unlawful merely because it was made before the Statement of Objections or because it differed from the ordinary leniency scheme.
3. Fairness and equal treatment required the OFT to consider whether the claimant’s position materially differed from that of other recipients and, if so, what accommodation was possible. At the penalty stage it had to treat that difference as a relevant consideration and decide what reduction, if any, was appropriate. The precise reduction remained within the OFT’s discretion.
4. The OFT was not required to provide the claimant with the gist or supporting evidence of the allegations when making the Fast Track Offer. The context was a very large investigation in which disclosure would have undermined the purpose of the expedited scheme. R v Secretary of State for the Home Department, ex p Doody [1994] 1 AC 531 was context-specific and did not require disclosure at this investigatory stage.
5. The OFT was also not required to reopen the offer after issuing the Statement of Objections. The 45 parties who had accepted the offer had done so without seeing that document or the OFT’s file. Allowing the claimant to accept on that later information would have created unequal and preferential treatment.
6. Acceptance of the offer had legal and evidential consequences. Its commercial character, and any possibility of withdrawal, did not remove the duty to act fairly. The OFT could not rely on the proposition that parties should make blind admissions of serious competition-law infringements.
7. It was legitimate, for the purposes of the offer and Statement of Objections, for the OFT to address the claimant as a potential parent responsible through decisive influence over Pearce Midlands. The ultimate question of liability was not decided and remained capable of determination on appeal to the Competition Appeal Tribunal.

The OFT was required to reconsider the claimant’s objectively different position when fixing any penalty. A declaration could be made to that effect.

First-instance judicial review proceedings. No prior decision is stated in the judgment.