Akzo Nobel N.V. v Competition Commission & Ors

Section 86(1)(c) of the Enterprise Act 2002 does not require a foreign company to maintain a physical presence or fixed place of business in the United Kingdom. The question is whether a business is carried on in the United Kingdom and whether the target is sufficiently involved in carrying it on. Strategic and operational management of a substantial United Kingdom business may satisfy that test even when the management is performed abroad. Mere shareholder involvement, or a limited connection such as supplying goods from overseas, is insufficient. The assessment is fact-sensitive and must balance effective competition enforcement with international comity.

The Competition Commission investigated Akzo Nobel’s proposed acquisition of a further 51% interest in Metlac Holding S.R.L. It concluded that the transaction might create a substantial lessening of competition in the United Kingdom market for metal packaging coatings and proposed an enforcement order prohibiting completion.

Akzo Nobel, incorporated in the Netherlands, argued that the Commission lacked jurisdiction under section 86(1)(c) of the Enterprise Act 2002 because the prohibited conduct would occur outside the United Kingdom and Akzo Nobel was not carrying on business there. The Competition Appeal Tribunal rejected that challenge on 21 June 2013. The appeal concerned the meaning of carrying on business in the United Kingdom and whether the Tribunal had departed from the Commission’s findings.

1. Appeal dismissed. The Commission was entitled to make an enforcement order extending to conduct outside the United Kingdom because Akzo Nobel was a person carrying on business in the United Kingdom within section 86(1)(c) of the Enterprise Act 2002.
2. Section 86(1) must be read in the context of both the Act’s purpose of providing an effective regime against anti-competitive outcomes and its specific purpose of setting appropriate limits on jurisdiction over conduct abroad. United Kingdom nationality, incorporation under United Kingdom law and carrying on business in the United Kingdom are alternative connecting factors. Any one is sufficient.
3. A physical-presence test cannot be read into section 86(1)(c). The provision does not require the target company’s participation in the relevant business to occur within the United Kingdom, or require a fixed place of business of its own. Cases concerned with common-law corporate presence, including Adams v Cape Industries, did not control the statutory construction.
4. The correct inquiry is fact-sensitive: first, whether a business is carried on in, or partly in, the United Kingdom; secondly, whether the target is sufficiently involved in that business to be carrying it on, alone or with others. Mere involvement, such as supplying goods from abroad, is insufficient. Strategic and operational management of a business substantially carried on in the United Kingdom is sufficient, even where management and control take place offshore.
5. The Akzo Nobel group’s United Kingdom manufacturing and trading business was carried on through United Kingdom subsidiaries, but was strategically and operationally managed by Akzo Nobel through its Executive Committee. That made Akzo Nobel itself a person carrying on business in the United Kingdom. The conclusion did not attribute the subsidiaries’ activities to the parent or disregard separate corporate personality; it reflected the parent’s own management activity. A parent exercising only traditional shareholder rights would not thereby carry on the subsidiary’s business.
6. The Tribunal had not departed from the Commission’s findings. Any binary assumption that decision-making had to be attributed wholly either to the parent or to the subsidiaries was immaterial, since Akzo Nobel’s share of the management activity was sufficient.

Beatson LJ and Richards LJ agreed with Briggs LJ.

• Court of Appeal (Civil Division) — appeal dismissed: [2014] EWCA Civ 482.
• Competition Appeal Tribunal — rejected Akzo Nobel’s review challenge by judgment dated 21 June 2013.