Gallaher Group Ltd & Anor & Anor v Competition and Markets Authority

In public regulatory settlement processes, equal treatment extends to substantial assurances and benefits that can in principle be given to all similarly situated participants. It is not confined to procedure or common methodology. A party’s failure to ask for a benefit will rarely make it incomparable with a party that received it. The existence of other victims of unequal treatment is no answer. A mistake is not an automatic objective justification for unequal treatment. Fairness must be assessed in all the circumstances. Relief may equalise financial treatment without quashing the underlying decision, preserving finality and legal certainty.

The OFT investigated tobacco pricing and invited companies to settle through early resolution agreements. It gave TMR assurances that it would benefit from successful appeals by other companies, but gave no equivalent assurances to the appellants. After the Competition Appeal Tribunal allowed appeals by other companies, the OFT paid TMR its penalty and certain costs. The appellants sought judicial review of the 2008 and 2012 decisions.

Collins J found that the appellants had been treated unfairly and unequally, but dismissed their claims on the basis that the assurances had been given by mistake and that public funds should not be used to replicate the mistake. The appellants appealed. The central issue was whether the unequal treatment was objectively justified.

The appeals were allowed. The Master of the Rolls gave the leading judgment, with which Longmore LJ and Lloyd Jones LJ agreed.

1. The assurances given to TMR were clear, unqualified and substantial. The principle of equal treatment applied to all parties involved in the early resolution process. It required replication of substantial aspects of an agreement that could in principle be applied to all and would be valuable to all. It did not require identical wording or disclosure of confidential negotiations. The approach was consistent with Crest Nicholson Plc v Office of Fair Trading [2009] EWHC 1875 (Admin).
2. The appellants and TMR were in relevantly comparable positions. TMR’s request for the assurances did not make its position materially different. A party’s failure to ask for more favourable treatment will rarely defeat comparability. Nor did the existence of other parties who had also been treated unfairly answer the appellants’ claims. The OFT was not entitled to rely in 2012 on differences created by its own failure to treat the parties equally in 2008.
3. The question whether unequal treatment was objectively justified depended on fairness in all the circumstances. The fact that the OFT had made a mistake was not a conclusive answer. In so far as Customs and Excise Commissioners v National Westminster Bank plc [2003] STC 1072 stated a general principle applicable in all contexts, that approach was wrong. The case was also distinguishable because it concerned a large administrative system and a complex statutory assessment. The reasoning in R v Department for Education and Employment, ex p Begbie [2000] 1 WLR 1115 supported an assessment focused on unfairness and abuse of power.
4. The 2012 decision was plainly unfair and not objectively justified. The only material difference between TMR and the appellants was that the OFT had given the assurances to TMR and withheld them from the appellants. The OFT could equalise the financial treatment without withdrawing the underlying Tobacco Decision.
5. Relief could therefore consist of payment to the appellants of sums equivalent to their penalties, together with appropriate interest and costs. This preserved finality and legal certainty because the Tobacco Decision remained in force.

• Court of Appeal (Civil Division) Allowed both appeals in [2016] EWCA Civ 719.
• High Court of Justice, Queen’s Bench Division, Administrative Court Collins J, on 26 January 2015, found unfair and unequal treatment but dismissed the claims on the basis that replication of the mistaken assurances was not required where public funds were involved.
• Court of Appeal (Civil Division) In a related procedural appeal, allowed the OFT’s appeal against the grant of permission to appeal out of time, holding that there were no exceptional circumstances and emphasising finality and legal certainty: [2014] EWCA Civ 400.
• Competition Appeal Tribunal Granted permission to appeal the Tobacco Decision out of time on 27 March 2013.