R v The Competition and Markets Authority

Domestic administrative law does not recognise equal treatment or substantive fairness as freestanding grounds of judicial review. Consistency is generally desirable, but differential treatment is unlawful only where it falls within established principles, notably rationality, procedural fairness or legitimate expectation. Terms such as “conspicuous unfairness” and “abuse of power” add no distinct test.

A public authority applying common criteria to a defined group, and promising equality, may create a legitimate expectation of equal treatment. A breach does not itself confer a financial remedy or reverse a final, lawfully accepted decision. An authority need not replicate an earlier mistake. It may rationally treat persons differently where an assurance and reliance place one person in a materially different legal position.

The Office of Fair Trading investigated alleged tobacco price-fixing under the Competition Act 1998. Gallaher and Somerfield entered Early Resolution Agreements, admitted the alleged infringements and accepted discounted penalties. Another participant, TMR, received an additional assurance that it would benefit from any successful appeal by another party. After other parties successfully appealed, the Office refunded TMR but refused equivalent payments to Gallaher and Somerfield.

The respondents’ applications to appeal the infringement decision out of time ultimately failed in Office of Fair Trading v Somerfield Stores Ltd [2014] EWCA Civ 400. Collins J then dismissed their judicial review claims in [2015] EWHC 84 (Admin). The Court of Appeal reversed that decision in [2016] EWCA Civ 719; [2016] Bus LR 1200, holding that the differential treatment was unfair and unlawful. The central issue was whether domestic public law required the authority to replicate TMR’s treatment or refund the respondents’ penalties.

1. Disposition. The Supreme Court unanimously allowed the appeal and restored Collins J’s order dismissing the judicial review claims. Lord Carnwath delivered the leading judgment, with which Lord Mance, Lord Sumption, Lord Hodge and Lord Briggs agreed.
2. Equal treatment. Domestic administrative law does not recognise equal treatment as an independent ground of review. Consistency is generally desirable, and treating like cases alike is an axiom of rational behaviour, but it is not an absolute rule. Unequal treatment is ordinarily examined through established doctrines such as rationality and legitimate expectation. Section 60 of the Competition Act 1998 did not import the EU principle of equal treatment into a dispute governed by general administrative law.
3. Legitimate expectation and remedy. The Office owed a general duty during the 2008 negotiations to treat the limited group of investigated parties equally. It applied one set of legal and policy criteria and had stated that it would observe equal-treatment principles. This could create a legitimate expectation of equal treatment. Nevertheless, even an assumed breach through failure to disclose or replicate TMR’s assurance did not itself justify a financial remedy in 2012 or reversal of penalties which had been lawfully imposed and accepted.
4. Fairness. Simple substantive unfairness is not a ground of judicial review. Procedural fairness remains an established ground, but substantive unfairness does not become a separate legal criterion through expressions such as “conspicuous unfairness” or “abuse of power”. Those expressions add nothing to ordinary principles of rationality and legitimate expectation. The earlier authorities employing such language had to be understood in their procedural, irrationality or legitimate-expectation contexts.
5. Application. TMR’s assurance and claimed reliance were crucial differences. The authority could reasonably conclude that withdrawing the assurance would give TMR a strong claim to appeal out of time and that such an appeal would succeed. Gallaher and Somerfield had knowingly accepted the risk of forgoing an appeal in return for discounted penalties and had no comparable basis for a late appeal. Honouring TMR’s assurance without refunding the respondents was therefore objectively justified and rational.
6. Separate reasons. Lord Sumption added that an Early Resolution Agreement ordinarily resolves the relevant issues finally: a participant may take the negotiated discount or the benefit of continuing proceedings and an appeal, but not both. Lord Briggs emphasised that, where an authority rationally chooses among unattractive lawful options and one avoids replicating an earlier mistake, the choice belongs to the authority rather than the court.

1. United Kingdom Supreme Court: In [2018] UKSC 25, the court unanimously allowed the Competition and Markets Authority’s appeal and restored Collins J’s order dismissing the claims.
2. Court of Appeal: In [2016] EWCA Civ 719; [2016] Bus LR 1200, the court allowed the claimants’ appeals, declared the Office of Fair Trading’s unequal treatment unlawful and ordered repayment of their penalties with interest and costs.
3. High Court, Administrative Court: In [2015] EWHC 84 (Admin), Collins J dismissed the judicial review claims because avoiding repetition of the mistaken assurance objectively justified the different treatment.