Balmoral Tanks Ltd & Anor v Competition And Markets Authority

Under article 101 TFEU and the Competition Act 1998, an exchange of commercially sensitive pricing information can constitute an object infringement after a single meeting. The assessment is contextual. The market, product, information exchanged and its capacity to reduce uncertainty must be considered. Pricing information is not automatically unlawful.

An undertaking that refuses to join a cartel may nevertheless incur liability for a separate information-exchange infringement. Conduct need only be treated as part of a single continuous infringement where the undertaking intended to contribute to the cartel’s common objectives. Different penalties are permissible where existing penalties and deterrence objectively justify the distinction.

Balmoral entered the market for cylindrical galvanised steel tanks in late 2011. At a meeting on 11 July 2012, it refused to join an existing cartel but discussed current and future pricing with cartel participants.

The CMA issued two decisions on 19 December 2016. The Main Cartel Decision found that Balmoral was not part of the cartel. The Information Exchange Decision found that Balmoral had participated in a separate concerted practice contrary to article 101 TFEU and section 2 of the Competition Act 1998, and imposed a penalty of £130,000 on Balmoral and its parent. The CAT dismissed Balmoral’s appeal: [2017] CAT 23. The central issues were whether the two decisions were inconsistent, whether the information exchange was an object infringement, and whether imposing a penalty only on Balmoral breached equal treatment.

The appeal was dismissed. Lord Justice Newey gave the judgment, with the Chancellor of the High Court agreeing.

1. Distinct infringements. The Main Cartel Decision and the Information Exchange Decision could properly stand together. Although both concerned pricing, the main cartel involved longstanding bid-rigging, customer allocation and price-fixing, whereas the separate infringement concerned an exchange of commercially sensitive information which reduced uncertainty about pricing. The two infringements had different ingredients. Difficulties that might arise in follow-on damages proceedings did not justify treating Balmoral as a participant in the main cartel.
2. Single and continuous infringement. Balmoral would have participated in the main cartel’s single and continuous infringement only if it had intended to contribute to the common objectives pursued by the cartelists and had accepted the risk of their planned conduct. Balmoral rejected customer allocation, price-fixing and bid-rigging and did not share those objectives. The Court declined to decide whether a competition authority is obliged to characterise conduct as one overall infringement where objective reasons for doing so exist.
3. Object infringement. The object and effect alternatives in article 101 TFEU and section 2 of the Competition Act 1998 are disjunctive. Once an anti-competitive object is established, effects need not be examined. The correct assessment of an information exchange is contextual. The CAT was entitled to consider the nature of the pricing information, the market and product, the significance of future pricing intentions, and the capacity of the exchange to influence later bids. A single meeting could suffice, and the CAT had given adequate reasons for finding that the exchange reduced uncertainty.
4. Penalty. The equal treatment principle did not require identical penalties. Balmoral was not in the same position as the existing cartel participants, which had already received substantial penalties for conduct covering the meeting and the wider cartel. Having regard to seriousness and deterrence under section 36(7A) of the Competition Act 1998, the CMA was entitled to impose an additional fine on Balmoral alone.

• Court of Appeal (Civil Division): dismissed Balmoral’s appeal against the CAT decision.
• Competition Appeal Tribunal: dismissed Balmoral’s appeal against the CMA’s Information Exchange Decision on liability and penalty: [2017] CAT 23.