The Competition And Markets Authority (CMA) v Concordia International RX (UK), Court of Appeal - Civil Division, August 07, 2018, [2018] EWCA Civ 1881,[2018] WLR(D) 516

Resolution Date:August 07, 2018
Issuing Organization:Civil Division
Actores:The Competition And Markets Authority (CMA) v Concordia International RX (UK)

Neutral Citation Number: [2018] EWCA Civ 1881

Case No: A3/2017/3226



Business and Property Courts of England and Wales



Mr Justice Marcus Smith

[2017] EWHC 2911 (Ch)

Royal Courts of Justice

Strand, London, WC2A 2LL

Date: 07/08/2018


Lady Justice King

Lord Justice Simon


Dame Elizabeth Gloster

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Jason Beer QC, Rob Williams and Charlotte Ventham (instructed by Legal Service of the Competition and Markets Authority) for the Appellant

Mark Brealey QC (instructed by Morgan, Lewis and Bockius UK LLP) for the Respondent

Hearing date: 17 May 2018

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Judgment ApprovedLady Justice King:

1. Under sections 28 and 28A of the Competition Act 1998 (``CA 1998''), the High Court has the power to issue warrants enabling the Competition and Markets Authority (``CMA'') to enter and search business or domestic premises for the purposes of an investigation under the CA 1998. Such applications are made without notice to the occupier or person in charge of the premises which are subject of the warrant. In those circumstances, the grant of the warrant may be challenged by a subsequent application to the High Court.

2. The case subject to this appeal is the first occasion on which such a challenge has been made and, as such, raises an important point of principle concerning the ability of the CMA to obtain, and then to defend, warrants issued by the High Court to enable them further to investigate alleged anti-competitive behaviour on the one hand, and to enable the subject of such warrants to challenge the making of them on the other.

3. Specifically, this is an appeal against an order made by Mr Justice Marcus Smith on 20 November 2017 whereby he ordered that the application of Concordia International RX (UK) Limited (``Concordia'') to vary or discharge a warrant issued under section 28(1)(b) CA 1998 must be determined without the court relying upon any relevant material the disclosure of which had been withheld from Concordia on the grounds of public interest immunity (``PII'').

4. It is agreed between the parties that in the light of the recent Supreme Court decision in R (Haralambous) v Crown Court at St Albans [2018] UKSC 1, [2018] AC 236 (``Haralambous'') the appeal against the judge's order must be allowed and that, in the light of the decision in Haralambous (contrary to the judge's judgment) any judge considering an application to set aside or vary a warrant is entitled, and indeed is obliged, to consider all relevant material regardless of the fact that some of it may be subject to PII.

5. Concordia seeks to cross-appeal (out of time) that part of the judgment by which the judge declined to use a confidentiality ring as a means of protecting sensitive material which qualifies for PII.

6. Given the importance of the issues, and the fact that there are two important ancillary issues remaining unresolved, the parties asked, and the court has agreed notwithstanding that the appeal must in any event be allowed, to hear argument and give a judgment in relation to these two further matters raised (i) as a separate ground of appeal on the part of the CMA: ``the procedural issue'' and (ii) by the late cross appeal by Concordia: ``the PII issue''.

7. The procedural issue (Ground 4 of the Grounds of Appeal) is whether the judge fell into error in holding (in his judgment at [70](ii) and (iii)) that the questions of whether or not material is protected by PII and the scope of disclosure in the event of a challenge are matters to be determined as part of the application for the warrant itself (as opposed to at the hearing of any inter partes challenge).

8. The PII issue is as to whether material determined to be subject to public interest immunity and therefore (pursuant to Haralambous) to be taken into account by the judge when considering an application to vary or discharge a warrant can, and/or should, notwithstanding the PII character of the information, be disclosed by the CMA into a `tight' confidentiality ring compromised of Concordia's external lawyers.

Investigations under the Competition Act 1998: Obtaining a warrant to enter business or domestic premises without notice

9. Under section 25 CA 1998, the CMA may conduct investigations into suspected infringements of competition law. The relevant infringements are anti-competitive agreements and abuses of a dominant position which contravene UK and EU competition law as provided for in six specified cases set out in section 25(2) - (7) CA 1998. In each of these six cases, the threshold for investigation is that the CMA has reasonable grounds to suspect an infringement of the prohibition in question.

10. Under section 26-28A CA 1998, the CMA has various powers to obtain information and evidence in connection with investigations made under section 25. In particular, in relation to the present case:

a) Section 26 gives the CMA the power to require documents and information which the CMA considers relate to any matters relevant to the investigation.

b) Section 27 is a power to enter business premises without a warrant.

c) Sections 28 and 28A enable the CMA to apply to the High Court for the issue of a warrant, giving the CMA the power to enter business or domestic premises.

11. Section 28 CA 1998 applies in three types of case. Two concern cases in which the CMA has sought to exercise its powers under sections 26 or 27 CA 1998 but has failed to obtain the evidence which it seeks (sections 21(a) and (c) CA 1998). The third case (section 28(1)(b) CA 1998) applies where the CMA has reasonable grounds to suspect that:

i) There are documents on the premises which the CMA has power to require to be produced under section 26; and

ii) ``if the documents were required to be produced, they would not be produced but would be concealed, removed, tampered with or destroyed''.

12. The present case concerns a warrant granted under section 28 which enables the CMA to enter and search business premises without first giving notice of its intention to carry out inspections.

13. It goes without saying that the power to enter and inspect business or domestic premises without notice is a draconian one and the granting of such warrants is strictly controlled. Sections 28(7A)(a) and 28(8A)(a) provides that an application for a warrant must be made in accordance with rules of court. The relevant rules are contained in a Practice Direction: Application for a Warrant under the Competition Act 1998 (the ``Practice Direction'') which, in so far as is relevant, provides as follows:

a) The application is made without notice (ex-parte) to a High Court Judge (paragraphs 2.1-2.3).

b) Specific provision is made for the confidentiality of the hearing of the application and the evidence filed in support and the court record cannot be inspected or copied by any person either before or after the hearing without the permission of the court. (paragraphs 3.1 - 3.3 and 6.1).

c) The application must be supported by evidence sworn on oath and must cover all matters on which the CMA relies and all material facts of which the court should be aware including a number of specified matters of substance (paragraphs 4.2-4.3).

d) There are safeguards which prescribe the content of the warrant, the authorisation of the persons who will execute the warrant and the procedural steps to be taken in executing the warrant (paragraphs 4.4, 6.2, 7.1 and 7.3). The material to be provided to the target of the warrant is also specified, but does not include disclosing the supporting evidence.

e) There is provision for an application to the court to vary or discharge the warrant (paragraphs 9.1-9.4). Such an application should be made to the judge who granted the warrant if he is available (paragraph 9.4).

Factual Backdrop

14. The warrant in question relates to the business premises of Concordia. It was granted by Mann J on 5 October 2017 and relates to an investigation into anti-competitive contracts in relation to four drugs. At the time of the application for the warrants, two of the drugs in question, hydrocortisone and carbimazole, had been the subject of ongoing investigations for some 18 months. The CMA had conducted its investigation by issuing requests for information pursuant to section 26 CA 1998. In response, Concordia had disclosed many hundreds of documents. The CMA had moved on to issue Concordia with its written case (the statement of objections) and Concordia had responded with its written case in defence. Concordia has also made submissions at an oral hearing conducted by the CMA on 20 July 2017.

15. The CMA received additional information relating amongst other things to communications held on personal devices. By an affidavit in support of its application for a warrant under sections 28 and 28A CA 1998, the CMA said that, if substantiated, such additional evidence would support a case that there had been an explicit but informal market sharing arrangement between Concordia and Actavis UK, the pharmaceutical company who has an effective monopoly in relation to the supply of hydrocortisone tablets in the UK.

16. The warrants, having been granted, were executed on 10 October 2017. Concordia applied to vary the warrant to exclude hydrocortisone and carbimazole on the basis that it had been cooperating with the CMA investigations and that there was no basis upon which to suspect that it would conceal, remove, tamper with or destroy evidence.

17. On 11 October 2017 at a directions hearing, Marcus Smith J gave directions for the hearing of a preliminary issue to decide whether the CMA was required to disclose to Concordia all of the material which had been before Mann J at the ex parte application. This...

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