Competition

Commitments – Office of Fair Trading (OFT) accepting commitments from intervening companies – Appellant appealing – Whether OFT failing to consider appellant’s representations

Skyscanner Limited v Competition and Markets Authority: Competition Appeal Tribunal: 26 September 2014

The Office of Fair Trading (the OFT), now the respondent Competition and Markets Authority (the CMA), accepted commitments from the interveners supporting the CMA (the interveners), pursuant to section 31A(2) of the Competition Act 1998 (the 1998 act). By the commitments, the interveners agreed to modify their behaviour in accordance with certain principles, the main element being the removal of the complete prohibition on discounting room-only rates by online travel agents and its replacement by limited discounting to closed groups.

The appellant price-comparison website and others had objected to the restriction on disclosure of specific price information outside the closed groups. The OFT had sought more evidence or supporting material from the appellant. The appellant appealed, under section 47(1)(c) of the 1998 act.

The appellant contended that the OFT had acted unlawfully in making the decision and that it should be quashed. In particular, as: (i) the OFT had failed to take into account properly or at all the representations that the appellant had made on the impact of the decision would have on the meta-search sector and/or inter-brand competition; (ii) the OFT had acted contrary to the policy and objectives of the act by putting in place the commitments without considering the potential anti-competitive consequences; and (iii) the decision had been ultra vires because the commitments had had the effect of requiring third parties to act in line with them, even though those third parties had not offered commitments and the OFT had not accepted commitments from those third parties.

The appeal would be allowed.

(1) The OFT had failed properly to consider or conscientiously to take into account the objection to the proposed commitments raised by the appellant and others. That objection had centred on the restriction on disclosure of specific price information outside the closed groups established as part of the commitment arrangements. It was not clear whether that had been because the OFT had closed its mind to the point or whether it had been unable to appreciate the potential significance for price transparency, and hence for competition, of what had been said.

In either case, the OFT had failed properly to investigate a plausible point further and instead had insisted on more evidence or supporting material from the appellant. In so doing, the OFT had acted unfairly and the process by which it had subsequently reached its decision had been procedurally improper (see [100] of the judgment).

R v Brent London Borough Council, ex p Gunning (1985) 84 LGR 168 applied; Tesco Stores Ltd v Secretary of State for the Environment [1995] 2 All ER 636 applied.

(2) The appeal on the ground of illegality failed. Assessing whether or not a particular restriction on conduct restricted competition was a matter of appreciation and expert judgment. The present case was one where expert appreciation was needed and the tribunal had to restrain from substituting another assessment for that of the OFT.

Further, it was not possible to state with a sufficient degree of certainty, on the information available, that the restriction on disclosure necessarily amounted to a restriction on competition, even though it might appear to be so. Accordingly, it could not be found that the OFT had infringed any overriding duty not to frustrate the purposes of the 1998 act.

However, the previously established procedural impropriety found its reflection in the irrationality of the decision.

The OFT had taken that decision without informing itself about the possible impact on price transparency of an obvious and clear restriction on disclosure of price information. In that way, it had failed to take account of a matter of which it ought to have taken account and had acted as no reasonable authority should act (see [152]-[154], [159] of the judgment).

Padfield v Minister of Agriculture, Fisheries and Food [1968] 1 All ER 694 considered; Boddington v British Transport Police [1998] 2 All ER 203 considered.

(3) The commitments had not bound third parties, other than in the sense that third parties who dealt with the interveners might be affected by them, as the interveners would be unable to contract in terms which breached the commitments. There was nothing unusual in that. It was not ultra vires for the OFT to accept commitments which affected the terms upon which the parties to those commitments might contract with third parties (see [168] of the judgment).

Kassie Smith QC (instructed by Maclay Murray & Spens LLP) appeared for the appellant; Kelyn Bacon QC and David Bailey (instructed by the General Counsel, Competition and Markets Authority) appeared for the CMA; Duncan Sinclair and Samar Abbas (instructed by Shoosmiths LLP) appeared for the intervener supporting the appellant; Alistair Lindsay (instructed by Slaughter and May) appeared for the first intervener supporting the CMA; Josh Holmes (instructed by King & Wood Mallesons LLP) appeared for the second intervener supporting the CMA; Tim Ward QC and Jessica Boyd (instructed by Freshfields Bruckhaus Deringer LLP) appeared for the third intervener supporting the CMA.