The Competition and Markets Authority has the power to require documents and evidence from overseas under the Competition Act 1998, the Court of Appeal has found.

The case is centred on the relationship between German incorporated motor manufacturers BMW and VW and their subsidiaries incorporated in the UK. The CMA, investigating suspected anti-competitive agreements by vehicle manufactures and trade associations, argued that the subsidiaries form part of an undertaking with their parent companies.

In its investigation, the CMA requested documents and information. Eventually, BMW said it would not respond further ‘because it had been advised that the CMA did not have the power to require it to respond’ while VW said the CMA ‘did not have vires under section 26 [of the Competition Act] to compel a foreign company to produce documents that were located overseas’.

The administrative court and Competition Appeal Tribunal found in favour of BMW and VW.

However, ruling that section 26 has extraterritorial effect, Sir Julian Flaux, Lord Justice Coulson and Lord Justice Green said: ‘In our judgment the scheme, context and purpose of section 26…support the conclusion that parliament intended it to have extraterritorial effect.'

They added that: ‘If the CMA is denied the ability to exercise section 26 extraterritorially, and is limited to exercising it only against legal entities physically connected to the United Kingdom, a gaping lacuna in the effectiveness of the CMA to perform its statutory function would arise.’

Commenting on the judgment, CMA’s chief executive Sarah Cardell said: ‘Our cases increasingly involve cross-border, multi-national businesses and information requests are a key tool by which we can investigate whether those businesses have been engaged in unlawful conduct.' The unanimous judgment 'strengthens the CMA’s ability to investigate, enforce against and deter any anti-competitive conduct that harms consumers, businesses and markets in the UK,' Cardell said.