The UK’s Financial Conduct Authority (FCA) is stepping up competition law enforcement in the financial sector, over which it has concurrent competition law enforcement powers alongside the Competition and Markets Authority (CMA).
Action by the FCA last year resulted in UK financial organisations being fined £586 million, according to data from the watchdog. Only a small fraction of this amount relates to fines for competition law violations. The first FCA competition decision dates back to 2019, when it found that 3 asset management firms breached competition law. The fines imposed by the FCA were relatively small and the case hinged on a leniency application rather than proactive enforcement by the FCA.
However, with the UK’s withdrawal from the EU, things are bound to change. Competition cases in the UK financial sector will no longer fall within the European Commission’s exclusive jurisdiction but will now be subject to the FCA’s scrutiny too.
To get ready, the FCA has been working to update its competition enforcement procedures and revised guidance was issued earlier this month. Among other things, the new FCA competition enforcement guidance include the following changes:
- remove references to the FCA enforcing Articles 101 and 102 of the Treaty on the Functioning of the European Union
- include a section clarifying the FCA’s competition powers following EU withdrawal
- make clear that since April 2019 our competition law jurisdiction extends to the provision of claims management services in Great Britain
- make certain procedural changes that reflect changes adopted by the CMA in its procedural guidance (CMA8 Guidance on the CMA’s Investigation Procedures in Competition Act 1998 cases). These include:
- issuing any draft penalty statement at the same time as the statement of objections
- providing more detail on streamlined access to file arrangements
- the discontinuation of ‘Formal Complainant’ status
- requiring all interim measures applications to be accompanied by a declaration of truth from the applicant
- describe our practice of applying penalty reductions where a party obtains approval for a voluntary redress scheme
In addition to the specific changes listed above, the FCA has made minor drafting changes for clarity and/or to reflect their practical experience with the 2019 competition investigation.
The main areas of competition law enforcement focus for the FCA currently are expected to be:
- data markets – after benchmark providers and investment companies raised concerns related to high entry barriers for new entrants; and
- digital platforms – through the Digital Regulatory Cooperation Forum, which includes the CMA, Ofcom and the Information Commissioners’ Office.
Companies in the digital financial sector should audit their competition law compliance programs as a matter of priority. If you would like to discuss in confidence how to carry out an audit or any specific issues, please get in touch with your Squire Patton Boggs lawyer or the authors of this blog post.