In a unanimous judgment, the Court of Appeal of England and Wales (CoA) reaffirmed the Competition and Market Authority’s (CMA) power to require overseas companies with no branches in the UK to produce documents and information when investigating suspected anticompetitive conduct.  The CoA considered that not allowing the CMA to obtain information from overseas companies would create a “gaping lacuna” in the CMA’s ability to perform its statutory duties. 

The CAT and High Court put the brakes on the CMA’s extraterritorial powers

The judgment follows the CMA’s appeal of a joint ruling by the Competition Appeal Tribunal (CAT) and the High Court issued in February 2023.  The CAT and the High Court considered applications for judicial review by BMW and Volkswagen in the context of the CMA’s ongoing investigation into the recycling of end-of-life vehicles.  The two applications raised a common legal issue: the territorial scope of section 26 of the Competition Act 1998 (CA98) – one of the CMA’s principal information-gathering powers in cartel and abuse of dominance investigations. 

In their joint ruling, the CAT and High Court agreed with BMW and Volkswagen that the CMA did not have the power to require parent companies based in Germany to comply with section 26 notices or to fine them for non-compliance.  The CAT found that the CMA’s interpretation of the statute was “aggressively extraterritorial” and stated “there is, quite simply, no such power”.

The CMA argued that section 26 did allow it to compel the production of information from overseas companies based on its interpretation of the phrase “any person” used in the section.  The agency submitted that a section 26 notice validly addressed to BMW as an “undertaking” would extend to all legal or natural persons within that undertaking, wherever situated. 

The CAT considered this interpretation to be too broad and that it should instead be limited to specific natural or legal persons (i.e., specific corporate entities).  Specifically, the CAT found that a section 26 notice can be issued to an undertaking only “via a natural or legal person with sufficient connection to the jurisdiction”.  The CAT noted that undertakings “(particularly these days) will, more often than not, be international”.  Under the CMA’s interpretation “a single section 26 notice, addressed to an undertaking, would trigger an obligation to respond in every single legal or natural person within that undertaking”.  The CAT considered this too broad, and the CMA’s requests ultra vires section 26.

Where a notice is addressed to an undertaking, the question of whether a company within that undertaking is obliged to respond depends on “whether – considering their status as natural legal persons, and disregarding their position as a part of an undertaking – they have or do not have a UK territorial connection.  If they do, then they must respond as if the notice were directed to them specifically.  If they do not, then the presumption against extraterritoriality applies, and there is no obligation to respond”.

The CAT deliberately avoided seeking to delineate a “UK territorial connection”, stating that “there will be difficult borderline cases which we want to avoid”, but considered that a company registered in the UK would have such a connection.

CMA receives green light from the Court of Appeal

The CMA appealed this joint ruling, arguing that it “substantially risks undermining our ability to investigate, enforce against and deter anti-competitive conduct that harms consumers, businesses and markets in the UK”.[1]  It appealed on two grounds:

  • Extraterritoriality.  The CMA argued that the general presumption against extraterritorial application of statutes should be rebutted.  The deliberate extraterritorial application of section 2 (prohibition of anticompetitive agreements) and section 18 (prohibition to abuse a dominant position) would be frustrated if section 26 CA98 did not also have extraterritorial effect.
  • Undertaking.  In the alternative, the CMA argued that the reference to “any person” in section 26(1) CA98 captured all documents held by all members of any undertaking provided any member of that undertaking was present in the UK.

The CoA overturned the first-instance judgment, confirming the CMA’s position that “any person” under section 26 includes “undertakings.  It is therefore “open to the CMA to exercise section 26 powers against any entity” whether located inside or outside of the UK.  The CoA found that a different interpretation would create a “perverse incentive for conspirators to move offshore to organise cartels directed at harming the United Kingdom market and they would be more or less immune from investigation”.  It held that there is nothing in “logic, policy, case law or legislative history” that supports the CAT’s restrictive interpretation.

  • No express territorial limits.  The CoA considered that section 26 falls under the umbrella of section 25 CA98 which is extraterritorial and facilitates the prohibitions in sections 2 and 18, which also have extraterritorial reach. 
  • Context and purpose support extraterritoriality.  The CoA recognised that cartels are, characteristically, covert and ever more international, with parties keeping information “close to the chest” to minimise the risk of detection.  The CoA considered the “conundrum” that the CMA faced in exercising its statutory duty to protect domestic markets and UK consumers in cases of this type where actors were located abroad. 
  • Principles of comity serve as a natural fetter.  The CMA recognised the practical limitations to its broad investigatory powers, such as the power to conduct dawn raids being limited to the UK.  The CoA found that these limits did not undermine a finding that Parliament intended to grant extraterritorial investigative and enforcement powers more generally. 
  • Effectiveness and practicality.  The CoA agreed with the CMA that if the agency could not use section 26 powers against foreign entities, its ability to perform its statutory task would be compromised.  It would render the CMA “largely toothless when confronting international cartels.”  The CoA also noted the potential consequences of a narrow interpretation in the digital era, where companies might find it easy to achieve practical immunity from CMA investigations.

Full speed ahead

The extraterritorial application of the CMA’s information-gathering powers has come into sharper focus following Brexit.  Before Brexit, the CMA could more easily obtain information from the European Commission and national competition agencies across EU Member States, as a member of the European Competition Network.  Following Brexit, the CMA has had to rely on other tools to obtain information from companies located in the EU.  The CMA has therefore welcomed the judgment.  Its Chief Executive, Sarah Cardell, said the 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”.[2]

Separately, the CMA expects to be granted stronger powers to enforce against non-compliance with its investigations.  Currently, the CMA can impose maximum fines of £30,000, as well as daily fines of £15,000 for non-compliance.  The Digital Markets, Competition and Consumers Bill (DMCC Bill), expected to come into force later this year, would allow the CMA to impose significantly greater fines of up to 1% of a business’ annual worldwide turnover and daily penalties up to a maximum of 5% of daily worldwide turnover for non-compliance.  The DMCC Bill will also explicitly clarify the extraterritorial scope of the CMA’s information-gathering powers.

[1]          See the CMA’s case page available at:

[2]         CMA case page: Suspected anti-competitive conduct in relation to the recycling of end-of-life vehicles.