Mr Justice Marcus Smith:
Note: This is an open judgment, produced after a hearing in private. In order to safeguard confidential information and potentially information protected by public interest immunity, certain redactions have been made by Mr Justice Marcus Smith, indicated as follows: "[…]" Until determination of any public interest immunity questions, the redactions to the judgment will be kept under review by the Judge.
- This is an application by the Competition and Markets Authority (the "CMA") for warrants to search six business premises in connection with suspected infringements of UK competition law.
- The warrants are sought pursuant to section 28 of the Competition Act 1998.
- The parties against whom warrants are sought (the "Suspect Undertakings") are listed in Annex 1 to this Ruling. The premises that the CMA is applying for warrants to enter ("the Premises") are listed in Annex 2 to this Ruling. The Premises, I stress, are all business premises.
- The section 28 warrants are sought in support of a section 25 civil competition law enforcement investigation. Section 25 permits the CMA to investigate suspected competition law infringements.
- A section 28 warrant is an intrusive form of warrant. As Ms Ventham, who appears for the CMA put it in her written submissions, such a warrant has a number of features which distinguish it from the CMA's other powers:
(1) It enables the CMA to obtain documents without prior notice, so as to avoid or mitigate the risk of their destruction.
(2) It allows the CMA itself to search for relevant material.
(3) It enables the CMA to enter premises by force, if necessary.
- It is because of these features, obviously, that an application for a section 28 warrant has to be made to a Justice of the High Court, supported by evidence. For reasons that are obvious when the requirements for the grant of a section 28 warrant are considered, the application is made in the absence of the party against whom the warrant is sought. Given that this is an ex parte application, the CMA has and recognises that it has an obligation of full and frank disclosure.
- In this case, the applications against the Suspect Undertakings are supported by evidence from Mr Sean McNabb, Director of Cartel Enforcement of the CMA. I have before me two affidavits from Mr McNabb ("McNabb 1" and "McNabb 2"), as well as a formal statement from Mr Max Valk, also of the CMA. Annex 3 to this Ruling sets out a list of all of the material produced by the CMA on this application.
- There are various grounds upon which the CMA may apply for a section 28 warrant. In this case, the CMA relies upon section 28(1)(b). Under this provision, the court may issue a warrant if it is satisfied that there are reasonable grounds for suspecting that:
(1) The first condition. There are, on the premises in question, documents which the CMA has the power to require to be produced under section 26 of the Competition Act 1998. I shall refer to this as the "first condition". Section 26 gives the CMA the power to require persons to produce specified documents or information which it considers relate to any matter relevant to an investigation. The effect of the first condition is that the CMA must have reasonable grounds for suspecting that there are documents relevant to an investigation on the premises in question.
(2) The second condition. The "second condition", as I shall refer to it, is that if the documents under the first condition were required to be produced, they would not be produced, but would be concealed, removed, tampered with or destroyed.
- A "document", I should note, is a widely drawn concept. It includes information recorded in any form: see section 59(1) of the Competition Act 1998. Under other, similar, legislation, it is clear that documents are a widely drawn and widely understood concept, including not only individual documents (in whatever form) but devices such as computer hard drives. By an analogy of reasoning, the same applies to mobile phones, laptops and tablets.
- The grant of a warrant enables the CMA to exercise a number of statutory powers, which are set out in section 28(2) and section 28(3) of the 1998 Act, including the power to enter and search premises, to make copies of documents and, in certain defined circumstances, to take possession of the documents themselves for a period of up to three months. The CMA may further exercise additional powers under section 50 of the Criminal Justice and Police Act 2001, once lawfully present on the premises.
- In terms of the approach of this court to applications of this nature, the law has been very fully set out in the decision of the Court of Appeal in Competition and Markets Authority v. Concordia International RX (UK) Limited [2018] EWCA Civ 1881. In that case, the CMA had obtained a warrant, again pursuant to section 28 of the Competition Act 1998, to search Concordia's business premises. Concordia, as it was entitled to, challenged the warrant. The CMA sought to withhold from disclosure to Concordia certain material on which it had relied on the grounds of public interest immunity ("PII"). The Court of Appeal held that an application to vary or discharge a warrant issued under section 28 should be approached in line with the principles applicable in the comparable regime under section 8 of the Police and Criminal Evidence Act 1984. Accordingly, a court should have regard, at an inter partes challenge to the section 28 warrant, to the entirety of the evidence on the basis of which that warrant was granted, including evidence which was subject to PII and which would therefore be withheld from the target of the warrant. Such a course, so held the Court of Appeal, would not amount to an impermissible, closed material procedure. The Court of Appeal further held that the appropriate time for the court to determine what material should be redacted on the grounds of PII, in the event of a challenge to the warrant, was upon such application being made, rather than the ex parte application stage itself.
- The upshot of this course is that undertakings that are the subject of section 28 warrants are often only served with the warrants themselves, which say nothing about the basis upon which the warrants have been obtained. That makes challenge of those warrants extraordinarily difficult. I am very well aware of the need to balance the efficacy of the section 28 process with the needs of justice, but it does seem to me that – as long as the section 28 process is not prejudiced – an undertaking served with a section 28 warrant is entitled to as much information as the CMA can safely give them.
- The anti-competitive conduct being investigated by the CMA in this case arises in relation to the demolition industry: that is, the sector comprising firms that demolish and dismantle buildings and structures. Much of this work is sourced by competitive tender and the markets in which these firms operate, […].
- The anti-competitive conduct being investigated by the CMA turns on […].
- Although the CMA has provided me with more detail regarding this infringement, I do not need to be more specific than this for the purposes of this Ruling. It goes without saying, but I say it nonetheless, that, if established, such conduct would amount to an extremely serious infringement of competition law.
- Mr McNabb's affidavits in support of this application are based upon various sources of information. These sources are described in Annex 4 to this ruling. I shall, in the body of this ruling, simply refer to the sources as "Source 1", "Source 2", "Source 3" and so on.
- I turn, then, to the two conditions that have to be established in order for there to be jurisdiction to grant a section 28 warrant.
- The first condition, as I have described, requires there to be reasonable grounds for suspecting that there are documents relevant to an investigation on the premises to be searched. As to this:
(1) I am satisfied from Source 1, as corroborated in part by Source 2, that there are reasonable grounds for suspecting that the anti-competitive conduct that I have described took place, clearly implicating one of the Suspect Undertakings.
(2) Since the anti-competitive conduct here suspected involves a cartel, that implies the involvement of other undertakings. I am satisfied from Source 1, and Sources 3 and 4 in combination, that there are reasonable grounds for suspecting that a number of natural persons within all of the Suspect Undertakings were involved.
(3) I am satisfied from Sources 1 and 2 that there are reasonable grounds for suspecting that at least part of the anti-competitive conduct that I have described will be documented – […].
(4) I am satisfied from Source 3 that there are reasonable grounds for suspecting that documents regarding the anti-competitive conduct will be located at the Premises.
- Taken together, I am satisfied that the first condition is met.
- I should add that Mr McNabb, in his evidence, has, quite properly, identified factors that may suggest that documents which once existed might already have been disposed of. There is no suggestion that any of the Suspect Undertakings are actually aware of the CMA's interest but, obviously, any prudent cartelist will keep retained documents to a minimum and there may be ordinary document retention and destruction policies in play. There are concerns that there may be some information available to the Suspect Undertakings that might lead them to suspect that the CMA is looking into the industry and that this fact might trigger the destruction of documents. I stress that there is no evidence of actual awareness on the part of the Suspect Undertakings, but the CMA have drawn this danger to my attention. The triggers that might have caused an awareness on the part of the Suspect Undertakings of the CMA's interest include the CMA's prior overt interest in this industry and what I shall refer to as Non-Source 5 and Non-Source 6. These are sources of evidence which are described in Annex 4 to this Ruling which the CMA has drawn, quite properly, to my attention, but which are not relied upon in support of the CMA's section 28 application. These sources of evidence were identified to me pursuant to the CMA's full and frank disclosure obligation. I have taken them into account in that light, not as positive evidence in support of the application but as matters that I ought to know about in case they make a difference to my decision. I am grateful to the CMA for having raised them. I have considered them, and they make no difference to my decision. I find that the first condition is satisfied.
- I turn, then, to the second condition: are there reasonable grounds for suspecting that if these documents were required to be produced, they would not be produced but would be concealed, removed, tampered with or destroyed. I regard it as a safe inference that parties involved in a cartel will want to keep their involvement secret. I consider that, given the nature of the cartel suspected in this case, and the fact that documents are suspected as having been produced, it can be inferred that if a request for the production of documents is made, these documents will not be produced, but will be concealed, removed, tampered with or destroyed. I consider that this point, in itself, gives rise to a reasonable ground for suspicion and I find that the second condition is met.
- Non-Sources 5 and 6 went to another point that the CMA made by way of full and frank disclosure. These sources have been available to the CMA for some time, but the CMA did not launch an investigation as a result of these sources. I can entirely understand why the CMA did not take matters further as a result of these sources. I have noted the information, but it makes no difference to the decision that I have come to.
- I conclude that the conditions for the issuing of the section 28 warrants are met and I can see no other reason why those warrants should not be made. I therefore make them.
- The specific details regarding the warrants - the persons supervising, persons involved, scope of searches, etc –have been explained to me. I do not address these matters in this ruling, but I should stress they have been addressed before me in detail, both in writing and orally by Ms Ventham. I am satisfied that section 28 warrants should be granted and that they should be granted in the terms sought.
Annex 1: Suspect Undertakings
Paragraph 3 of the Ruling
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(5) |
[...] |
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(6) |
[...] |
Annex 2: Premises
Paragraph 3 of the Ruling
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Annex 3: Materials produced by the CMA on the application
Paragraph 7 of the Ruling
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(1) |
Claim forms |
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Draft warrants |
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Explanatory Note to warrants under sections 28 and 29 of the Competition Act 1998 |
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Authorisations |
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Draft Orders |
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Affidavit of Sean Martin McNabb sworn on 20 February 2019 |
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(7) |
Second affidavit of Sean Martin McNabb sworn on 5 March 2019 |
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(8) |
Witness statement of Max Valk dated 5 March 2019 |
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(9) |
Specimen warrants |
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(10) |
Undertakings |
Annex 4: Sources of information
Paragraph 16 of the Ruling
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Source 1 |
[...] |
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Source 2 |
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Source 3 |
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Source 4 |
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Non-Source 5 |
[...] |
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Non-Source 6 |
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