The Competition and Markets Authority v Concordia International RX (UK) Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Marcus Smith |
| Judgment Date | 12 December 2018 |
| Neutral Citation | [2018] EWHC 3448 (Ch) |
| Date | 12 December 2018 |
| Court | Chancery Division |
| Docket Number | Claim No: CP-2017-000009 |
[2018] EWHC 3448 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
COMPETITION LIST (ChD)
Rolls Building
7 Rolls Building
Fetter Lane
London EC4A 1NL
THE HONOURABLE Mr Justice Marcus Smith
Claim No: CP-2017-000009
Mr Jason Beer, QC, Mr Rob Williams and Ms Charlotte Ventham (instructed by The Competition and Markets Authority) for the Claimant
Mr Mark Brealey, QC (instructed by Morgan, Lewis and Bockius UK LLP) for the Defendant
Hearing date: 5 December 2018
Approved Judgment (Open)
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
A. INTRODUCTION
Under section 28 of the Competition Act 1998, the High Court has power to issue warrants enabling the Competition and Markets Authority (the “CMA”) to enter and search business premises for the purposes of an investigation under the Competition Act 1998. Such applications are made without notice to the occupier or person in charge of the premises which are the subject of the warrant, and the application is made in private. Where a warrant under section 28 is granted, it may be challenged by a subsequent application to the High Court.
On 5 October 2017, the Claimant – the CMA – applied to Mann J for various warrants under section 28 against (amongst others) the Defendant, Concordia International Rx (UK) Limited (“Concordia”).
The application was supported by certain confidential material, which is entirely usual in such applications. After hearing submissions from the CMA, and considering the evidence, Mann J granted various section 28 warrants, including a warrant against Concordia (the “Warrant”).
The Warrant applied to documents relating to an investigation into suspected anticompetitive behaviours in relation to a number of pharmaceutical drugs (described in the Warrant as “relevant products”). The relevant products – set out in Annex A to the Warrant – included:
(1) Carbimazole 5mg and 20mg tablets (“Carbimazole”); and
(2) Hydrocortisone 10mg tablets (“Hydrocortisone”).
By an application notice dated 10 October 2017, Concordia applied to have the Warrant discharged to the extent that it applied to Carbimazole and Hydrocortisone. Concordia does not seek to have the Warrant discharged in relation to any other relevant products.
That application is due to be heard on 19 December 2018. Before this application can be heard, it is obviously necessary to determine whether Concordia can have sight of the confidential material referred to in paragraph 3 above. This judgment deals with that anterior issue.
It is necessary to begin by setting out the context in which an application to set aside or vary a section 28 warrant takes place.
B. THE CONTEXT
It is now clear law – following the decisions of the Supreme Court in R (Haralambous) v. Crown Court at St Albans [2018] UKSC 1 (“ Haralambous”) and of the Court of Appeal in this case [2018] EWCA Civ 1881 (“ Concordia”) 1 – that the court may, on the making of an ex parte application for a warrant, rely upon material which cannot be disclosed to the subject of the warrant on the grounds of public interest immunity (“PII” and “PII Material”): Haralambous at [27] and [37]; Concordia at [27].
Where the issue of a warrant is subsequently challenged, the court must operate a “closed material procedure”, whereby the court considers the PII Material, which is not, however, disclosed to the subject of the warrant (or to the subject's legal representatives): Haralambous at [43], [51], [52] and [59]; Concordia at [27]. Neither the subject of the warrant, nor the subject's representatives, will be present during the “closed material procedure”. 2
Of course, it will be necessary, before the challenge to the warrant is heard, to determine the proper scope of the PII asserted by the CMA. The appropriate time for the court to form a definite view as to what is protected by PII is upon an application having been made by the subject of a warrant for the warrant in question to be varied or discharged: Concordia at [31]. As a matter of practicality, the appropriate time will have to be sufficiently before the hearing of the application to challenge the warrant so as to enable both parties to prepare knowing what material will be available in the “open” part of the proceedings and what material will be available only in the “closed” part of the proceedings.
As to the process that must be followed when considering whether material is protected by PII:
(1) The general rule is that the court should consider first representations by the party asserting PII (in this case, the CMA), then by the party the subject of the warrant (Concordia) in “open” proceedings, then further representations by the party asserting PII in the subject's absence in “closed” proceedings: Commissioner of Police for the Metropolis v. Bangs [2014] EWHC 546 (Admin) (“ Bangs”) at [31].
(2) So far as possible, purely legal matters should be resolved in the “open” proceedings: Bangs at [32].
(3) Where it is necessary to hold “open” and “closed” hearings, the judge must give “open” and “closed” judgments. It is highly desirable, in the “open” judgment, to identify every conclusion in that judgment which has been reached in whole or in part in the light of points made in evidence referred to in the “closed” judgment and state that this is what has been done: Bank Mellat v. HM Treasury (No 2) [2013] UKSC 38 at [68].
The hearing before me on 5 December 2018 was conducted according to this process. This is the “open” judgment, which resolves those matters capable of being dealt with without referring to the “closed” material (the “Open Judgment”). There is a separate,
“closed” judgment (the “Closed Judgment” [2018] EWHC 3450 (Ch)) which deals with matters arising during the “closed” part of the PII application I heard. This judgment identifies those conclusions which are based upon the findings and holdings I make in the Closed Judgment.
C. THE CMA'S ASSERTION OF PUBLIC INTEREST IMMUNITY
(1) The sensitive material
The material over which the CMA asserted public interest immunity comprised:
(1) The first affidavit of Ms Ann Pope, the Senior Director for Anti-Trust Enforcement in the CMA, sworn on 29 September 2017 (“Pope 1”). Pope 1 attached one exhibit (“Pope 1 Exhibit”).
(2) The first affidavit of Mr Andrew Groves, a Director in the Competition, Consumer and Markets Group in the Enforcement Directorate of the CMA, sworn 29 September 2017 (“Groves 1”). Groves 1 attached one exhibit (“Groves 1 Exhibit”).
(3) The first affidavit of Ms Susan Oxley, Project Director, Competition, Consumer and Markets Group at the CMA, sworn 29 September 2017 (“Oxley 1”). Oxley 1 attached one exhibit (“Oxley 1 Exhibit”).
(4) The first affidavit of “X” (the name of the deponent is redacted on grounds of PII), sworn 29 September 2017 (“X 1”). X 1 attached one exhibit (“X 1 Exhibit”).
(5) The CMA's skeleton argument in support of its application for the Warrant before Mann J (the “CMA Skeleton”).
(6) A transcript of the ex parte hearing before Mann J on 5 October 2017 (the “Transcript”).
(7) The judgment of Mann J – Neutral Citation [2017] EWHC 2577 (Ch) – in which he determined the CMA's application.
I shall refer to these materials as the “Section 28 Application Materials”, for they all relate to the application under section 28 of the Competition Act 1998 made before Mann J. The Section 28 Application Materials will – self-evidently – be of great importance in Concordia's application to vary the Warrant.
The CMA does not suggest that the entire content of the Section 28 Application Materials needs to be protected by PII. Indeed, very early on in these proceedings, I ordered 3 the CMA to make disclosure of all of the Section 28 Application Materials, provisionally redacted:
(1) As the CMA considered necessary in the public interest; and
(2) For relevance.
The redactions to the Section 28 Application Materials make clear the reason for the redaction: redactions due to relevance are coloured yellow (“Relevance Redactions”); redactions due to the sensitivity of the material, and which would otherwise be relevant to Concordia's application, are coloured green (“PII Redactions”). Since that initial disclosure, the CMA has released a further version of the Section 28 Application Materials, scaling back the extent of the redactions.
In this judgment, I am concerned to assess whether the non-disclosure of the PII Redactions can be justified – as the CMA assert – on public interest grounds. I am not concerned with the Relevance Redactions.
(2) The basis for the assertion of PII by the CMA
So far as possible, a party asserting PII must indicate to the other parties that an application asserting PII is being made and state – without disclosing the material said to be sensitive – at least the category or nature of the sensitive material at issue. Exceptionally, it may be that even disclosing the category or nature of the sensitive material will reveal the very thing that the party asserting PII is seeking to protect, in which case the category or nature of the sensitive material need not be specified unless and until the court has heard the application in “closed” session. 4
In this case, the CMA contended that this was such an exceptional case, where disclosure of even the category or nature of the sensitive material could not be made without thereby disclosing the very thing that the CMA was seeking to protect.
For the reasons given in Section C of the Closed Judgment, I find that the CMA was correct in asserting that even the...
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