CMA imposes yet another fine for failure to comply with document requests under Section 109 Notices

The CMA today published a penalty notice addressed to Sabre Corporation in the context of its anticipated acquisition of Farelogix Inc, for its failure to comply with two Section 109 Enterprise Act Notices.  The anticipated acquisition is currently being examined by the CMA after its Merger Intelligence Committee identified the transaction as requiring further investigation (recent CMA statistics identified that 29% of the transactions it reviewed over the last year were detected through its Merger Intelligence Committee).

Section 109 Notices are used by the CMA to make a formal request to provide information or documents or to give evidence as a witness.  The notice sets out the information or documents that are required to be provided, the purpose for which the notice is given, and the deadline for complying with the request.  Failure to comply with the requirement set out in the notice, without reasonable excuse, may result in a penalty being imposed of up to £30,000.

In March and April 2019 the CMA issued Section 109 Notices requesting Sabre to provide documents responsive to a number of questions in the draft Merger Notice, with deadlines of 25 April and 30 April 2019.  On 28 June 2019 Sabre produced a further 444 documents that had previously been withheld from the CMA or had been provided in a more redacted form.  The documents had originally been designated as privileged but Sabre subsequently realised they did not contain legally privileged information.  Sabre argued that it had acted reasonably but the CMA concluded that its errors had been negligent and had not been caused by an event beyond Sabre's control.

This is the fourth time the CMA has imposed a penalty for failure to comply with Section 109 Notices.  In November 2017 the CMA imposed a penalty of £20,000 on Hungryhouse for failure to comply with a document request under a Section 109 Notice.  AL-KO Kober was fined £15,000 in May 2019 for having produced a large volume of documents more than four months after the deadline and Rentokil was fined £27,000 in the context of its acquisition of MPCL for failure to produce responsive documents by the relevant deadlines.  Compared to the level of fines imposed by the EU Commission for similar infringements (in May 2017 the Commission imposed a fine of €110 million on Facebook for having provided misleading information in the context of its acquisition of WhatsApp) these penalties remain low, but it is worth noting that in his letter to BEIS outlining proposals for reform of the UK competition regime, CMA Chair Andrew Tyrie proposed a turnover-based fining regime for the UK similar to that of the EU Commission.

The latest CMA penalty notice is a reminder to businesses of the importance to respond comprehensively and in a timely fashion to all CMA requests under Section 109 Notices.  This will require robust processes in order to identify the relevant responsive documents and a transparent approach with the CMA under which any concerns are raised with the CMA in good time.  The CMA's Internal Documents Guidance addresses the use and scope of internal document requests and provides useful guidance on the principles it expects businesses to apply when preparing their responses.

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