The Competition & Markets Authority “crossed the line to unfairness” in the time constraints put on would-be merger partners Asda and Sainsbury’s to provide evidence to its ongoing inquiry, judges have ruled.
The verdict came in a written publication of the judges’ decision published on Friday after the supermarkets won a Competition Appeal Tribunal against the CMA to be granted extra time to respond to the merger probe.
Explaining the verdict, which was originally announced last month, the judges also warned that the CMA may have to re-think its procedures given the possibility of a flood of further big merger cases post-Brexit.
Sainsbury’s and Asda called for an additional 11 working days over the Christmas period to respond to the “huge amount” of material received from the authority as the result of its probe, but the request was turned down by the competition watchdog.
Some of the documents ran into hundreds of pages, it is understood, and the retailers claimed the deadline could have resulted in the inquiry being rushed.
A panel of three judges at the Competition Appeal Tribunal, said the case was very large by UK standards and gave rise to “complex issues in competition terms”.
“We of course recognise that both applicants are well resourced and have large teams of advisors working on this case,” they ruled.
“Nonetheless, such cases require effective co-ordination, and given the importance of the main hearing, we think that preparing for that hearing inevitably imposes an additional burden and diverts senior personnel.
“The time here allowed and the burden it imposed, crossed the line to unfairness.”
They warned the CMA could face many more such cases as responsibility passes down from the EU Commission after the UK leaves the EU.
“This case highlights the difficulties, as much for the CMA as for the parties, created by the statutory deadlines in the case of a particularly large and complex merger,” the judgment said.
“The public interest does not benefit if the period in which the inquiry has to be completed is unreasonably compressed.
“At present, such cases are relatively rare, but if the departure of the United Kingdom from the European Union will lead to all large-scale, international mergers affecting the United Kingdom which currently fall within the exclusive jurisdiction of the EU Commission, being in future also subject to the UK merger regime, this problem is likely to be multiplied.
“In that event, we hope that urgent consideration will be given to a revision of the statutory deadlines, to provide for the greater flexibility that is available under the EU merger regime.”
A CMA spokeswoman said: “Our first priority in this investigation has, and will continue to be, assessing if shoppers would face higher prices or a lower quality of service as a result of the merger and, if so, to prevent that from happening.”
“Investigating any merger of this size requires assessing a large volume of material in a short timeframe and it is not unusual for the companies involved to be required to respond in the timelines we were working to with Sainsbury’s and Asda.
“The court confirmed that it is for the CMA to set its own administrative timetable, in order to meet the legally binding deadline, and that we did not need to give them as much time as they were asking for.”
The CMA is expected to announce its provisional findings and consider possible remedies such as a sell-off of stores, later this month or in early February, with its final report due in early March.