A new dawn for competition law investigations in the UK

On 1 January 2025, the powers of the UK Competition and Markets Authority (CMA) to investigate breaches of the Competition Act 1998 (CA98) were significantly strengthened under long-awaited changes made by the Digital Markets, Competition and Consumers Act 2024 (Act).

These changes are reflected in the CMA’s updated guidance on CA98 investigations, published on 19 December 2024. The changes have a wide-ranging impact, meaning that businesses of all sizes operating across all sectors of the UK economy should ensure that they understand them.

New duty to preserve documents relevant to CMA investigations  
The Act introduces a broad obligation on both individuals and businesses to preserve documents which may be relevant to a CMA investigation.

Individuals and businesses must ensure that, where they know or suspect that an investigation is being carried out, or is likely to be carried out by the CMA, they do not falsify, conceal, destroy or otherwise dispose (or cause or permit the same to be undertaken in relation to) documents which they know or suspect to be relevant to the investigation.  

Importantly, the duty is triggered not only where a person has been made aware of an investigation by the CMA or a third party, but also where it may be inferred from other information, such as the conduct of others; meaning that the duty can potentially be triggered in a wide range of circumstances.  

The duty applies both to documents which tend to prove or disprove that there has been an infringement, and to documents that contain background information (such as information about the market in which the suspected infringement occurred). The CMA’s guidance makes it clear that a broad view should be taken as to whether a document is relevant to an investigation. So, if in doubt, it is best to err on the side of caution. 

Failure to comply with the duty, without reasonable excuse, may result in a fine: for businesses, a fixed amount of up to 1% of global turnover and/or a daily rate of up to 5% of turnover; for individuals, a fixed amount of up to £30,000 and/or a daily rate of up to £15,000. The automatic destruction of relevant documents under standard document retention policies is unlikely to constitute a reasonable excuse for a breach. Where the duty may be triggered, routine document destruction policies should therefore be suspended, and document retention policies should provide for the preservation of documents relevant to CA98 investigations.

Extraterritorial scope of the CMA’s powers

The Act expands the territorial scope of the CMA’s investigative powers in a number of ways. It empowers the CMA to, by notice, require ‘any person’ including an undertaking (which need not have a territorial connection to the UK), to produce documents and information held outside the UK. Where a notice is addressed to an undertaking, the requirement to comply applies to the undertaking as a whole (not just the legal entity on which the notice is served). It will not be open to an entity (for example, a UK subsidiary company) to argue that it does not have the power to compel the production of documents or information from other entities within the undertaking (for example, a non-UK based parent company). So, group companies based across countries outside the UK should be briefed on this as soon as possible.

The CMA’s power to require the production of information held outside the UK extends to information that is not already written down but based on knowledge or experience (eg market share or structure information).  

The CMA’s powers in respect of “dawn raids” (unannounced inspections to gather evidence where a breach of competition law is suspected) have also been enhanced. In both business and domestic premises raided under warrant, the CMA now has the power to search all documents accessible from the premises. This includes documents stored offsite and outside the UK, including in the cloud.  

Additional new powers for the CMA include the power to ‘seize and sift’ evidence from domestic premises raided under warrant, and the power to interview witnesses remotely (eg on Teams or Zoom).

Implications for businesses in the UK

With increased compliance obligations and the risk of higher fines for non-compliance, businesses which have not yet reviewed their competition law compliance and dawn raid policies and procedures in light of the Act should do so now.  

The competition team at Mills & Reeve has extensive experience of advising and representing clients on competition investigations by the CMA. We can also assist with the preparation and review of competition compliance policies, risk and gap analyses and the delivery of training to staff at all levels.  

The Act also makes significant changes to the UK merger control rules and introduces a new regime for digital markets. See our briefings on A new era for the UK’s merger control regime and New year, new competition rules for digital markets in the UK.

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