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CMA wins information exchange appeal


The Competition Appeal Tribunal ("CAT") dismissed an appeal brought by Lexon (UK) Ltd in respect of a decision of the Competition and Markets Authority ("CMA") finding that Lexon had illegally shared commercially sensitive information in order to keep up prices for an antidepressant and imposing a fine of £1.2 million on Lexon.

Between July 2015 and May 2016, Lexon’s director, Mr. Sonpal, engaged in direct contacts with the managing directors of two competitors in the supply of nortriptyline tablets, King and Alissa.  The contacts were made via mobile text messages, emails, telephone calls and a face-to-face meeting at a London hotel.  In the course of their contacts, the participants exchanged information about a competitor’s stocks of nortriptyline; the prices being offered in the market; their pricing strategy and entry plans.

On 4 March 2020, the CMA found that these information exchanges were capable of reducing the participants’ uncertainty about the market conduct of competitors.  Their object was to maintain prices, or at least to slow their decline, at a time when competition in the nortriptyline market was intensifying. 

On 11 May 2020, Lexon appealed against the Decision, primarily on the basis that the CMA erred in finding that the information exchanges gave rise to an infringement by object.  It also challenged the level of the fine.

On 27 August 2020, the CMA issued proceedings in the High Court seeking a competition disqualification order against Mr Sonpal under section 9A of the of the Company Directors Disqualification Act 1986. The High Court subsequently transferred the issue of whether Lexon had breached competition law to the CAT for determination.

On 25 February 2021, the CAT held that Lexon’s objections to the CMA’s analysis were not well founded.  The CAT held that the contemporaneous and witness evidence set out in the Decision was clear and sufficient to support the finding of infringement by object. In the CAT's view, the CMA had correctly assessed both the economic context of the information exchanges and their anti-competitive purpose. The CAT found that the penalty of £1.2 million in a business where Lexon realised very substantial profits over a significant period in clear breach of the law to be amply justified.

The CAT also determined the competition issue that had been transferred by the High Court, declaring that Lexon, a company of which Mr Sonpal was and is a director, has committed a breach of competition law for the purpose of the director disqualification proceedings.

The CAT's judgment is here.

David Bailey was instructed by and represented the CMA.