Can ACCC investigations access offshore documents? Recent UK decision suggests "yes"

The Australian Competition and Consumer Commission (ACCC) has been given powers to serve investigation notices outside Australia. These notices, issued under section 155 of the Competition and Consumer Act 2010 (CCA), require persons served, to produce documents and information even if doing so would incriminate the person or expose them to penalties. It is an offence to fail to comply with such a notice unless the person is not capable of complying with the notice.

This new approach to anti-competitive investigations extending across international borders has been demonstrated in a recent UK decision upholding notices served in the UK on UK-based subsidiary companies, being enforced against parent companies based in Germany.

While there may yet be further appeals in the UK case, the decision is likely to encourage regulators and other agencies to use these investigative powers to seek to compel persons and corporations outside Australia to produce information to Australian agencies.

The UK Competition and Markets Authority serves notices

In 2022, the UK Competition and Markets Authority (CMA) served notices under section 26 of UK competition legislation inside the UK addressed to two UK subsidiaries of two German domiciled entities. However, each notice required production not only from the UK subsidiary but also from the German parent entity and any other legal entities forming part of the same "undertaking".

One German parent entity was fined a maximum of £30,000 for not complying with the notice and daily fines of £15,000, which it appealed on the basis that section 26 notices may not have extraterritorial effect. The other challenged whether the CMA had the power to compel information and documents held by a foreign company overseas.

In February 2023, at first instance, the UK Court held that the CMA did not hold the requisite powers, noting that the CMA's interpretation was "aggressively extraterritorial" and "very likely to undermine comity between nations".

How far do the UK Competition and Markets Authority's powers go?

Extraterritoriality: On appeal the CMA notices were upheld. The Court of Appeal held that the investigatory and enforcement powers in the UK statute were intended to have extraterritorial effect. It gave the example of a cartel between undertakings in the USA, Canada and Japan with no physical presence in the UK, but intended to be implemented in the UK, as falling within the scope of the section. In Australia there is little doubt now that section 155 is also intended to have extraterritorial effect. This UK decision indicates it is open to domestic law to authorise the execution of these powers outside the jurisdiction if that is clearly intended.

UK concept of an "undertaking": One difference with Australia is that in the UK the phrase "any person" in section 26 is expressly defined to include an "undertaking" and it is therefore open to the CMA to exercise section 26 investigation powers against any entity within an undertaking (whether located inside or outside the UK), so long as one part of the undertaking has a presence in the UK.

The Court of Appeal held that when the CMA serves a notice upon an entity within an "undertaking", that entity is not entitled to state that it cannot compel the production of documents elsewhere in the undertaking due to contract / company law terms or otherwise.

The Court of Appeal noted however, that in serving notices on undertakings, the CMA must respect fundamental and procedural rights including the right to defence. The court held there was no evidence of procedural or fundamental rights being violated. The UK subsidiaries were served with the notices which were then brought to the attention of the German parent companies, and it was made clear that the obligation of production applied to the undertaking as a whole. The German parent companies had exercised their "right of access to a court and to a fair and objective adjudication of their challenges".