R (Gallaher Group Ltd ) v The Competition and Markets Authority [2018] UKSC 25


In a judgment handed down on 16 May 2018 the Supreme Court has considered the extent and consequences of the duty of equal treatment in the context of enforcement proceedings brought by the Office of Fair Trading ("OFT").[1]

The facts of the case

In 2003 the OFT commenced an investigation into alleged price-fixing in the tobacco market. In 2010 the OFT found infringements of the relevant provisions of the Competition Act 1998 by 12 companies. Those companies included the claimants (Gallaher Group Limited, Somerfield Stores, and the Co-Operative Group) and TM Retail Group Ltd ("TMR").

Six of those companies (but not the claimants or TMR) appealed the OFT's decision to the Competition Appeals Tribunal. The claimants and TMR entered into separate early resolution agreements ("ERAs") with the OFT under which – in return for the possibility of a 20% reduction on the penalty imposed – they admitted the infringement and agreed terms for co-operation with the OFT:

  • TMR paid a reduced penalty of £2,668,991. In 2008, during the course of discussions about its ERA, the OFT had informed TMR that if another company were successful in its appeal against the infringement decision, then TMR would obtain the benefit of that appeal.
  • No such assurance was sought by, or given to, the claimants. Gallaher paid a reduced penalty of around £50m under the terms of its ERA, and Somerfield/Co-Operative paid a penalty of around £4m, reduced from around £8m.

In December 2011 the Competition Appeal Tribunal allowed the appeals brought by the six other companies. Had TMR and the claimants also appealed (instead of entering into ERAs) their appeals also would have been allowed. In lights of the assurances it had given to TMR, the OFT agreed to refund its penalty and to make a contribution to its legal costs. 

It was accepted that the assurance given by the OFT to TMR had been given by mistake, without regard to the principle of finality and the OFT's own rules. Despite this, TMR retained the benefit of the mistake. 

The claimants asked the OFT to withdraw its infringement decision and to refund their penalties, as it had refunded TMR's. The OFT refused.

The judgments

The claimants issued judicial review proceedings against the OFT, arguing that they should also be given the benefit of the assurances given to TMR. The claim failed in the High Court, Mr Justice Collins ruling that "as a general rule a mistake should not be replicated where public funds are concerned".

The Court of Appeal disagreed, noting that "the only difference between the positions of TMR on the one hand and the claimants on the other was that the OFT had given the assurances to TMR in 2008, but not to the claimants". The Court of Appeal described the different treatment of TMR and the claimants as "a plain breach of the principle of equal treatment and unfair". The claimants did not argue that the infringement decision should be set aside (which would have breached the principle of finality). They argued that they should be entitled to repayment of their penalties (plus interest and costs). The Court of Appeal agreed.

The Supreme Court allowed the appeal and re-instated the order of Mr Justice Collins. Whilst equal treatment is an established principle of EU law, it is not recognised as a distinct principle of domestic administrative law. As recognised by Lord Bingham in R (O'Brien) v Independent Assessor [2007] 2 AC 312, it is "generally desirable" but not an absolute rule.

The claimants also sought to argue that the CMA's decision was "conspicuously unfair". Lord Carnwath undertook a review of judgments in which that expression had been used, in order to explain "how misleading it can be to take out of context a single expression such as "conspicuous unfairness" and attempt to elevate it into a free-standing principle of law." As with equal treatment, "conspicuous unfairness" is not recognised as a distinct principle of domestic administrative law.

The "only difference" between TMR and the claimants, as noted by the Court of Appeal, was "potentially crucial" according to Lord Carnwath. The claimants were aware of the possibility that other parties might successfully appeal, and this was a risk that the claimants took with their eyes open. If the assurance given to TMR had been withdrawn or not honoured that would have given TMR a very strong case to appeal out of time (and the appeal would almost certainly have been successful). The claimants were not in that position; they had no grounds to appeal out of time, as confirmed by the Court of Appeal in separate proceedings. For Lord Carnwath that "only difference" provided objective justification for the OFT taking a different approach, and it was not irrational for them to do so.


Mistakes resulting in unequal treatment and potential unfairness are plainly regrettable, but do happen. Public bodies should carefully consider the circumstances as they find them; and this case confirms that when such mistakes happen, principles of administrative law do not necessarily require those mistakes to be replicated in order to achieve absolute equality. A challenge will need to establish not just that there has been unequal treatment or unfairness, but will need to pass the much higher thresholds of lack of objective justification and/or irrationality.

The "principle of finality" is of interest, and of wider application than competition cases. It was a key consideration in the Court of Appeal's overturning of the Competition Appeal Tribunal's decision to allow the claimants to appeal the infringement decisions out of time, once the other companies' appeals had succeeded. The principle of finality requires that decisions that are unchallenged become definitive and should not be able to be called into question indefinitely. The Court of Appeal found that the claimants had entered into the ERAs "with their eyes open" and in full knowledge of the possibility that the other companies' appeals may succeed. In doing so they took the benefit of the reduced penalty, albeit that had they appealed in time they would have paid no penalty at all. The claimants knew that they could have appealed and entered into the ERAs (though to do so would have meant they would have paid more under the terms of the ERA had the appeals failed).

When faced with tactical choices such as whether to challenge a decision or take the benefit of an early admission, very careful thought needs to be given to the immediate and longer term consequences. This case shows that the bar for seeking to un-wind such a choice made with full knowledge of the consequences is a very high one.

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[1] The OFT's functions were taken over by the Competition and Markets Authority in 2014. The facts of this case pre-dated 2014 so the Supreme Court's judgment refers throughout to the OFT.

For more information please contact either Emily Heard or Trevor Watt

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