Technology, big data and the regulatory arms race
In 2010, the then Office of Fair Trading (OFT) launched an investigation into a suspected price-fixing cartel between aviation giants, British Airways and Virgin Atlantic. The airlines were alleged to have conspired to fix fuel surcharge prices. However, the case collapsed following the discovery of 70,000 emails that had not been disclosed to the prosecution until the last minute due to a technical error.
The collapse of the case caused the OFT to be universally criticised, with commentators describing the investigation as a “fiasco” and the OFT exhibiting “incompetence on a monumental scale”.
Fast-forward four years and both the OFT and the Competition Commission (CC) have been dissolved and replaced by the Competition and Markets Authority. Thanks to the technological failings seen in cases such as the Virgin-British Airways price-fixing case, the two authorities may have created the impression that competition authorities lack technological prowess when it comes to investigations. Yet corporations hoping that this new authority will follow in the footsteps of its predecessors in the handling of electronic evidence should take heed; the CMA has a completely different approach .
How does the CMA differ from its predecessors?
The Treasury has granted funds which have allowed the CMA to invest further in the capacity it needs to increase the number of cartel cases it can pursue and the speed with which it can do so.
Increased quality and quantity of staff
According to Stephen Blake, Senior Director of the Cartels and Criminal Group at the CMA, the CMA has doubled the size of its Cartels and Criminal Group. In addition to doubling the size of that team, the CMA has also focused on building a team with the ability to work proactively and follow an intelligence-led investigation strategy. With this in mind, the CMA have hired a coterie of senior investigators and experienced intelligence officers.
According to an experienced competition expert in London, “Enforcement authorities have learnt a lot over the past few years. They will have seen a change in the volume of documentation that needs to be collated and reviewed and this will have driven the change in approach which is now becoming apparent in their approach to information requests and general case management. The CMA has had the benefit of the hard lessons learned by the OFT, and will be far more engaged on this topic and cautious in planning how to manage an investigation, not just in terms of adhering to best practice but also in managing an investigation to criminal standards.”
To avoid repeating incident such as the Virgin-British Airways data mishandling, the CMA has adopted the same ediscovery and investigatory tools used by law firms and corporations undergoing scrutiny. In a dawn raid scenario, this means they are now able to process very large volumes of data quickly, scan entire corporate IT landscapes and drill down and forensically examine or analyse specific trails of evidence, in detail.
As part of the CMA’s commitment to implementing intelligence-led detection and enforcement strategies, leadership at the CMA has promised to foster closer partnerships with the police and other criminal enforcement agencies.
What will these changes mean for corporate compliance officers and in-house counsel?
The CMA has more funding, highly-trained and motivated staff and is actively pursuing investigations, as well as addressing the cases inherited from the OFT and CC. With the technological gap between authorities, law firms and companies now closed, the best way for corporations to prepare is to take a proactive approach to compliance. This can take the form of conducting regular internal investigations, streamlining and understanding data estates and for the ultimate in preparedness, arranging a mock dawn raid.