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R (on the application of Gallaher Group Ltd) v Competition & Markets Authority [2018] UKSC 25

Why is it important?

The decision reaffirms the basis on which the decisions of public authorities can be challenged by way of judicial review.

What happened?

The Competition and Markets Authority (CMA) appealed against a Court of Appeal decision that its predecessor, the Office of Fair Trading (OFT), had breached a public law duty to give equal treatment to parties subject to investigation.

During an investigation by the OFT into alleged price fixing in the tobacco market, the 13 parties were given the opportunity to reduce the penalties against them by entering Early Resolution Agreements (ERAs). During ERA negotiations, one party (TMR) was told by the OFT that it would vary or withdraw its decision against them in the event of a successful appeal by one of the other parties. When such an appeal was subsequently upheld, the OFT agreed to repay TMR’s penalty and a contribution to its costs. The other parties, who had not received the same assurance from the OFT, argued that they should nonetheless be treated in the same way as TMR. After the OFT refused, they brought claims for judicial review.

The respondents ultimately brought judicial review claims, which failed in the High Court but succeeded on appeal. The CMA appealed to the Supreme Court.

What did the court say?

The Supreme Court allowed the CMA’s appeal. Both of the lower courts had erred in accepting that the OFT was required to comply with a ‘principle of equal treatment,’ which does not in fact exist as a distinct principle of administrative law. The case had to be determined by the ordinary principles of judicial review, most notably irrationality and legitimate expectation; inconsistency by CMA, even when it resulted in ‘conspicuous unfairness’ as between the parties, was not enough.

Take away

The decisions of public authorities can be subject to judicial review if they act outside the constraints of lawfulness and rationality; ‘manifestly unfair and unequal treatment’ is not a sufficient basis for judicial review if those constraints are not breached.

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