AppNexus Europe Limited (AppNexus) has been fined £20,000 for failing, without reasonable excuse, to comply with a Competition and Markets Authority (CMA) information request. It responded to a notice for information ten weeks after an already extended deadline and following a warning by the CMA that it would issue a fine if the information request was not responded to.
The CMA uses market studies to examine and address possible competition or consumer protection issues in a market. Under s174 Enterprise Act 2002 (EA02), the CMA has the power to issue a notice requiring a person to provide documents and information for the purposes of assisting the CMA in carrying out a market study. S174 EA02 provides that non-compliance may result in a penalty of such amount it considers appropriate, up to a maximum of £30,000.
AppNexus was served a draft notice in relation to an ongoing CMA market study into online platforms that obtain material revenues through digital advertising on 24 July 2019. AppNexus was given the opportunity to comment on the content of the draft notice, including whether material was not easily available for certain questions. AppNexus confirmed that it would use “best efforts to meet the deadline” but it might “prove extremely challenging”.
A final and formal version of the notice, containing more than 250 questions was issued on 22 August 2019 with a deadline for a response by 5pm on 6 September 2019. AppNexus requested an extension, which was granted until 5pm on 11 September 2019. The CMA stated that AppNexus had been given “ample time to respond with any comments, including issues regarding timing, ahead of issuing the formal request” and the CMA had warned AppNexus numerous times that it would issue a fine if it did not comply.
AppNexus submitted a partial response on 7 November 2019, three weeks beyond the extended deadline, whilst a further substantive response was submitted seven weeks later, ten weeks after the extended deadline. The response came four days after AppNexus’ parent company, AT&T, took over responsibility for co-ordinating the response.
Consequences of failure to respond
The CMA warned AppNexus on multiple occasions (19 September, 7, 21, 29 October and 14 and 18 November 2019) that its ongoing lack of compliance with the s174 notice could result in the CMA exercising its powers to impose an administrative penalty.
The CMA found that there was no reasonable excuse for the serious failure to comply with the s174 notice and imposed the £20,000 penalty. Excuses given included, that AppNexus is a global organisation which would mean a review of the response would need to be done over several phases, there were 250 questions requiring expert knowledge and it was “holiday season”. The CMA determined that these excuses, and others provided, were not “significant and genuinely unforeseeable or unusual…or beyond AppNexus’ control”. This was echoed by the fast turnaround of responses once AT&T became involved.
The CMA stated that AppNexus’ failure to respond had an adverse impact on the market study as the CMA had statutory deadlines that were unable to be met due to the lack of compliance by AppNexus. As such, the CMA considered the penalty of £20,000 to be an appropriate response to the seriousness of the failure whilst also acting as a future deterrent.
This is the first time that the CMA has used the enhanced information gathering and fining powers given to it by the Enterprise and Regulatory Reform Act 2013 to impose a fine for failure to comply with a s174 notice. The decision demonstrates the importance of taking a CMA request for information seriously and ensuring full compliance with such requests. The fine came after numerous warnings and should act as a deterrent in future showing that the CMA is willing to exercise its powers, if such warnings are ignored.