Settling Ofcom competition investigations: 40% penalty discount for no right of appeal
In short: Ofcom proposes a Competition Act settlement discount of up to 40 per cent for non-cartel conduct, double the cap in its 2017 guidelines, where the business settles before Ofcom issues a Statement of Objections. The business must also confirm that it will not challenge or appeal the decision. The consultation closes on 6 November 2026.
A communications provider under investigation for abuse of a dominant position defends the substantive case and, in parallel, weighs whether to settle. Settling reduces the penalty it pays and removes its practical ability to take the decision to the Competition Appeal Tribunal afterwards. Ofcom published draft guidelines for consultation on 11 September 2026 that would double the reduction available for a decision to settle, and writes the condition attached to it more plainly than the guidelines it replaces.
Ofcom holds concurrent powers with the Competition and Markets Authority (CMA) to enforce the Chapter I prohibition (anti-competitive agreements) and the Chapter II prohibition (abuse of a dominant position) of the Competition Act 1998 in the communications sector. Ofcom last revised its procedural guidelines for doing so on 28 June 2017. The consultation closes at 5pm on 6 November 2026 and Ofcom plans to publish final guidelines in Spring 2027.
Key points
- Ofcom proposes a tiered settlement discount: up to 20 per cent for cartel conduct and up to 40 per cent for non-cartel conduct where settlement concludes before a Statement of Objections is issued, falling to up to 10 and 25 per cent respectively after. Source: Draft Enforcement guidelines for Competition Act investigations, paragraph 5.13.
- A settling business would confirm that it will not challenge or appeal the infringement decision, and that if it does, it may no longer benefit from the discount. Source: Draft Guidelines, paragraph 5.8.
- A settling business would have to admit, as a minimum, the material facts of the infringement and its legal characterisation. Source: Draft Guidelines, paragraph 5.8.
- The CMA has applied the same percentages since 19 December 2024. Source: Guidance on the CMA’s investigation procedures in Competition Act 1998 cases (CMA8), paragraph 14.30.
- The European Commission reduces a cartel fine by 10 per cent for settlement and operates no settlement procedure for other conduct. Source: Commission Notice on the conduct of settlement procedures [2008] OJ C167/1, paragraph 32.
- Ofcom would also add to the guidelines three powers and duties already in force since 1 January 2025. A business must preserve documents under section 25B of the Competition Act 1998. Ofcom’s information notices extend to material held outside the United Kingdom under section 44B. A business that fails to adhere to commitments or to comply with a direction faces a penalty of up to 5 per cent of turnover under section 35B(4). Source: Consultation, paragraphs 3.7 to 3.14.
| What the authority offers | Cartel conduct | Other conduct, including abuse of dominance | Appeal waiver required |
|---|---|---|---|
| Ofcom, as proposed on 11 September 2026 | Up to 20% before a Statement of Objections, up to 10% after | Up to 40% before a Statement of Objections, up to 25% after | Yes. The business confirms it will not challenge or appeal, and may lose the discount if it does |
| Ofcom, under the 2017 guidelines still in force | Up to 20% before a Statement of Objections, up to 10% after | Same figures, with no separate rate for non-cartel conduct | Yes, as a condition of settlement |
| The CMA, since 19 December 2024 | Up to 20% before a Statement of Objections, up to 10% after | Up to 40% before a Statement of Objections, up to 25% after | Yes. The business confirms it will not appeal to the Competition Appeal Tribunal |
| The Financial Conduct Authority, under guidance updated in January 2022 | Up to 20% before a Statement of Objections, up to 10% after | Same figures, with no separate rate for non-cartel conduct | Yes, as part of the streamlined process |
| The European Commission | 10%, fixed, whenever settlement is reached | No settlement procedure. Cooperation is rewarded case by case | No. The Commission preserves review by the EU courts |
What Ofcom proposes to change about settlement
Ofcom would tier the settlement discount by the stage at which settlement concludes: up to 20 per cent for cartel conduct and up to 40 per cent for non-cartel conduct where settlement concludes before a Statement of Objections, falling to up to 10 and 25 per cent respectively after it. Ofcom sets this out at paragraph 5.13 of the draft, adopting the percentages the CMA published at paragraph 14.30 of its own guidance on 19 December 2024.
The 40 per cent rate applies to abuse of dominance, which is the exposure a communications provider with market power carries. A business that settles such a case before a Statement of Objections could save up to two fifths of the penalty Ofcom would otherwise impose, with the figure decided case by case. Against the statutory ceiling of 10 per cent of worldwide turnover in section 36(8) of the Competition Act 1998, a saving of up to two fifths is a large sum, and it is the only part of the penalty calculation whose rate a business knows in advance.
Ofcom would also widen what the business admits. The existing requirement is a clear and unequivocal admission of liability as to the nature, scope and duration of the infringement. Ofcom would add that the scope includes, as a minimum, the material facts of the infringement as well as its legal characterisation. A claimant bringing a follow-on damages claim (a damages claim that relies on the regulator’s own infringement decision) under section 47A of the Competition Act 1998 relies on exactly those findings, so the wording of the admission will matter long after the investigation closes.
The condition not to appeal, and how the Competition Appeal Tribunal views that
Ofcom would require the settling business, at paragraph 5.8 of the draft, to “confirm that it will not challenge or appeal against the infringement decision; if it does, it may no longer benefit from the settlement discount”. Ofcom records in its footnote to that requirement that it may apply to the Competition Appeal Tribunal under paragraph 3(2)(b) of Schedule 8 to the Competition Act 1998 to revoke the discount, and that the Tribunal has full jurisdiction to review the level of a penalty, meaning it can substitute its own figure rather than check that Ofcom acted reasonably.
Here Ofcom would go further than the CMA guidance it is following. The CMA requires the same confirmation, at paragraph 14.8 of its guidance, but no longer states what happens to the discount if the business appeals anyway. The CMA said so in its earlier editions, and both of the Tribunal judgments Ofcom cites quote that wording from the edition each of them applied. Ofcom would return to published guidance a proposition the CMA now leaves to the terms of settlement and to the case law.
In Roland (U.K.) Ltd v Competition and Markets Authority [2021] CAT 8 the Tribunal described the settlement discount as a bargain, a lower penalty in return for an agreement not to appeal, and held at paragraph 137 that it saw no valid reason to ignore that bargain when the settling party appealed on penalty alone. It recalculated the penalty without the 20 per cent discount, from £4,003,321 to £5,004,141. In Keltbray Ltd v Competition and Markets Authority [2024] CAT 79 at paragraphs 350 to 355 the Tribunal followed Roland. The appellant persuaded the Tribunal to reduce the headline penalty from £20 million to £18 million, lost the discount, and paid £18 million where it would have paid £16 million had it stayed settled.
A business that considers the draft penalty too high can decline to settle, accept liability and appeal only the penalty. The Tribunal held at paragraph 352 of Keltbray that even a successful appeal on that path would have carried no discount. A business can admit the infringement and still argue about the number. It cannot do that and keep the discount.
How the European Commission approaches the same cooperation
The European Commission reduces a cartel fine by 10 per cent where a party settles, at paragraph 32 of its Notice on the conduct of settlement procedures [2008] OJ C167/1. The figure is fixed, it does not vary with the stage at which settlement is reached, and the procedure is confined to cartels, Article 10a of Regulation 773/2004 being headed “Settlement procedure in cartel cases”, so an undertaking facing an abuse of dominance case in Brussels has no settlement route at all.
A settling party in Brussels gives up less for its 10 per cent. Under paragraph 20 of the Settlement Notice it acknowledges liability, states the maximum fine it would accept and confirms that it does not envisage asking for access to the file or a further oral hearing, all of which are procedural rights. The Commission states at paragraph 41 of the same Notice that its final decisions remain subject to judicial review, and that the Court of Justice has unlimited jurisdiction to review fines. It keeps its right to bring an annulment action under Article 263 of the Treaty on the Functioning of the European Union.
The Commission does give larger reductions outside the cartel procedure, without publishing a scale. In five vertical restraint decisions in July and December 2018 it reduced fines by 40 and 50 per cent under point 37 of its 2006 fining guidelines, to reflect cooperation beyond what the parties were obliged to give. The Commission exercised its discretion case by case, according to what each party’s cooperation had saved it. No EU instrument sets a percentage or a stage-based scale for cooperation outside a cartel. The published scale, and the waiver that goes with it, are a UK invention.
The same statute, eight regulators, guidance written years apart
Ofcom, the Gas and Electricity Markets Authority, the Water Services Regulation Authority, the Office of Rail and Road, the Northern Ireland Authority for Utility Regulation, the Civil Aviation Authority, the Payment Systems Regulator and the Financial Conduct Authority all hold concurrent powers to enforce the Competition Act 1998, under section 54(1). Each publishes its own procedural guidance, and the versions currently in force were written years apart.
The Office of Rail and Road rewrote its guidance on 22 September 2025 and adopted the 20, 40, 10 and 25 per cent scale. Ofgem states on its own enforcement guidelines page that it will incorporate the changes made by the Digital Markets, Competition and Consumers Act 2024 at the next update. The Financial Conduct Authority, in guidance updated in January 2022, caps settlement at 20 per cent before a Statement of Objections and 10 per cent after, with no separate rate for non-cartel conduct. The Payment Systems Regulator published its guidance on 13 August 2015 and still describes enforcement by reference to Articles 101 and 102 of the Treaty on the Functioning of the European Union, which ceased to have effect in the United Kingdom on 31 December 2020.
A firm regulated by two of these authorities can face two different published settlement rates for the same conduct under the same statute, depending on which of them takes the case.
What else would change in an Ofcom investigation
The duty to preserve documents already applies and does not depend on this consultation. A person who knows or suspects that an investigation is being carried out, or is likely to be carried out, must not falsify, conceal, destroy or otherwise dispose of a relevant document. That duty is set out in section 25B of the Competition Act 1998, inserted by section 121(2) of the Digital Markets, Competition and Consumers Act 2024 with effect from 1 January 2025. Ofcom would reflect the duty in its guidelines and align with the CMA’s approach to it. Suspicion is the trigger, not a notice. The CMA has said that automatic destruction under a document retention policy is unlikely to be a reasonable excuse. Timed deletion carries on running unless someone stops it.
Ofcom would record three further points in the guidelines. Its information notices extend to documents and information held outside the United Kingdom where the person has a UK connection, under section 44B of the Competition Act 1998. A business that fails without reasonable excuse to adhere to commitments it has given, or to comply with a direction, faces a penalty of up to 5 per cent of turnover, under section 35B(4). Where a case is not settled, at least two people, generally three, collectively take the final infringement decision, reflecting the minimum of two in rule 3(3) of the Competition Act 1998 (Competition and Markets Authority’s Rules) Order 2014.
Ofcom would record, at paragraph 2.3 of the draft, that it will have regard to the need to make a decision or take action as soon as reasonably practicable at every step of an investigation. The duty to have regard to expedition comes from section 371(13) of the Communications Act 2003, inserted by the Digital Markets, Competition and Consumers Act 2024. Ofcom must have regard to the need to act promptly; it is under no obligation to decide by any particular date, so a business under investigation can press the point but cannot hold Ofcom to a timetable. Our investigations and enforcement support page covers what responding to an information notice or a Statement of Objections involves in practice.
Viewpoint
I read the 40 per cent rate as the substantive change in this consultation and the rest as tidying up. Doubling the reduction available in abuse cases moves the settle-or-fight decision for the firms Ofcom regulates, because a communications provider with market power has most to worry about under the Chapter II prohibition.
The widened admission is the harder question. Spelling out that the business admits the material facts and the legal characterisation gives a claimant bringing a follow-on claim under section 47A of the Competition Act 1998 a firmer decision to build on, and by then the settling business has given up the appeal that would have been its route to narrowing those findings. The trade-off depends on the client’s own facts.
Ofcom notes in the consultation that the Department for Business, Innovation, Science and Trade opened its own consultation on 17 July 2026 on making competition enforcement swifter, and that Ofcom will consider further changes depending on the outcome. That consultation closes on 25 September 2026, six weeks before Ofcom’s, and guidelines finalised in Spring 2027 may be revised again shortly afterwards. Anyone responding by 6 November 2026 is responding to an interim text.
Frequently asked questions
What is the maximum Competition Act settlement discount Ofcom proposes?
Up to 40 per cent for non-cartel conduct and up to 20 per cent for cartel conduct, where a settlement concludes before Ofcom issues a Statement of Objections. After a Statement of Objections the figures would fall to 25 per cent and 10 per cent. Ofcom would consider the discount case by case, and the earlier settlement concludes, the greater the reduction available.
Does settling a Competition Act investigation mean giving up the right to appeal?
Under the draft guidelines the settling business confirms that it will not challenge or appeal the infringement decision, and that if it does it may no longer benefit from the discount. The right of appeal to the Competition Appeal Tribunal remains. A business that appeals faces an application by Ofcom to the Tribunal, under paragraph 3(2)(b) of Schedule 8 to the Competition Act 1998, to revoke the discount.
Can a business admit the infringement and appeal only the penalty?
It can, provided it does not settle. In Keltbray Ltd v Competition and Markets Authority [2024] CAT 79 the Tribunal held at paragraph 352 that a business which considers a draft penalty too high can decline to settle, accept liability and appeal the penalty imposed, and that it would have had no settlement discount whether or not the appeal succeeded. A business that settles and then appeals faces an application to revoke the discount it received.
How does the UK settlement discount compare with the European Commission’s?
The European Commission reduces a cartel fine by a fixed 10 per cent under paragraph 32 of its Settlement Notice [2008] OJ C167/1, and operates no settlement procedure for abuse of dominance. The Commission states at paragraph 41 of that Notice that judicial review of the final decision remains available. The United Kingdom offers a larger reduction on a published scale and asks for a confirmation that the business will not appeal, which the Commission does not.
When does the Ofcom consultation close?
Responses are due by 5pm on 6 November 2026, to Ofcom’s enforcement mailbox using the published response form. Ofcom plans to publish its final guidelines and a statement in Spring 2027, and has said it will consider further changes depending on the outcome of the separate government consultation on competition enforcement opened on 17 July 2026.
If you are weighing settlement in a Competition Act investigation, or responding to the consultation before 6 November 2026, contact Rob Bratby at Bratby Law.
