Copart appeals £2.5m fine from CMA

Copart, a supplier of vehicle salvage services, is appealing a multi-million pound fine issued by the Competition and Markets Authority (CMA).

The £2.5m fine, issued earlier this month (December 2023), was for failing to comply with an initial enforcement order imposed by the CMA during its investigation into Copart’s purchase of Hills Motors, with three breaches identified. 

The order had required the merging businesses to operate separately pending the outcome of the CMA’s investigation. 

That investigation was concluded in July, with the CMA deciding that the merger with Hills Motors did not give rise to competition concerns in the supply of salvage services. 

However, during the initial enforcement order (IEO), which was imposed in August 2022 at the start of the investigation and ran until July 2023 when it concluded, Copart was restricted from doing anything which could impact the investigation, except with the prior written consent of the CMA.

It included ensuring the Copart and Hills Motors businesses were carried on separately and that the Hills Motors business’s separate sales identity was maintained.

Furthermore, any negotiations with any existing or potential customers in relation to the Hills Motors business were carried out by the Hills Motors business alone, and Copart did not enter into any joint agreements with Hills Motors

The three breaches involved three requests for proposals (RFPs) for the supply of salvage and related services issued by three unnamed insurers.

It found that Copart submitted and continued to negotiate (in particular by continuing negotiations during the specified period with the respective prospective customers) proposals that combined elements of the Hills Motors business with the Copart business.

However, Jane Pocock, CEO of Copart UK and Ireland, told Fleet News that the CMA’s decision to issue a penalty notice is subject to appeal.

The CMA’s calculation of the amount of the penalty is measured against Copart’s Global turnover. 

Pocock explained: “Copart won the case in a rare phase 2 turnaround but unfortunately the CMA is now regularly issuing fines, normally where cooperation has been withheld. 

“In this case, during the period of the 12-month investigation Copart and our customers fully cooperated.

“Copart were the successful party on three large tenders and the CMA believe they were not explicitly informed of the contract awards.”  

However, Pocock argues: “The CMA even had a 'monitoring trustee' appointed and were in regular contact with our lawyers who had submitted copies of all tenders and communicated with all customers who were also in direct dialogue. So basis for the fine remains an ongoing situation.

“The CMA has also been under increased scrutiny due to its inconsistent approach to cases since Brexit and there is wider concern that the CMA is inhibiting investment in the UK.

“This aside, Copart remains proud to have achieved the right outcome for our customers and we will be updating the industry on our exciting new plans for growth in the green parts sector in the new year. It appears this is the price of doing business with the CMA.”