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Directors to be prosecuted for cartel involvement
11 January 2008
Just as businesses were shutting for the Christmas break at the
end of December 2007, the OFT announced that it would be bringing
prosecutions against three directors for the "cartel offence" which
was created by the Enterprise Act 2002. It is the first time
criminal charges will have been brought for this offence.
It is an offence for individuals to dishonestly agree that their
business will engage in certain types of anti-competitive
agreements, including price fixing, artificially limiting supply or
production, market-sharing or rigging bids on tenders.
The announcement follows an 11 month investigation by the OFT,
which featured the cooperation of authorities internationally. The
companies concerned are also being separately investigated by the
European Commission for breaches of competition legislation.
The businessmen were originally arrested by the United States
authorities in May of this year whilst attending an industry
conference. The businessmen had been allowed to return to the UK
and were arrested by Police on their arrival at Heathrow Airport on
18 December 2007.
The Enterprise Act 2002 and Competition Act 1998 give the OFT
draconian powers to investigate anti-competitive behaviour of
individuals and companies respectively. These include requiring the
production of documents and other specified information, covert
surveillance powers and the powers to enter premises with or
without a warrant (sometimes called a "dawn raid"), to search for
and seize relevant documents.
The Directors' case is to be heard before Magistrates and no
presumption is raised at this stage about the guilt of the three
directors.
Nevertheless, if convicted, the businessmen could be sentenced
with up to five years imprisonment and/or an unlimited fine.
Separately, companies found to have been in breach of EC
competition law may be fined up to 10% of their annual world wide
turnover.
This news highlights the importance of maintaining compliance
with competition law, and arranging for audits of your current
procedures where it is thought you are at risk.
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