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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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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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