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safeway fails to get liability shifted

21 January 2011

Following an investigation by the Office of Fair Trading (OFT), beginning in 2005, it was found that Safeway had been guilty of anti-competitive practices in relation to the purchase of dairy products. The OFT has indicated that the financial penalty could be in excess of £10M.

Safeway (now owned by Morrisons Plc) brought a claim (Safeway Stores Limited v Twigger) against its directors (who sat on the board at the time of the anti-competitive practices) seeking an indemnity from the directors for any financial penalties that they may have to pay.

The Court of Appeal found that the liability for any financial penalty imposed under the Competition Act 1998 was “personal” to the undertaking. The Court emphasised that penalties under the act impose liability on the undertaking itself and it was not the case that the undertaking was vicariously liable for actions of its directors and employees.

Overall, a good decision for directors and their insurers.

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