This guide is based on UK law. It was last updated in February 2010.
Introduction
The Office of Fair Trading (OFT) has continued to prevent anti-competitive activity in the UK by imposing heavy fines upon offending businesses. On 22 September 2009, the OFT announced that it had imposed fines totalling £129.5 million on 103 construction companies across England for engaging in anti-competitive behaviour. Just over a week later the OFT fined six recruitment agencies a total of £39.27 million in connection with the supply of candidates for their construction clients.
Nevertheless the prospect of a fine has not always been enough to deter individuals within the business from breaching competition laws. The Enterprise Act 2002 (Act) introduced tougher sanctions which are a powerful incentive for individuals themselves not to engage in anticompetitive behaviour. The Act came into force in June 2003.
Cartel offence
The Act introduced the "cartel offence", whereby individuals who are involved in hardcore cartels may be liable to criminal sanctions, including imprisonment of up to five years and/or unlimited personal fines. The criminal sanctions under the Act apply only to those individuals who set up and maintain hardcore cartels i.e. agreements between competitors to fix prices, share markets, limit production, and rig bids (horizontal agreements). The offence is committed regardless of whether the agreement in question is implemented or not.
In December 2007, the OFT announced that three UK businessmen were charged in relation to their involvement in the global marine hose cartel. The three businessmen pleaded guilty and were sentenced to imprisonment for periods of between two and a half and three years each. They were also disqualified from acting as company directors for between five and seven years (see below).
More recently, four British Airways individuals were charged with cartel offences in connection with the OFT's investigation into price-fixing of fuel surcharges for long haul passenger flights. The trial is set for April 2010.
The case against the BA executives follows a joint investigation by US and UK competition authorities that has already resulted in the airline paying £270 million in fines. Whilst British Airways was eventually fined a record £121.5 million, Virgin received full immunity from fines. Nevertheless, Virgin did not escape completely: in the US, Virgin and British Airways have agreed to compensate individuals who travelled on flights affected by the collusion.
In Ireland, cartels were first criminalised in 1996, and prison sentences of up to five years and fines of up to €4 million can be imposed on guilty individuals. In 2007, following an investigation by the Irish Competition Authority into the activities of the Citroën Dealers Association, the Director of Public Prosecutions (DPP) brought criminal charges against 14 of the Association's members. One of the members was convicted and given a 15 month prison sentence, suspended for five years and fined €80,000 for his involvement in the cartel.
The United States has led the way in imprisoning executives convicted of fixing prices and participating in other hardcore anti-competitive conduct. Individuals face a maximum of ten years in prison and/or a $1 million fine. In 2007 alone, the US Department of Justice (DoJ) sentenced defendants to an aggregate 86 years in prison.
Custodial sentences also have been imposed on individuals participating in cartels in other countries, for example Canada and Israel, and there is the risk of imprisonment in a number of other countries including Brazil, France, India, Japan, Korea, and Russia.
Directors' disqualification
The Act added new provisions to the Company Directors Disqualification Act 1986 to permit the disqualification of directors where the company of which they are a director has breached competition law, and their conduct as a director makes them unfit to be involved in the management of a company. The OFT may seek disqualification (for a period of up to 15 years) where serious infringements of competition law are established, not just for participation in hardcore cartels.
An application for a disqualification order will be made where the director's conduct contributed to the breach; he had reasonable grounds to suspect that the conduct of the undertaking constituted the breach and he took no steps to prevent it; and where he did not know but ought to have known that the conduct of the undertaking constituted the breach.
Whistleblowers
The Act encourages whistleblowers and the OFT was given discretionary powers to protect individuals who report anti-competitive conduct from prosecution in England and Wales. In certain circumstances the OFT will also reward individuals in return for information on breaches of competition law.
Consumer bodies
The Act introduced new procedures to empower consumer bodies to make claims on behalf of individuals who have suffered loss as a result of anti-competitive behaviour.
In January 2008, the high street chain JJB was ordered to pay compensation to people who were over-charged when they purchased certain replica football shirts between 2000 and 2001, after the consumer group, Which? launched an action on behalf of consumers. JJB had already been fined over £8 million by the OFT, but has agreed to pay a further £20 to every customer who joined the damages action, and £5 or £10 to any consumer who can produce evidence of having bought a shirt at the time of the anti-competitive behaviour.
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