Abstract
This Report was prepared to assist the International Rapporteur in reporting to the LIDC congress in Budapest in October 2018. It reflects the views expressed by CLA members at a meeting held on 30 May 2018 to discuss the draft. As this Report notes, the UK competition regime has rules that govern the attribution of civil liability to the company and parent company, as well as the attribution of criminal liability to individuals (whether or not they occupy management positions within infringing businesses). The UK also has a director disqualification regime, under which directors of companies infringing competition law may be disqualified from acting as company directors for long periods of time. It appears that director disqualification against individuals strikes the right balance as a penalty that has widespread public support (unlike imprisonment) and that is achievable in a wide variety of cases.
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Notes
- 1.
Competition Act 1998 (‘CA98’).
- 2.
Section 2 CA98.
- 3.
Section 18 CA98.
- 4.
For example, a sole trader.
- 5.
Set out at Section 60 CA98.
- 6.
Section 60(1) CA98.
- 7.
Enterprise Act 2002 (‘EA02’).
- 8.
Rather than enshrining the cartel offence within a new Act, the UK the Enterprise and Regulatory Reform Act 2013 amended the existing EA02 offence.
- 9.
Cartelists were prosecuted for conspiracy to defraud on occasion where ‘aggravating’ features of the cartel were present. However, there was nothing intrinsically criminal involved in entering a secret cartel. See Norris v United States of America [2008] UKHL 16 at paragraph 63.
- 10.
Section 188, EA02 (as amended and original).
- 11.
Some behaviour could, however, be both an abuse of dominance and a crime.
- 12.
The cartel offences apply only to natural persons.
- 13.
Section 188(1) EA02 (original).
- 14.
From R v Ghosh [1982] EWCA Crim 2.
- 15.
In Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017] UKSC 67.
- 16.
Article 25 of European Council Regulation 1/2003 (the ‘Procedural Regulation’) provides for a 5-year limitation period to open a case beginning on the date on which the infringement was committed (in the case of one off infringement) or ceased (in the case of continuing infringements), after which the Commission cannot impose a penalty.
- 17.
Meaning that there is still the possibility, albeit small, that further prosecutions of the original cartel offence will be brought in future.
- 18.
Quarmby Construction Company Ltd v OFT [2011] CAT 11, paragraph 47.
- 19.
Given that (1) Quarmby Construction Company Ltd concerned the application of Section 36 CA98, which also contains the CMA’s powers to fine undertakings for breaching Articles 101 and 102 TFEU; and (2) the Article 25 Procedural Regulation limitation period applies only to the Commission.
- 20.
Section 188A EA02.
- 21.
Section 188B EA02.
- 22.
Section 188A(1)(a) EA02.
- 23.
Section 188A(1)(b) EA02.
- 24.
The EA02 (Publishing of Relevant Information under section 188A) Order 2014 exercising the powers granted to the Secretary of State by section 188(1)(a)(c) EA02.
- 25.
Section 188A(3) EA02. The definition of ‘legal requirement’ used is that set out in Paragraph 5 of Schedule 3 CA98 and means a requirement imposed by UK or EU law, or the law of a Member State having legal effect in the UK.
- 26.
Section 188B(3) EA02.
- 27.
See Sect. 12.3.3 below.
- 28.
Precast Concrete Drainage Criminal Investigation, sentencing hearing 15 September 2017.
- 29.
The CMA’s civil investigation CE/9691/12 (‘Galvanized Steel Tanks Civil Investigation’) was opened on 27 November 2012, but did not issue a statement of objections until May 2016, long after the sentencing at the conclusion of the original cartel offence investigation in case CE/9623/12 (‘Galvanized Steel Tanks Criminal Investigation’) on 14 September 2015. The final decision in the Galvanized Steel Tanks Civil Investigation was issued on 19 December 2016. The CMA’s civil investigation 50299 (‘Precast Concrete Drainage Civil Investigation’) has not issued a statement of objections, the sentencing at the conclusion of the Precast Concrete Drainage Criminal Investigation having taken place on 15 September 2017.
- 30.
R v George, Crawley, Burns and Burnett 2008 (unreported).
- 31.
Case CE/7691-06.
- 32.
See Sect. 12.3.6 below.
- 33.
Section 25, ERRA.
- 34.
The latest Impact Assessment available at the time of writing is for the year ending 31 March 2017.
- 35.
CMA Performance Management Framework, January 2014.
- 36.
The OFT publication ‘The impact of competition interventions on compliance and deterrence’ (OFT 1391, December 2011) concluded that for the period 2003–2011: (1) 28 cartels were deterred for every cartel investigation; (2) 40 other anticompetitive agreements were deterred for every anticompetitive agreement investigated; and (3) 12 abuses of dominance were deterred for every abuse of dominance investigated.
- 37.
The latest of these was published in December 2015. Despite a new British Parliament being elected in 2017, an updated Strategic Steer had not been published at the time of writing.
- 38.
The latest of these at the time of writing was for the year commencing 1 April 2018.
- 39.
With reference to the enforcement of the Chapter I/Article 101 and Chapter II/Article 102 prohibitions, the Sectoral Regulators have effectively the same powers as the CMA and in nearly all cases Sectoral Regulators adopt the CMA’s Guidance when pursuing cases. As a result of this, and the dearth of Sectoral Regulator competition cases, this Report refers almost exclusively to the CMA.
- 40.
While the now-defunct healthcare regulator, Monitor, is said on the UKCN website to have ‘observer’ status, there is no reference to this observer status having been taken up by NHS Improvement, the successor body to Monitor.
- 41.
A complete list of competition cases brought by the Sectoral Regulators since the founding of the UKCN in 2014 is available on https://www.gov.uk/government/publications/competition-act-1998-cases-in-the-sectors-regulated-by-ukcn-members/competition-act-1998-cases-in-the-regulated-sectors. Accessed 6 June 2018. The only infringement decision by a Sectoral Regulator since 2014 (by the CAA for price fixing at Manchester Airport Car Parks) did not result in fines as one undertaking sought and received immunity and the other had no revenue in the relevant market. In 2010, Ofgem fined National Grid £41,600,000 for breaching the Chapter II/Article 102 prohibition, which was reduced to £15,000,000 on appeal. In 2006, the ORR fined EWS £4,100,000 for breaching the Chapter II/Article 102 prohibition.
- 42.
Schedule 14 ERRA amends the legislation affecting the CAA, Ofcom, Ofgem, Ofwat, the ORR and NIAUR to insert this obligation. With regard to the PSR, this is set out at section 62 FSBRA and with regard to the FCA, this is set out at section 234K of the amended Financial Services and Markets Act 2002.
- 43.
CMA10, March 2014.
- 44.
Ibid, paragraph 4.3.
- 45.
See Sect. 12.2.1 above.
- 46.
ECJ, joined cases C-359/95 and C-379/95 P Commission and France vs. Ladroke Racing, ECLI:EU:C:1997:531, pt 34; ECJ, case T-228/97 Irish Sugar vs. Commission, ECLI:EU:T:1999:246, pt 130; ECJ, case T-513/93 Consiglio Nazionale degli Spedizionieri Doganali, ECLI:EU:T:2000:91, pt 59.
- 47.
For the FCA’s benchmark manipulation fines, including LIBOR, see https://www.fca.org.uk/markets/benchmarks/enforcement (retrieved 6 June 2018).
- 48.
Case 39914: Euro Interest Rate Derivatives.
- 49.
See for example the Final Notice for Deutsche Bank dated 23 April 2015.
- 50.
See Sect. 12.2.6 below.
- 51.
Section 38(1) CA98.
- 52.
CMA73, 18 April 2018.
- 53.
OFT1495, July 2013 is the OFT’s detailed guidance on its principles and process in leniency applications, which has since been adopted by the CMA.
- 54.
See footnote 42.
- 55.
Fining Guidelines, paragraph 2.4.
- 56.
With respect to trade associations, the 10% worldwide turnover cap applies to the sum of the worldwide turnover of each member of the association of undertakings active on the market affected by the infringement. See paragraph 2.2.7 of the Fining Guidelines.
- 57.
The voluntary redress scheme is a new addition to the Fining Guidelines. See further Sect. 12.2.10.
- 58.
Fining Guidelines, footnote 33. A 5% discount for a compliance programme was awarded in the CMA’s decision in Case CE/9857-14, 10 May 2016 (Bathroom Fittings) and a 10% discount was awarded in the CMA’s decision in Case CE/9784-13, 20 August 2015 (Eye Surgeons).
- 59.
At footnote 30.
- 60.
Decision in Case 39.525, paragraph 919.
- 61.
Unless the undertaking is the individual, e.g. a sole trader.
- 62.
‘A claimant may not recover for damage which is the consequence of her own criminal act’: see Safeway Stores Ltd v Twigger [2010] EWCA Civ 1472, paragraph 27.
- 63.
Case CE/9784-13, 20 August 2015 (Eye Surgeons).
- 64.
Decision in case CE/9784-13, from paragraph 5.32.
- 65.
For example, see the decision in Case CE/9859-14, 16 December 2016 (Modelling Sector), paragraphs 5.91 and 5.101.
- 66.
As with all other unlimited fines referred to in this Report which may be imposed upon summary conviction, the legislation refers not to an unlimited fine but to the ‘statutory maximum’. The statutory maximum is now unlimited (section 85 of the Legal Aid, Sentencing and the Punishment of Offenders Act 2012).
- 67.
Section 190(1)(b) EA02.
- 68.
Section 190(1)(a) EA02.
- 69.
CMA9, March 2014—this Guidance is a summary of the cartel offence and codes used by English and Scottish prosecutors when deciding to bring a prosecution. There is nothing contained within it which cannot be found elsewhere.
- 70.
R v Whittle, Brammar and Allison (unreported).
- 71.
Sentences ranging from 2.5 to 3 years were imposed, these were reduced to 20 months to 2.5 years on appeal.
- 72.
R v Whittle, Allison and Brammar [2008] EWCA Crim 2560, paragraph 34.
- 73.
Namely the gravity and duration of the offence; the degree of culpability of the defendant in implementing and enforcing the cartel; whether the cartel was contrary to the defendant’s company compliance manual; and any mitigating factors such as personal circumstances or duress.
- 74.
Section 6, Proceeds of Crime Act 2002 (‘POCA’).
- 75.
Sections 10 and 75, POCA.
- 76.
See https://www.gov.uk/cma-cases/marine-hose-criminal-cartel-investigation (retrieved 6 June 2018).
- 77.
Section 9A Company Directors Disqualification Act (as amended).
- 78.
Ibid, Section 9B.
- 79.
Ibid, Section 13.
- 80.
Ibid, Section 15.
- 81.
OFT510, 1 June 2010. Note that the CMA announced on 4 June 2018 that it would be revising OFT510. At the same time as this announcement, the CMA deleted a paragraph from OFT510 in recognition of the fact that, in order for an appeal against a DDO to be heard in the CAT the same time as an appeal against an infringement decision or penalty, disqualification proceedings would need to start earlier than provided for in the now-deleted paragraph of OFT510.
- 82.
See press release dated 5 March 2018 (https://www.fca.org.uk/news/press-releases/fca-fines-and-bans-former-deutsche-bank-trader-guillaume-adolph (retrieved 6 June 2018)).
- 83.
See Sect. 12.2.6 above.
- 84.
See Sect. 12.2.2 above.
- 85.
See Sect. 12.2.6 above.
- 86.
Galvanized Steel Tanks Civil Investigation decision, paragraph 5.30.
- 87.
Read across into the Chapter I CA98 case law by virtue of Section 60 CA98.
- 88.
ECJ, case C-67/13P Cartes Bancaires v Commission, ECLI:EU:C:2014:2204, pt 54.
- 89.
Additional powers exist under the EA02 with respect to penalties for non-cooperation/providing misleading information in relation to the CMA’s merger control and market investigation inquiries.
- 90.
See CMA decision of 12 April 2016 in Case CE/9742-13 fining Pfizer for failing to provide information.
- 91.
See Sect. 12.2.7 for an explanation of the difference between summary conviction and conviction on indictment.
- 92.
Section 44 CA98.
- 93.
Section 43 CA98.
- 94.
Section 42 CA98.
- 95.
Section 42 CA98.
- 96.
Section 72 CA98.
- 97.
Section 40A CA98.
- 98.
CMA4, January 2014.
- 99.
Section 194 EA02.
- 100.
Section 193 EA02.
- 101.
Currently GBP 5000.
- 102.
Section 201 EA02.
- 103.
Section 201(2) EA02.
- 104.
Section 201(5) EA02.
- 105.
Garden Court Foods v Milk Marketing Board [1984] AC 130.
- 106.
Part 4, Damages Regulations.
- 107.
Paragraph 36 Damages Regulations.
- 108.
Paragraph 42 Damages Regulations.
- 109.
Albion Water Limited v Dŵr Cymru Cyfyngedig [2010] CAT 31.
- 110.
Although this Reporter is aware of at least one other case where they were paid as part of a settlement agreement.
- 111.
Travel Group PLC (in liquidation) v Cardiff City Transport Services Limited [2012] CAT 19.
- 112.
See Sect. 12.2.6 above.
- 113.
CMA40, 14 August 2015.
- 114.
Section 49C CA98.
- 115.
Rather than the undertaking fined for the cartel activity: see Safeway Stores Ltd v Twigger [2010] EWCA Civ 1472.
- 116.
For example, in Air Canada & Ors v Emerald Supplies Limited & Ors [2015] EWCA Civ 1024, the Court of Appeal refused to allow the claimants to expand the scope of the claim to include conduct which took place outside the EU using the tort of conspiracy and the tort of interference.
- 117.
See OFT Guidance on Enforcement (OFT407), paragraph 5.41. This Guidance has been adopted by the CMA.
- 118.
ECJ, case C-97/08 P, Akzo Nobel v Commission, ECLI:EU:C:2009:536.
- 119.
E.g. in Durkan Holdings and Others v Office of Fair Trading [2011] CAT 6.
- 120.
Decision of 21 September 2009 in case CE/4327-04.
- 121.
See, for example, Sepia Logistics v OFT [2007] CAT 13, in which the Competition Appeal Tribunal (‘CAT’) confirmed the approach taken by the OFT in its decision on aluminium spacing bars. The OFT did not rely on the bare presumption of control but on the fact that the ultimate parent exercised actual control through an individual director of both the parent and subsidiary and specifically through her direct involvement in the infringement (including participation in relevant meeting).
- 122.
The circumstances of the Marine Hose Criminal Case were very different to the other original cartel offence cases brought, see Sect. 12.3.6 below.
- 123.
Note that on 10 April 2018, the CMA obtained DDUs from two former directors of estate agents which had previously been fined for fixing the minimum commission rate which they would offer. See https://www.gov.uk/cma-cases/residential-estate-agency-services-in-the-burnham-on-sea-area-director-disqualification (retrieved 6 June 2018).
- 124.
See Sect. 12.2.7 above.
- 125.
For Financial Year ending 31 March 2016.
- 126.
Ibid, Table 1. See Sect. 12.2.4 above for detailed explanation of the CMA’s objectives.
- 127.
Year ending 31 March 2017.
- 128.
See page 132 of the Accounts. Comprises the CMA’s total spend on its Cartel & Criminal Group (GBP 6.9 million) and the ‘enforcement’ segment of the Competition, Consumer and Markets Group (GBP 9.2 million).
- 129.
CMA 2017 Accounts, page 6.
- 130.
Professor Bruce Lyons writes in further detail on the appropriateness of the 10:1 target in a blog post which is available on https://competitionpolicy.wordpress.com/2016/08/05/the-dangerously-distorted-incentives-created-by-the-cmas-performance-target/ (retrieved 6 June 2018).
- 131.
‘UK businesses’ understanding of Competition Law’, prepared for the CMA by IFF Research and published on 26 March 2015.
- 132.
55% of respondents thought it was permissible to agree prices with competitors to avoid losing money; 47% thought it permissible to discuss prospective bids with competitors; 40% thought it permissible to agree to market share. See CMA Survey, paragraph 4.18.
- 133.
CMA Survey, paragraph 4.20.
- 134.
See paper by Andreas Stephan ‘Survey of Public Attitudes to Price Fixing in the UK, Germany, Italy and the USA’, CCP Working Paper 15-8 (‘Stephan (2015)’).
- 135.
Stephan (2015), table 6.
- 136.
See paper by Andreas Stephan ‘Survey of Public Attitudes to Price-Fixing and Cartel Enforcement in Britain (2008) 5 Competition Law Review 123’ (‘Stephan (2008)’), Table 14.
- 137.
While a majority jury is sometimes permissible for English (and Welsh) jury trials, a majority of 10 - 2 is required, suggesting that at least 83% of the jury must think that a person defending a charge of the original cartel offence was dishonest. Simple majorities are acceptable in Scottish jury trial, meaning that a representative Scottish jury could convict a cartelist were an original cartel offence case ever to be tried in Scotland.
- 138.
See Sect. 12.2.2 above.
- 139.
Examples are cited in Norris v United States of America [2008] UKHL 16 at paragraph 19.
- 140.
Stephan (2015), Table 7.
- 141.
Stephan (2015), Table 8.
- 142.
Stephan (2008), section 3.4.
- 143.
Stephan (2015), Section 7.
- 144.
Stephan (2015), Table 11.
- 145.
Stephan (2015), Table 8.
- 146.
The prison sentences imposed in the Marine Hose Criminal Case were such that any lower and the defendants would have been extradited to the US to serve the remainder of the time in a US prison, as per the terms of the defendants’ plea agreements with the US authorities. The result of this was that the defendants effectively requested the sentences which they received, despite their appearing excessive when set against the sentences subsequently imposed for the original cartel offence. As such, this case should be regarded as an outlier. See R v Whittle, Allison and Brammar [2008] EWCA Crim 2560, paragraph 27.
- 147.
See Sect. 12.2.4 above.
- 148.
See the BKA’s 2016 annual report and case database. The BKA uses the term ‘cartel’ to define any breach of the prohibition on anticompetitive agreements.
- 149.
Stephan (2015), Table 6.
- 150.
Stephan (2015), Table 6.
- 151.
For example at section 64(3)(b) of the Act.
- 152.
See Sect. 12.2.4 above.
- 153.
See Sect. 12.2.4 above.
- 154.
Article 12, Procedural Regulation.
- 155.
See paragraph 15-524 Archbold Criminal Pleading Evidence and Practice 2018 Ed.
- 156.
See paragraph 15-523 Archbold Criminal Pleading Evidence and Practice 2018 Ed.
- 157.
Wouter Wils ‘Is Criminalization of EU Competition Law the Answer?’, World Competition, Volume 28, No. 2, June 2005, pp. 117–159, para 138.
- 158.
See R v Whittle, Allison and Brammar [2008] EWCA Crim 2560.
- 159.
See Sect. 12.2.3 above.
- 160.
Section 9 CA98 (as amended).
- 161.
ECJ, case T-17/93 Matra Hachette v Commission, ECLI:EU:T:1994:89, pt 85.
- 162.
Commission Regulation 316/2014.
- 163.
Any decision to charge a suspect with either cartel offence must follow the Code for Crown Prosecutors, which sets out an evidential and a public interest test, both of which must be met.
- 164.
Note that in the CMA’s investigation into cleanroom laundry services and products in Case 50283, the defendants argued unsuccessfully that the Technology Transfer Block Exemption exempted their arrangement (see paragraph 5.218 of the decision). The CMA’s decision rejected the application of the Technology Transfer Block Exemption on a number of grounds but only after what appears to have been a detailed review, which considered (among other things) market shares, the know-how (or lack of it) transferred between the parties, their competitive situation at the time of the alleged transfer and the changes to the arrangement which had taken place. Were these factors irrelevant to what the CMA was trying to prove, it seems unlikely that such a detailed review would have been carried out.
- 165.
See Sect. 12.3.3 above.
- 166.
As noted in Sect. 12.2.7 above, UK regulatory bodies can and do take independent action when a person who is regulated by them is involved in a breach of competition law.
- 167.
See Sect. 12.2.7 above.
- 168.
See Sect. 12.2.7 above.
- 169.
Drivers of Compliance and Non-compliance with Competition Law, OFT 1227, May 2010, paragraph 4.1.6.
- 170.
Drivers of Compliance and Non-compliance with Competition Law, OFT 1227, May 2010, paragraph 4.1.7.
- 171.
See Sect. 12.3.4 above.
- 172.
Daniel Trodd entered into a disqualification undertaking not to act as a director for 5 years following the CMA’s decision in Case 50233 (‘Online Posters and Frames Investigation’), Barry Kenneth Cooper was disqualified as a director for 7 years following his conviction of the original cartel offence at the conclusion of the Precast Concrete Drainage Criminal Investigation.
- 173.
The survey reported in Stephan (2008); the YouGov 2014 Survey; The impact of competition interventions on compliance and deterrence (OFT 1391, December 2011).
- 174.
Section 7 BA10.
- 175.
Section 7(2) BA10.
- 176.
ECJ, case C-542/14, VM Remonts, ECLI:EU:C:2016:578.
- 177.
See Sect. 12.2.6 above.
- 178.
Notably, on 20 April 2018, the Italian Competition Authority launched a consultation on its draft competition compliance guidelines, which explicitly set out separate discounts for compliance programmes in place before an infringement takes place and compliance programmes in place after an infringement takes place.
- 179.
See for example Council Framework Decision 2002/475/JHA of 13 June 2002 on combating terrorism, which directed Member States to criminalise certain actions related to terrorism.
- 180.
Antimonopoly Office of the Slovak Republic response.
- 181.
Portuguese Competition Authority response.
- 182.
Competition and Consumer Protection Commission response.
- 183.
Set out most famously in Max Weber’s 1919 essay Politics as a Vocation.
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Jenkinson, R. (2019). United Kingdom. In: Këllezi, P., Kilpatrick, B., Kobel, P. (eds) Liability for Antitrust Law Infringements & Protection of IP Rights in Distribution. LIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition. Springer, Cham. https://doi.org/10.1007/978-3-030-17550-4_12
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