"Banged Up" - Imprisonment for breach of competition law in the UK now a reality

After some years of talking about the possibility of imprisonment in the UK for Competition Law infringement, it has finally happened.  It was always a question of "when" and not "if", and finally in June, Southwark Crown Court sentenced three executives involved in the so-called marine hose cartel to between two and a half and three years' imprisonment.  The individuals concerned were also disqualified from acting as UK company directors for between five and seven years and two of the individuals concerned were ordered to pay combined sums of over £1m in relation to their personal gains from the cartel, or face additional prison terms.  These were the first convictions under Section 188 of the Enterprise Act 2002, known as the "cartel offence", which came into force on 20 June 2003. 

Then last month the OFT announced that four British Airways executives were being similarly charged with cartel offences in connection with the OFT's investigation into the price-fixing of fuel surcharges for long haul passenger flights between July 2004 and April 2006.  The BA executives are due in court on 24 September.  The OFT is also in the process of conducting various other investigations including into over 100 general building contractors, however there has been no suggestion so far that the case involves any criminal prosecution elements.

The marine hose and BA cases show that criminal prosecutions for UK Competition Law infringement are now a reality and should not be underestimated.  Nothing concentrates the mind like the threat of loss of liberty and this is precisely the law's intention, with the judge in the marine hose case warning that future sentences were likely to be higher, and the OFT simultaneously saying that it will bring more prosecutions against individuals participating in criminal cartels in future. 

The OFT has also said that in absent criminal prosecution, it is likely to seek director disqualification orders in less serious cases (for example where the company's involvement has been more peripheral) as an alternative.  If a company is found to have breached civil competition rules the OFT has the power to disqualify a director implicated in cartel activities from acting as a UK company director for up to 15 years.  The OFT wants UK business to clearly understand that cartel offences should be seen as another species of fraud, and the OFT's hotline, offering individuals up to £100,000 for inside information related to cartel activity, has apparently received a number of calls.  This initiative runs side by side to the OFT's general leniency or "whistleblower" programme, whereby full or partial immunity from criminal prosecution and fines can be exchanged for information leading to the dismantling and conviction of cartels.

The clear message from these cases is not to take competition law infringement lightly.  If in doubt about a particular course of action or agreement, seek legal advice before entering into it.  If worried about a past action or agreement again seek legal advice to determine whether further remedial action is required, which perhaps in worst cases may lead to voluntary whistleblower applications for leniency to relevant competition authorities such as the OFT.