Sonya Branch, the OFT’s Executive Director, Enforcement and Mergers (and soon to be Director of Enforcement at the newly formed CMA), has highlighted some of the challenges in bringing successful criminal cartel prosecutions under the Enterprise Act 2002 (the EA), what the organisation is doing to address these and what the outlook is for the CMA when it takes over from the OFT in April 2014. In a speech at the Law Society, she revealed that a major contributing factor to the fact that there have been so few prosecutions of the criminal cartel offence has been the requirement to prove dishonesty.

The heart of the problem is in the two-pronged Ghosh test for dishonesty, which requires the OFT not only to show that the conduct was objectively dishonest but also that the defendant subjectively realised that his conduct would be regarded as such. The fact that cartel cases do not usually have clear victims, and that defendants often do not gain personally from the cartel conduct, makes this particularly difficult to prove to a jury. Branch also referred to studies which have shown that up to 40% of the general public do not consider price fixing to be dishonest, meaning that juries may be persuaded by arguments that defendants have acted with well-meaning intentions, such as to preserve jobs. The high uncertainty surrounding convictions has, according to Branch, been a major factor in the OFT’s decision to close several criminal cartel investigations without taking enforcement action.

As a result, the OFT has moved towards a more ‘intelligence-led’ approach to cartel detection with the aim of increasing deterrence through better detection rates and delivering criminal cartel investigations and prosecutions more efficiently. This is proving successful – almost half of the new cartel cases opened over the last three years have been intelligence-led rather than coming to the OFT’s attention through leniency applications.

On 1 April 2014, the Enterprise and Regulatory Reform Act 2013 will come into force and the CMA will take over the role of investigating and prosecuting criminal cartel conduct from the OFT. At the same time, the requirement of dishonesty will be removed from section 188 EA, a move intended to make the offence easier to prove in court. The CMA will publish prosecutorial guidance on the new offence later this year. The Government has also allocated extra funding to support the CMA’s cartel enforcement after 2015 and enable it to improve the scale and sophistication of its criminal cartel enforcement activities. It remains to be seen whether these changes will be sufficient to increase the number of criminal cartel prosecutions, of which there have been just two (only one of them successful) since the offence was enacted in 2002.

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About Michael O'Kane

Michael O’Kane is a partner and Head of the Business Crime team at leading UK firm Peters & Peters. Described as ‘first-rate’ (Legal 500 2012), he “draws glowing praise from commentators” (Chambers 2013) for handling the international aspects of business crime, including sanctions, extradition and mutual legal assistance. Called to the Bar in 1992 and prior to joining Peters & Peters he was a senior specialist prosecutor at the Crown Prosecution Service Headquarters(CPS). At CPS HQ he was a key member of a small specialist unit responsible for the prosecution of serious and high profile fraud, terrorist and special interest criminal matters including the Stansted Airport Afghan hijacking and the prosecution of Paul Burrell (Princess Diana’s butler). Michael joined Peters & Peters in 2002. He became a partner in May 2004, and Head of the Business Crime team in May 2009. Since joining Peters & Peters, Michael has dealt with a wide range of business crime matters. He has particular expertise in international sanctions, criminal cartels, extradition, corruption, mutual legal assistance, and FSA investigations. Described as“ an influential practitioner in fraud and regulatory work, so much so that he is top of the referral lists of many City firms for independent advice for directors” (The Lawyer’s Hot 100 2009), he was recognised as one of the UK’s most innovative lawyers in the 2011 FT Innovative Lawyer Awards and included in the list of the UK's leading lawyers in 'The International Who's Who of Asset Recovery 2012. In 2012 he was the winner of the Global Competition Review Article of the Year. Michael regularly appears on television and radio to discuss his specialist areas and he is the author of the leading textbook on the UK Criminal Cartel Offence “The Law of Criminal Cartels-Practice and Procedure” (Oxford University Press 2009). Recent/Current Sanctions Work • Representing 109 individuals and 12 companies subject to designation by the European Council under targeted measures imposed against Zimbabwe. This is the largest and most complex collective challenge to a sanctions listing ever brought before the European Court. • Acting for a former Egyptian Minister and his UK resident wife, challenging their designation by the European Council of Ministers under targeted measures brought against former members of the Egyptian Government. • Advising a company accused in a UN investigation report to have breached UN sanctions imposed in relation to Somalia. • Advising a UK company in relation to ongoing commercial relationships with an Iranian company listed under both EU and UN sanctions. • Advising an individual in relation to a UK investigation for alleging breaching nuclear export controls.

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