Today heralds a new criminal cartel offence in the UK introduced by section 47 of the Enterprise and Regulatory Reform Act 2013 (“ERRA 2013”).

The Competition Commission and the OFT are now merged into the Competition and Markets Authority (“CMA”) and the CMA will have primary responsibility for the investigation and prosecution of criminal cartels.  It has published a number of guidance documents describing how it will exercise its powers, reiterating publicly that the approach to enforcement does not differ fundamentally from that taken by the OFT. The CMA today released a statement setting out its 5 strategic goals.

The main change to the previous offence is  that for cartel conduct occurring after 1 April 2014,  the prosecution no longer needs to prove dishonesty to secure the criminal conviction of an individual.

The new cartel offence, like the old one, can be committed regardless of whether the illicit agreement is actually implemented. However, the new offence is defined to exclude agreements that are made openly. Under a new section 188A of the Enterprise Act, the cartel offence will not be committed where, under the arrangements:

1. customers are given relevant information about the arrangements before entering into agreements for the supply to them of the product or service affected; or
2. in the case of bid-rigging arrangements, the person requesting bids is given relevant information about the arrangements before or at the time a bid is made; or
3. relevant information about the arrangements is published in the London Gazette before they are implemented.

The exclusion of agreements that are made openly reflects the Government’s intention to target only the most serious cartels. In addition to the exclusions in section 188A, section 188B provides the following defences to the cartel offence:

1. At the time of making the agreement, the individual did not intend that the nature of the arrangements would be concealed from customers or from the CMA; or
2. The individual took reasonable steps, before making the agreement, to ensure that the nature of the arrangements would be disclosed to professional legal advisers for the purposes of obtaining advice on them before their implementation.

The CMA’s Cartel Offence Prosecution Guidance of March 2014 states that the phrase “professional legal advisers” is intended to cover both external and in-house legal advisers who are appropriately qualified. For this defence to succeed, an individual must have made a genuine attempt to obtain legal advice about the arrangement, including making full disclosure of all relevant facts to the professional legal adviser.

The UK Government’s position is that the requirement to prove dishonesty in the previous offence prevented more cases being prosecuted. Since the implementation on the criminal cartel offence in June 2003, only two cases have come to court, one resulting in convictions. By contrast, in Ireland, where dishonesty is not required, over the same period, there have been 38 criminal convictions from 6 separate cases.