NEW UK CRIMINAL CARTEL OFFENCE IN FORCE

cmaToday 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.

This entry was posted in OFT, UK by Michael O'Kane. Bookmark the permalink.

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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