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Behind bars

John Cassels
09/08/2013

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United Kingdom

To be found guilty of the cartel offence in the UK no longer requires proof of dishonesty.

To be found guilty of the cartel offence in the UK (a crime that attracts penalties of up to 5 years in jail, an unlimited fine and disqualification from being a director for up to 15 years) no longer requires proof of dishonesty.  This means that price fixing, bid rigging, and market sharing are essentially strict liability criminal offences. 

Recent changes to the law, which included removal of the dishonesty requirement, have created a criminal antitrust Frankenstein's monster.  As with the original rule, individuals are forbidden from making arrangements between two businesses which fix prices, limit supply or production, or share markets.  However, a number of circumstances which will prevent an agreement amounting to a criminal cartel and defences have now been introduced.

For example, agreements made in order to comply with a legal requirement will not be criminal.   In addition, individuals will not be guilty in certain circumstances where relevant information (i.e. names of the parties to the agreement, nature of the agreement, products and services to which it relates) "would be" disclosed to potential customers before any purchasing agreement is finalised or "would be" generally published before the agreement is implemented.   It is unclear whether phrasing this as "would be" disclosed rather than "is" disclosed or "has been" disclosed will be of any significance.

There are, in addition, three defences to the offence.  Two of the defences refer to the defendant's lack of intention to conceal the nature of the arrangements from customers or from the UK's new competition authority (the Competition and Markets Authority) at the time when the arrangement was made.  The third defence is that before the arrangements are made, the defendant took reasonable steps to ensure that the nature of the arrangements would be disclosed to professional legal advisers for the purpose of obtaining advice about them before making or implementing them.  It is unclear whether disclosing proposed arrangements to in-house counsel will suffice.

The Government's intention seems to have been to tie criminality to concealment, as if it offered a bright and clear route to conviction.  I suspect that all affected parties (businesses, executives, the CMA, lawyers, judges, jury members) would have struggled less with dishonesty than they will with this new regime. 

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