Last month three UK businessmen were sentenced to imprisonment as part of the first ever criminal cartel convictions.

The Enterprise Act 2002 introduced the first cartel offence five years ago under UK law. A person may be found guilty of the cartel offence if they dishonestly agree with one or more persons to engage in a ‘prohibited cartel activity’. Prohibited cartel activities include direct or indirect price-fixing, limitation of production or supply, sharing customers or markets, and bid-rigging. If found guilty of a cartel offence, a person can be sentenced up to a maximum of five years’ imprisonment and/or will receive a fine.

In June the Office of Fair Trading (OFT) announced that three businessmen had been convicted after pleading guilty to cartel related offences. A criminal investigation had been carried out in relation to a worldwide conspiracy in the oil and defence industries. The men were arrested in connection with this investigation and charged in the US. As part of their plea bargain the men returned to the UK to co-operate with the OFT investigation.

The men were later charged in the UK with dishonestly participating in a cartel relating to the supply of marine hose and ancillary equipment in the UK. They were each given two and a half or three years’ imprisonment as well as being disqualified from acting as directors for the next five to seven years.

 It is important to note that the judge in this matter expressed these sentences were to be a minimum standard and any future sentences for cartel offences were likely to be higher. The cartel was in operation at the time the offence was introduced, and only the activity taking place after this introduction could be taken into account in assessing the length of time to be spent behind bars. As it is now five years since the offence was created, this will not be a mitigating factor in sentencing anyone currently engaging in cartel activity, and so future sentences are likely to be tougher.

The convictions highlight the fact that the OFT are currently taking cartel investigations extremely seriously. Companies need to ensure they have clear competition compliance programs which are maintained effectively. Management and also individual employees need to be made aware of the significant personal risks involved in cartel activity and also understand that imprisonment is now a very real possibility.

Posted: July 10th, 2008 under Competition Law & Regulatory.
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