Regular readers will know that serious infringements of competition law carry the risk, not only of civil liability for companies, but also of criminal charges against their employees.
September saw one of the the first prison sentences handed down to an individual found guilty of the cartel offence under the Enterprise Act 2002. It followed an investigation into criminal cartel activity into galvanised steel tanks for water storage led by the Competition and Markets Authority (CMA) between 2012 and 2015.
This sounds a clear warning that for company directors and managers who infringe antitrust law, custodial sentences are more than a theoretical possibility.
The investigation culminated in criminal charges against a number of directors of companies involved in the cartel. These included Mr Snee, the former Managing Director of Franklin Hodge Industries. Following his arrest, Mr Snee cooperated with the investigation and pleaded guilty to the cartel offence in January 2014. Indeed, as we reported previously, he was a witness for the CMA at the subsequent trial of two further individuals, who were acquitted in June.
At, Mr Snee’s own hearing, he pleaded guilty to dishonestly agreeing with others to fix prices, unlawfully allocate customers and bid rigging between 2005 and 2012. His full cooperation with the inquiry was reported to the trial judge and, whilst not absolving him from punishment, did lessen the sanctions against him.
In passing sentence, His Honour Judge Goymer indicated that his starting point for an offence of this nature was a prison sentence of 2 years. Taking into consideration Mr Snee’s prompt guilty plea and his voluntary cooperation as a witness, the Judge reduced his sentence by the “higher end” discount of 75%, and concluded that it was appropriate in the circumstances of this case for the resulting 6 month sentence to be suspended.
In explaining the approach to sentencing, the judge remarked that “the economic damage done by cartels is such that those involved must expect prison sentences”. The judge’s hard-line stance sends a chilling warning to company officers and employees involved in cartels and re-enforces the need for corporations of all sizes to invest in appropriate compliance programs.
It is not only UK businesses who should take heed of the learned judge’s warning. The CMA has the power to seek the extradition of corporate officers overseas who have been involved in anti-competitive conduct that affects the UK. Under US-UK extradition arrangements, at least 38 citizens of the United States have been summoned to face penal trials in the UK.
Between 2004 and 2011, the UK served 58 extradition requests on US citizens. None of these requests were refused by the US government or its agencies.
Meanwhile, the growing use of the EU arrest warrant means European companies with business interests in the UK must be similarly vigilant.
Another sanction at the CMA’s disposal would have been to seek a director disqualification order for a serious breach of competition law. This sanction, which appears not to have been used in this case, debars individuals from directorships or other management roles for up to 15 years.