Following their US conviction, three oil executives have returned to the UK to face the first British criminal investigation into price fixing. They have been charged with bid rigging, price fixing and market allocation and made their first court appearance on 29 January 2008. 

Introduction

The three businessmen, Bryan Allison, David Brammar, and Peter Whittle, were arrested in the United States in May 2007 following allegations of price fixing and bid rigging.

The trio, together with five others, had been involved in the sales of marine hoses; a flexible hose used in the oil industry to transfer oil between tankers and storage facilities. The arrests coincided with dawn raids in the UK, France and Italy, signalling international cooperation in the fight against cartels.

Plea bargain

Mr Allison and Mr Brammar, both of Dunlop Oil and Marine Limited, together with Mr Whittle, an independent consultant, admitted their involvement in the price fixing of £122 million worth of marine hoses at a Texan court in December.

The three men made a plea bargain agreement with the US Department of Justice enabling them to return to the UK to face domestic charges. Sentencing of the trio in the US has therefore been deferred subject to the outcome of the British trial.

On their arrival at Heathrow, all three were arrested and interviewed by the OFT before being charged with bid rigging, price fixing and market allocation. As part of the plea bargain in the US, they have each agreed to serve the following sentences:

  • Peter Whittle: 30 months
  • Bryan Allison: 24 months
  • David Brammar: 20 months.

They made their first UK court appearance on 29 January 2008 at the City of London magistrates' court but declined to submit a plea. Their next day in court is scheduled for March.

Should the men plead guilty in front of a UK court, each day they spend in a British jail will count towards the sentences agreed with the US Department of Justice. However, should they receive lighter sentences from the UK court, they will have to return to the US to complete the remainder of their original sentences.

UK Trial

This case signifies the first time the OFT has used its criminal powers under the Enterprise Act 2002, demonstrating its commitment to punishing and deterring cartel offenders. Allison, Brammar and Whittle each face a maximum sentence of five years under the 2002 Act, together with the possibility of an unlimited fine. The men could also be disqualified from being directors for up to 15 years.

It is important to remember that all three men must be presumed innocent until proven guilty. Interestingly, should they decide not to plead guilty, this will have the effect of nullifying their US deal, and will result in their extradition to the US as well as much tougher sentencing and the possibility of serving consecutive British and American prison terms.

Further Investigations

The companies themselves are also under investigation by the European Commission as part of its cartel procedure, and therefore may receive an additional fine of up to 10% of the company's annual worldwide turnover should an infringement be proven.

Additionally, the companies may also be subject to private claims for damages.

Conclusion

Although the authorities have been criticised for trying the businessmen twice for the same crime, the deal has also been hailed as a pioneering approach to international law enforcement. The US assistant attorney general for antitrust defended their approach to the cartelists, stating that the US and UK offences were distinct, and that the decision taken by the US court did not affect the trial scheduled to take place in Britain.

The assistant attorney general further commented that the cooperation used in this case could be mimicked in other international financial criminal investigations, including those involving fraud and corruption.

In a similar case, three British bankers have plead guilty in a Texan court to defrauding the Natwest bank in order to secure a shorter sentence. The deal struck by the oil executives may give the Natwest Three further hope that, when their plea bargain deal is confirmed in February, they will be able to serve their prison sentence in Britain.

Meanwhile this latest crackdown on white-collar crime provides a severe warning to those involved in price fixing activities, demonstrating the need for executives to take responsibility for their company's actions. The marine hose case further demonstrates that when all goes wrong, cooperation with the authorities may help mitigate the worst-case scenario.