For the first time since the sanction was introduced in 2003, the UK's Competition and Markets Authority (CMA) has secured the disqualification of the director of a company found to have breached competition law. This serves as an important reminder of the CMA's powers to sanction individuals found to have participated in unlawful anticompetitive behavior. In addition to disqualification orders, the CMA has the power to fine an individual or prosecute under the criminal cartel offense. These proceedings are separate to any fines which the CMA may impose on the companies which the directors manage and are designed to deter individuals from getting involved in or ignoring breaches of competition law.
Daniel Aston, former managing director of Trod Ltd, is banned from acting as a director of any UK company for the next five years. In August 2016, the CMA fined Trod £163,371 (USD 207,000) after finding that the poster and frame retailer had agreed with a competitor, GB Eye Limited (GBE), not to undercut each other's prices on the online retail platform Amazon.
Under the Company Directors Disqualification Act, the CMA has the power to order the disqualification of a director for a maximum of 15 years, where the company of which he is a director has breached competition law, and the director is found to have conducted in a manner that makes him unfit to be responsible for the management of a company. This includes not only directors that are directly involved in competition law breaches but also those that had reasonable grounds to suspect that there was a breach and took no steps to prevent it, or did not know but ought to have known that there was a breach.
The CMA found that Mr. Aston had personally contributed to Trod's breach of competition law, as he had caused the company to enter into and implement the agreement with GBE. In particular Aston had introduced automated re-pricing software at Trod, which was configured to give effect to the cartel.
The CMA can disqualify a director either by way of a court order following a director's conviction for a criminal cartel offense, or by way of an undertaking offered by the director. In this case, Aston offered the CMA a disqualification undertaking before court proceedings against him had started. In consideration for his cooperation, the CMA reduced the period of disqualification to five years. In contrast, having reported the cartel to the CMA, GBE and its directors were granted total immunity from fines and disqualifications under the CMA's leniency policy.
If an individual breaches a competition disqualification order or undertaking, he may also be prosecuted for a criminal offense and face imprisonment and personal fines.
Director disqualification for breaches of competition law remains rare. In 2008, English courts disqualified, for five to seven years, three directors who pleaded guilty to their involvement in a price fixing, market sharing and big rigging cartel (Marine Hose). However, the directors were disqualified under the general disqualification regime, which applies to any director convicted of an offense in connection with the management of a company rather than under the competition disqualification regime. Nevertheless, this latest disqualification case illustrates the CMA stated determination to protect consumers and benefit business and the wider economy by the vigorous enforcement of competition law by focusing on the deterrence of individuals through prosecutions under the criminal cartel offense and the disqualification of directors.
The CMA announcement can be found on the government website.