The UK Competition and Markets Authority (CMA) has the power to seek a director’s disqualification where their company has breached competition law. Daniel Aston, former Managing Director of the online poster supplier Trod Ltd, has recently become the first person to be disqualified under this power.
The CMA found that Trod breached competition law by agreeing with a competing online seller not to undercut each other’s prices for posters and frames sold on Amazon UK. The agreement was implemented using automated re-pricing software. Trod Ltd was fined £163,371 for the breach, and Mr Aston has given an undertaking not to act as a director of any UK company for five years. Had he not given that undertaking the CMA could have asked the courts to apply the maximum disqualification period of 15 years.
While in this case Mr Aston was personally involved in Trod’s breach of competition law, the CMA does still expect all directors (executive and non-executive) to have some understanding of key competition law principles and of the importance of competition compliance. Therefore all directors carry some risk of disqualification if their company is involved in a breach. The CMA has adopted guidance on compliance and disqualification, including summary guidance for company secretaries and non-executive directors.
This case highlights that competition law breaches can have serious financial consequences not only for businesses, but also for their directors. The loss of £163k is not something any business would be happy about, but additionally no director wants to lose their livelihood for up to 15 years.
The CMA is taking an increasingly tough line on competition law breaches, and so competition compliance should be a priority for all businesses’ diligence and risk management operations.