An individual appeared in court in the UK on 27 January 2014 charged with the “cartel offence”. The cartel offence is rarely used, so this was an extremely significant event for UK competition law and a warning for the future.
The cartel offence is set out in the UK Enterprise Act 2002: it is a criminal offence for individuals to dishonestly agree to make or implement, or to cause to be made or implemented, arrangements which constitute certain types of cartel activity, namely price-fixing, limiting or preventing supply or production, market-sharing and bid-rigging. Individuals convicted of the cartel offence may be sentenced to up to five years’ imprisonment and/or an unlimited fine.
The charge relates to allegations of customer allocation, price-fixing and bid-rigging between 2004 and 2012 in respect of the supply in the UK of galvanised steel tanks for water storage. There is a parallel civil investigation as to whether certain companies have infringed the Competition Act 1998 that could lead to the imposition of significant fines on companies.
The UK Office of Fair Trading is extremely keen to proceed with cartel offence cases, due in particular to the deterrent effect. However, to date it has had success in only one case (the Marine Hose case, where guilty pleas were entered), and it suffered a very high-profile and embarrassing failure in the Airline Passenger Fuel Surcharge case.
This case provides a strong reminder to companies as well as individuals to set up, adopt, take part in and implement effective antitrust compliance programmes. This will give companies the best chance of avoiding or at least minimizing the risk of competition law sanctions for the company and criminal sanctions for employees.