Under the current UK regime, cartels are enforced by both civil and criminal means: corporate civil liability under the Chapter I prohibition contained in CA98 or the criminal cartel offence for individuals under EA02, or both. In many cartel cases, both investigations will proceed simultaneously.
The CMA continues to regard cartel enforcement as a major priority, and is working to ensure that it has the requisite people, skills and infrastructure to launch or take over major international cartel cases post-Brexit. As mentioned above, the draft 'no deal' guidance goes into detail on how cartel cases will be treated in the event that Britain leaves the EU without a deal in place.i Significant cases
In 2018, the CMA only issued one cartel decision, fining two of the main suppliers of household coal for barbecues £3.4 million for taking part in a market-sharing cartel. An investigation in the pharmaceutical sector was launched in October 2017, but was discontinued in November 2018 on administrative priority grounds. In 2017, the CMA issued three cartel infringement decisions concerning 'cleanroom' laundry services, furniture parts and real estate agents, and brought its criminal investigation into the construction industry to a close. It also successfully defended an infringement decision before the CAT in Balmoral Tanks, a case that raised important points of principle in relation to information exchange.Supply of solid fuel
As mentioned above, the CMA in 2018 fined two bagged household fuels suppliers over £3.4 million for rigging competitive tenders to secure supply to Tesco and Sainsbury's through a market-sharing cartel. This case started after intelligence work following a tip-off to the CMA's cartels hotline. The two suppliers had an arrangement wherein for each tender concerned, the other supplier would intentionally submit a higher bid that it was designed to lose, in turn ensuring that the existing supplier could retain their customer. The two suppliers also exchanged competitively sensitive information and confidential pricing information such as ongoing tendering processes, in order to facilitate their market-sharing cartel. The two companies admitted infringing competition law and received a 20 per cent fine discount for settling the case.Residential estate agency services
On 31 May 2017, the CMA issued a decision finding that six estate agents operating in the Burnham-on-Sea area in South-West England had taken part in a cartel to fix prices in relation to the provision of residential estate agency services, with fines totalling £370,084. This followed the admission of liability by four other estate agents and their paying fines totalling £372,233 under a settlement agreement reached with the CMA on 2 March 2017. On the basis of information received during that investigation, the CMA has opened an investigation into estate agents in other locations across the UK, which are undisclosed at the time of writing. This case is still at an early stage, and the CMA has not reached a view on infringement – an update is due by the end of April 2019.FCA
In November 2017, the FCA issued its first SO as part of its investigation into information exchange in the asset management sector – an investigation that is ongoing at the time of writing. Four asset management firms are alleged to have shared information, generally on a bilateral basis, on prices they intended to pay in relation to one or more of two initial public offerings and one placing, shortly before the prices were set. This may lead to the FCA's first CA98 infringement decision. Such a decision would be taken by a three-member Competition Decision Committee group within the FCA, but separate from the case investigation team, similar to the procedure followed by the CMA. Further SOs and eventually decisions are to be expected in the future as the FCA seeks to cement its role as a concurrent competition enforcer. In that regard, the FCA also opened a CA98 investigation into alleged collusion in the aviation insurance market. This was subsequently transferred to the Commission, whose investigation is ongoing.Balmoral Tanks
In respect of the CMA's cartel enforcement, in 2017 the CAT upheld a decision fining Balmoral Tanks (Balmoral) £130,000 for exchanging confidential information on prices and price intentions with competitors manufacturing galvanised steel tanks. The decision concerned a single meeting in July 2012 at which Balmoral was invited to join a long-running price-fixing cartel. Balmoral refused to take part in the cartel, but exchanged confidential information with competitors. The meeting had been covertly recorded by the CMA. The CAT confirmed that even sharing information on a single occasion, even when refraining from joining others in price fixing or market sharing, can constitute a breach of competition law. Balmoral subsequently challenged the CAT's ruling in the Court of Appeal, but the decision was upheld in its entirety in February 2019.ii Trends, developments and strategies
As part of its commitment to drive greater enforcement, the CMA continues to focus on raising awareness of competition law. In October 2018, the CMA launched a cartel awareness campaign which aims to educate businesses about illegal practices and to encourage whistle-blowing. Alongside this campaign the CMA released ICM research which showed that, out of 1,000 companies surveyed:
- only 57 per cent knew it was illegal to fix prices;
- nearly half either did not know or thought it was legal to discuss prices with competing bidders when quoting for new work (23 per cent said 'don't know, and 25 per cent actually thought it was legal); and
- significantly more than half (59 per cent) did not know or thought that dividing up and sharing customers with rivals was legal (24 per cent said 'don't know' and 35 per cent actually thought it was legal).
This campaign followed on from the CMA's 'Cracking Down on Cartels' campaign, which promised anonymity and rewards of up to £100,000 for individuals reporting cartel activity. This campaign was followed by a 30 per cent rise in the number of tip-offs. The CMA has also introduced a new tool to spot bid rigging that procurement professionals can download and use free of charge.
The CMA has noted that the cartel awareness campaign is designed to target industries including construction, manufacturing, recruitment, estate agents and property management and maintenance, as these sectors have been identified as being particularly susceptible to cartel behaviour. The CMA's view is that compliance work of this sort is of increasing importance, as Brexit may distract businesses from competition compliance concerns.iii Outlook
At the time of writing the CMA is expecting an increased cartel workload post-Brexit, when it will be responsible for investigating and enforcing the UK elements of major international cartels. As mentioned above, the CMA is focusing on raising awareness of cartels at a time when competition law is at risk of being neglected by companies primarily concerned with Brexit.