An investigation by the U.S. antitrust authorities into an alleged cartel in the marine hose sector has had repercussions reaching far beyond the United States.
The investigation centres on allegations that a number of suppliers of marine hose (which are used for the transportation of oil between tankers and storage facilities) colluded to allocate markets and customers, restrict supplies, fix prices and rig bids. The collusion is alleged to have taken place between at least 1999 and May 2007. The investigation was initiated by the U.S. Department of Justice and Department of Defense.
Since all of the potential defendants are foreign nationals, the U.S. authorities cooperated closely with the competition authorities in the relevant jurisdictions. As a result of this international coordination, unannounced searches and arrests undertaken by the U.S. authorities in Houston and San Francisco in May 2007 were timed to coincide with searches carried out by officials of the European Commission and UK Office of Fair Trading (“OFT”).
In spite of an increasing degree of convergence in the approach taken by different antitrust authorities internationally, local legal differences means that the implications of the alleged breaches will differ significantly by jurisdiction. In the United States and the UK, criminal charges have been brought against the individuals involved. By contrast, the European Union does not have the power to bring criminal proceedings against individuals for breach of antitrust rules, and the investigation may therefore only be pursued as an administrative case against the companies alleged to be involved under EU law.
Under an innovative plea agreement, the three UK nationals charged in the United States pleaded guilty to criminal charges in the United States, but were then allowed to return to the UK in return for their agreement to “accept responsibility for, and plead guilty to, the UK cartel offence.” This is the first instance in which the UK competition authorities have brought criminal charges under the criminal “cartel offence,” which came into force in June 2003. Each of the three UK defendants who entered into a plea agreement accepted a sentence in the United States of between 24 and 30 months imprisonment (subject to approval by the relevant US court). Under the plea agreement, any prison sentences imposed by the UK courts will be set off against the U.S. sentences on a day-for-day basis.
The OFT has emphasised that each of the UK defendants will be presumed innocent before the UK courts. However, each of the UK defendants is likely to be in the unusual position of requesting a sentence before the UK courts of no less than the period agreed to in their respective plea U.S. agreements, since they will otherwise have to return to the United States to serve out the remainder of their agreed sentence.
The case highlights the complex interplay between different antitrust regimes. Most large cartels have an international element and so collusive agreements will often expose not only the companies involved, but also their employees to sanctions in a number of jurisdictions. This is in addition to any actions for damages that may be brought by companies who claim to have suffered harm as a result of breach of competition law.
The proceedings can be seen as part of long line of antitrust cases in which European authorities (at both the EU and national level) have brought cases on the back of U.S. investigations. Other recent examples of this trend include the Microsoft and Vitamins cases.