In review: anti-cartel enforcement in United Kingdom

All questions

Cartels

Under the current UK regime, cartels are enforced by both civil and criminal means: corporate civil liability under the Chapter I prohibition contained in the CA98 or the criminal cartel offence for individuals under the EA02, or both.

In terms of criminal cartels, these are comparatively rarer, with the CMA having opened only seven criminal cartel cases since the creation of the offence in 2003. The most recent criminal cartel investigation into the Supply of precast concrete drainage products closed in September 2017.¹¹ Since then, the CMA has not launched any criminal cartel investigations.

Civil enforcement under Section 2 of the CA98 therefore remains very much the default enforcement method.

On 17 December 2020, the CMA issued a decision finding that two suppliers of groundworks products to the UK construction industry, Vp plc and MGF (Trench Construction Systems) Ltd, had colluded illegally to reduce competition and maintain or increase prices.¹² A third company, Mabey Hire Ltd, was also found to have been involved in the cartel for a short time. The CMA found that the cartel arrangement took place on and off between 2011 and 2017, and was a response to increased price competition in the market. Specifically, the CMA concluded that Vp and MGF had engaged in conduct amounting to a horizontal cartel by coordinating commercial behaviour, in particular pricing practices, and sharing competitively sensitive pricing and strategic information. Fines totalling more than £15 million were imposed on Vp and MGF (£11.2 million and £3.7 million respectively). Mabey was not fined as it brought the illegal activity to the CMA's attention and cooperated with the investigation under the CMA's leniency programme.

On 4 November 2020, the CMA issued a decision finding that Associated Lead Mills Limited, Royston Sheet Lead Limited (along with its parent company International Metal Industries Limited) and HJ Enthoven Limited (along with its parent company Eco-Bat Technologies Limited) had infringed competition law by entering into four anticompetitive arrangements.¹³ The CMA imposed fines totalling over £9 million on the parties, which include settlement discounts to reflect the fact that they admitted their role in the infringement and agreed to cooperate with the CMA. The four anticompetitive arrangements took place between October 2015 and April 2017 and included colluding on prices, sharing the rolled lead market by arranging not to target certain customers, and arranging not to supply a new business because it risked disrupting the firms' existing customer relationships. Each of the arrangements also included exchanges of commercially sensitive information.

In July 2020, the CMA found that a hospital belonging to a large healthcare provider, Spire Healthcare Ltd (a member of the Spire Healthcare Group), and seven private consultant eye specialists had entered into an illegal agreement following a discussion at a consultants' dinner.¹⁴ The agreement was to fix the price of initial consultations for private self-pay patients at that hospital. The price-fixing agreement started in August 2017 and continued for at least two years until the CMA opened its investigation. Ultimately, six individual consultants were fined in the range of £642 to £3,859 for agreeing to fix initial consultation fees and the private healthcare group was fined £1.2 million. The fines were reduced by 20 per cent as the parties involved admitted wrongdoing and complied fully with the CMA. One of the seven consultants was granted full immunity under the CMA's leniency programme. Notably, the CMA stated in its decision that the infringement involved the 'most serious type of cartel behaviour' with Spire acting as both the instigator and facilitator of the agreement between these competitors.¹⁵

Despite the lack of criminal enforcement, the CMA has been increasingly seeking director disqualifications in cartel (and other competition law) cases. These do not require a court process and so allow a 'softer' form of enforcement against individuals without needing to pursue the criminal cartel route and, for the time being, look set to remain a favoured enforcement tool. In February 2019, the CMA published guidance on competition disqualification orders, replacing the previous five-step assessment with a 'principles-based' approach.¹⁶ The CMA's Annual Plan 2021 to 2022 details 25 director disqualifications for breach of competition law since the power was first used in 2016, covering a wide range of sectors, including construction, pharmaceuticals and estate agencies.¹⁷

As part of its commitment to drive greater enforcement, the CMA has made a concerted effort to raise awareness of competition law.

Although criminal prosecutions have not been the norm in terms of CMA enforcement, they are by no means dead yet. On 21 October 2020, the Serious Fraud Office (SFO) and the CMA signed a memorandum of understanding (MoU) in respect of their intention to cooperate in the investigation and prosecution of criminal cartel offences.¹⁸ The MoU sets out a range of possible types of investigation, including joint investigations, SFO or CMA-led investigations (with the participation of the non-leading authority subject to the direction of the leading authority) and concurrent investigations (with the CMA responsible for civil matters and the SFO responsible for criminal matters). Therefore, while the MoU does not exempt the CMA from its responsibility for cartel prosecutions entirely, it does indicate that the SFO is positioned and willing to share at least some of this responsibility. There is likely to be much to be gained from the SFO being able to take its own prosecutions forward or add expertise to CMA-led investigations. It remains to be seen, however, whether this MoU will act as a catalyst for increasing the amount of criminal cartel prosecutions following a relatively extended period of lesser enforcement.

In terms of potential reform, from July to October 2021, the Department of Business, Energy and Industrial Strategy (BEIS) published a range of proposals in the areas of competition policy, consumer rights and consumer law enforcement.¹⁹ The consultation recognises that there are 'inherent challenges' associated with detecting and pursuing effective enforcement against cartels, not least given the efforts of participants to conceal their behaviour.²⁰ As such, the consultation contemplates reform to the leniency programme. Specifically, the consultation recognises that while leniency recipients are insulated from joint and several liability in private actions, they can still be liable for damages claims from their own direct or indirect purchasers.²¹ Therefore the consultation considers whether holders of full immunity in the public enforcement process should be imbued with additional immunity for damages caused by the cartel.²² The CMA supports this proposal.²³ Also of potential relevance to cartel enforcement is the proposal that the CMA's powers in CA98 investigations be extended to match those under the EA02 (i.e., powers to interview witnesses that do not necessarily have a connection to the business under investigation, as is currently required by Section 26A(1) of the CA98).²⁴ The outcome of the consultation is pending at the time of writing, but, whatever it produces, it is clear that the direction of travel across the spectrum of competition law is towards increased powers and enforcement.