Cartels
A cartel is taken to be a serious instance of anti-competitive behaviour and market distortion. It usually involves an arrangement or agreement by competitors to prevent restrict or distort competition. It may involve market sharing, price-fixing collusive actions, market rigging et cetera
Apart from the Competition Act (1998) provisions which created a general prohibition on anti-competitive agreements, the Enterprise Act 2002 provided for the statutory offence to deal with serious cases of cartel behaviour.
The Competition and Markets Authority has adopted the guidelines of its predecessor, the Competition Commission in relation to competition law enforcement. It has also issued its own guidance.
It is a criminal offence if an individual agrees with one or more other persons to make or implement or cause to be implemented arrangements relating to at least two undertakings involving specified prohibited activities. The activities concerned are
- market sharing
- price-fixing
- limitation of production and supply
- bid rigging.
Formerly, there was a requirement to constitute the offence that the person acted dishonestly. This has been removed by 2013 legislation in respect of post 1 April 2004 actions.
The cartel offence applies to agreements between participants at the same level in the market.
Enforcement Authorities
The principal enforcement authority is the Competition and Markets Authority. The various regulators have authority in respect of their sectors including
- Ofcom (communications broadcasting postal services)
- Ofgem gas and electricity
- Ofwat water sewage et cetera
- ORR (rail)
- Northern Ireland Authority for Utility Regulation
- Monitor (health services England)
- Financial Conduct Authority
The director of Serious Fraud Office and the CMA may bring prosecutions. Other bodies require the consent of the CMA.
There are extensive powers of investigation. The CMA may require information from parties. It may require that documents be furnished. Documents and information can be required from third parties.
The CMA may conduct on-site investigations with or without notice. It may use surveillance. It may enter premises without a warrant in certain circumstances.
Sanctions
In the case of an infringement, the CMA may apply an administrative sanction of up to 10% of the enterprise’s worldwide undertaking. There are a range of published considerations to which CMA has regard in imposing a penalty. They include issues such as the seriousness of the breach and deterrence. Seriousness is measures by reference to the objective circumstances in accordance with published criteria. Mitigating and aggregate factors are taken into account.
A person who has committed a cartel offence may be subject on conviction in the Magistrates court to imprisonment for up to 6 months and the statutory maximum fine for the Magistrates court. On conviction on indictment in the Crown Court, imprisonment may be imposed up to 5 years with an unlimited fine.
There are various other regulatory criminal sanctions which support the legislation, including for individuals who do not comply with orders made in the course of the investigation or who seek to frustrate it.
There is provision for the disqualification of persons from acting as a company director by reason of breach of competition law. A director who knew, suspected or had reasonable grounds to suspect such a breach and who took no reasonable steps to prevent it, may be disqualified. The maximum disqualification is 15 years.
Leniency and Immunity
The Competition and Markets Authority operate a leniency and immunity programme. IT has published guidance in respect of its operation.
Immunity is offered automatically where a person comes forward with evidence of the cartel before an investigation has started and the CMA did not already have sufficient information.
Immunity is discretionary where an investigation has begun but has not yet reached the statement of objection stage. A range of considerations apply. Further leniency may be applied where the company is first to come forward, but immunity is not granted for other disqualifying reasons.
In further cases partial leniency by way of reduction of penalties is applied where cooperation and information come at a later stage in the process.
The Competition and Markets authority may grant immunity by a “no action” letter. Where it issues the letter, it is prohibited from commencing a prosecution. Conditions apply.
The legislation actively encourages whistleblowing. There is provision for rewards to individuals who provide information relating to cartel activity (which may be up to £100,000). They are at the discretion of the Competition and Markets Authority, which has discretion as to the amount and grant of the award.
Whistleblowing in respect of unlawful activity including breaches of competition law is subject to the general Public Interest Disclosure legislation.
Private Actions for Damages
The Consumer Protection Act 2015 makes new provision for private actions for infringement of competition law. The Competition Appeal Tribunal has power to hear competition law actions. There are provisions for collective proceedings. There is a fast-track procedure for simpler cases. Injunctions may be granted. There is provision for pre-action disclosure as well as enhanced provisions for in action disclosure.
There are provisions for collective legal action. There is an opt in and an opt out in collective proceedings. In opt out proceedings eligible consumers and businesses may be automatically included unless they opt out. There is a procedure for the authorisation of a class representative and certification of claim so as to qualify for inclusion in collective proceedings.
There are provisions for collective settlements. The limitation period for commencement of proceedings is six years.
An EU directive further enhances private actions for breach of competition law. The directive seeks to assist persons who have suffered harm caused by an infringement of competition law so that they can effectively exercise their right too compensation
