The Competition and Markets Authority’s new Executive Director for Enforcement has said that the CMA will take a tougher line on cartel infringements.
In an interview with the Financial Times, Dr Michael Grenfell said that the CMA would seek to focus more on individual penalties, including its (as yet unused) power to disqualify company directors whose businesses violate competition law where the threshold for a criminal prosecution is not met.
The CMA will also invest in digital forensics and better intelligence gathering to identify cartels, building on the information it already receives through its leniency policy (which grants immunity from fines and prosecution to the first participant in a cartel that blows the whistle on the other participants). This will all be part of a drive to increase both the volume and speed of the CMA’s enforcement activity, with Dr Grenfell indicating that they already have several high-profile cartel cases in the pipeline.
This new focus from the CMA follows its largely unsuccessful prosecution of three directors over price fixing in the market for galvanised steel tanks for water storage, which we blogged on previously. One director received a six-month suspended prison sentence and 120 hours of community service after pleading guilty to participation in a cartel, but two other company directors were acquitted on the basis that they had not acted ‘dishonestly’.
That was not the first time the dishonesty requirement had caused difficulties for the CMA but, as it has now been removed for future cartel cases, it should be easier to prosecute and convict those engaged in cartel activity in the future.
Given the CMA’s tough talk on enforcement, it is more important than ever that businesses be aware of the potential penalties for breaching competition law. However, a general lack of awareness was highlighted earlier this year when the CMA published the results of a survey of UK businesses’ understanding of competition law. Among other things, this revealed that:
- only a fifth of respondent businesses had discussed competition law compliance at a senior level, and just 6% had held training sessions on the subject;
- two-thirds of the companies surveyed were generally unaware of the penalties for non-compliance with competition law (which can be severe: in addition to significant damage to reputation and brand, the regulatory consequences include fines of up to 10% of global group turnover; disqualification of directors for up to 15 years; and up to five years in prison and unlimited fines for committing the cartel offence); and
- there was particular uncertainty about the immunity and leniency policies adopted by competition authorities (referred to above).
These and other figures disclosed in the report suggest to us that many businesses could be running significant competition law risks without even knowing it, and without being aware of the potentially significant consequences. If you would like to discuss any aspect of competition law, please don’t hesitate to get in touch.
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