Today, the UK Competition and Markets Authority (CMA) published
a 60-second summary for company directors to avoid disqualification
for breaches of competition law. Please see the full text of the
guidance here. This is part of a series of CMA short
and simple guides on competition law and is relevant to all
directors whose companies fall within the scope of EU or UK
This follows the CMA's first ever director disqualification
order issued in December 2016 accepting undertakings of a company
director admitting wrongdoing and agreeing that his conduct
"made him unfit to be concerned in the management of a
company" for 5 years. The CMA pursued this case despite the
rather small turnover of the companies involved. Details of the
case can be found here.
The Company Director Disqualification Act 1986 allows the CMA to
apply to court for an order disqualifying a director from holding
company directorships or performing certain roles in relation to a
company for a specified period of up to 15 years. It can also
accept undertakings by a director. The following conditions must be
satisfied when issuing a disqualification order:
A company of which the individual is
a director commits a breach of competition law; and
The individual's conduct as a
director makes him unfit to be concerned in the management of the
A disqualification order can be imposed where a director
ought to have known that the relevant conduct was
a breach of competition law. The CMA has high expectations of
directors which was is also confirmed in today's 60-second
summary: "Company directors have a special responsibility to
be well-informed about their company practices and sure they comply
with the law".
Today's paper and the CMA's first disqualification order
may well suggest a step-change in CMA enforcement of competition
law against individuals. In addition to director disqualification
individuals face criminal sanctions in the UK for cartel activity.
However, the Authority has found it difficult so far to obtain them
and in fact only 4 individuals have been sentences since the cartel
offence was introduced in 2003. The threshold of the criminal
offence has recently been lowered (in particular the subjective
element of "dishonesty" was removed by Act in 2014).
Although we are likely to see more criminal convictions this will
not happen for some time as for cases dating back before 1 April
2014 the subjective condition of dishonesty still applies. In the
meantime and going forward the CMA will see disqualification orders
as a welcomed additional deterrent in its enforcer toolbox.
We recently discussed this topic in Jan. 19th
"Breakfast with Europe" webinar, a recording of which can
be found here. Needless to say, the area is complex and
we would be delighted to discuss how we can make competition
compliance of your company watertight.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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