Comparative Guides

Welcome to Mondaq Comparative Guides - your comparative global Q&A guide.

Our Comparative Guides provide an overview of some of the key points of law and practice and allow you to compare regulatory environments and laws across multiple jurisdictions.

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4. Results: Answers
Cartels
2.
Definitions and scope of application
2.1
How is a ‘cartel’ defined in the cartel legislation?
UK

Answer ... Section 2(2) of the Competition Act provides that the cartel prohibition applies, in particular, to:

  • directly or indirectly fixing purchase prices or selling prices or any other trading conditions;
  • limiting or controlling production, markets, technical development or investment;
  • sharing markets or sources of supply;
  • applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; or
  • making the conclusion of contracts subject to the acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

The Competition and Markets Authority’s (CMA) “Guidance on investigation procedures in Competition Act 1998 cases” describes a cartel as an “agreement between businesses not to compete with each other. The agreement can often be verbal. Typically, illegal cartels involve cartel members agreeing on price fixing, bid rigging, output quotas or restrictions, and/or market sharing arrangements. In some cartels, more than one of these elements may be present. For the purposes of the CMA’s leniency programme, price-fixing includes resale price maintenance”.

For the criminal offence, a cartel is an arrangement between at least two persons that undertakings will engage in price fixing, limiting supply or production, market sharing and/or bid rigging. Dishonesty is no longer a requirement for the offence. The offence is subject to certain exclusions and defences.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP
2.2
What specific offences are defined in the cartel legislation?
UK

Answer ... Section 2(1) of the Competition Act prohibits agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade within the United Kingdom and may have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom.

Under Section 188 of the Enterprise Act, an individual will be guilty of an offence if he or she enters into a horizontal agreement with one or more persons that undertakings will engage in cartel activities (ie, reciprocal direct and indirect price fixing, reciprocal limitation of supply or production, market sharing or bid rigging). This applies irrespective of whether the agreement was implemented or whether the individuals had authority to act on behalf of the undertakings at the relevant time. An individual can also be prosecuted for attempting to commit and conspiracy to do so. Dishonesty on the part of the individuals concerned must also be shown as regards arrangements performed from 20 June 2003 to 31 March 2014.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP
2.3
Is liability under the cartel legislation civil, criminal or both?
UK

Answer ... Civil liability exists for companies under the Chapter I prohibition and criminal liability for individuals under the Enterprise Act.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP
2.4
Can both individuals and companies be prosecuted under the cartel legislation?
UK

Answer ... Yes. Companies can be prosecuted for the civil cartel offence under the Chapter I prohibition. Individuals involved in the same offence can be concurrently prosecuted for the criminal cartel offence under the Enterprise Act.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP
2.5
Can foreign companies be prosecuted under the cartel legislation?
UK

Answer ... Yes – provided that the components of the cartel offence are satisfied, they apply irrespective of where the companies are incorporated.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP
2.6
Does the cartel legislation have extraterritorial reach?
UK

Answer ... Yes, provided that the components of the cartel offence are satisfied. The civil offence applies to agreements actually (or intended to be) implemented in the United Kingdom, regardless of where they were entered into or where the companies are incorporated.

The criminal offence applies to agreements entered into outside the United Kingdom only if they are in fact implemented in whole or part in the United Kingdom (ie, not merely based on intent). The test for implementation can be satisfied if there are affected sales in the United Kingdom.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP
2.7
What is the statute of limitations to prosecute cartel offences in your jurisdiction?
UK

Answer ... There are no limitation periods for public enforcement action for the criminal cartel offence under the Enterprise Act or for the civil cartel offence under Chapter I of the Competition Act.

The limitation period for standalone actions in England and Wales is six years. The beginning of the limitation period is the later of:

  • the date on which the infringement of competition law that is the subject of the claim ceases; and
  • the claimant’s date of knowledge – defined as the date on which the claimant first knows or could reasonably be expected to know:
    • of the infringer’s behaviour;
    • that the behaviour constitutes an infringement of competition law;
    • that the claimant has suffered loss or damage arising from the infringement; and
    • the identity of the infringer.

Such limitation period is suspended while a CMA investigation is ongoing and for at least one year after the conclusion of such investigation.

For more information about this answer please contact: Matthew Readings from Shearman & Sterling LLP