Answer ... The criminal offence under the Enterprise Act can be brought only against ‘persons’. For implementing or causing the implementation of cartel arrangements after 20 June 2003, individuals can face up to five years’ imprisonment and/or an unlimited fine. Such prosecutions were first imposed in Marine Hoses, in which three individuals were imprisoned (two for three years and one for two-and-a-half years) in June 2008. In September 2015 one director was sentenced to six months’ imprisonment (suspended for 12 months) and two other directors were acquitted following trial in Galvanised Steel Tanks. In September 2017 one individual was sentenced to two years’ imprisonment, suspended for two years (as well as disqualified from acting as a company director for seven years), having pleaded guilty to dishonestly agreeing to divide supply and customers and fix prices in Precast Concrete Drainage Products.
Answer ... The Competition and Markets Authority (CMA) has the power to impose fines on companies that have intentionally or negligently breached the Chapter I prohibition, up to a maximum of 10% of their worldwide turnover. Such agreements are void and unenforceable.
Generally, companies with a combined UK annual turnover below £20 million will benefit from immunity from fines, but this will not apply to breaches of Article 101 of the Treaty on the Functioning of the European Union or price-fixing agreements.
Directors can also be disqualified for a period of up to 15 years where they knew, or ought to have known, that their company was guilty of an infringement of EU or UK competition law. The CMA can either apply to the court for such orders or agree a disqualification undertaking with the relevant director. The CMA secured its first director disqualification on 1 December 2016, disqualifying Daniel Aston for five years due to his breaches of competition law in Posters and Frames.
In April 2018 the CMA announced two further director disqualifications arising out of the Estate Agent cartel, with one director disqualified for three-and-a-half years and the second for three years. In July 2018 the CMA produced revised guidance in relation to director disqualification orders in response to its public consultation. In 2019 the CMA disqualified five directors across two different cases relating to pre-cast concrete drainage products and ‘cover bidding’ in the market for services relating to refurbishing non-residential premises.
Answer ... Revised fining guidance published in April 2018 sets out a six-stage process for calculating fines. The CMA must provide a draft penalty statement to the parties setting out how the fine has been calculated and giving the parties a reasonable period to make representations:
- Starting point: Maximum of 30% of relevant turnover (the turnover of the undertaking in the product and geographic market affected in the last financial year preceding the date on which the infringement ended). More serious offences are likely to have a starting point of 21% to 30%.
- Duration: For infringements lasting more than one year, the fines cannot be multiplied by more than the number of years of the infringement.
Aggravating or mitigating factors: These include:
- role as a leader or instigator;
- involvement of directors/senior management;
- recidivism; and
- failure to comply with a warning/advisory letter.
Mitigating factors include:
- acting under severe duress;
- genuine uncertainty as to whether the agreement/conduct constituted an infringement;
- termination of the infringement as soon as the CMA intervenes; and
- cooperation with the CMA’s investigation (eg, by providing staff for voluntary interviews and/or witness statements).
- Deterrence and proportionality: Deterrent effect on the undertaking on which it is imposed and on other undertakings in the same field. This will be assessed by looking at the undertaking’s financial size and position over a period of three years.
- The overall cap: 10% of worldwide turnover.
- Leniency or settlement discounts.
If a penalty or fine has been imposed by the European Commission or by a court or other body in another member state in respect of an agreement or conduct, the CMA must take that penalty or fine into account when setting the amount of a penalty in relation to that agreement or conduct.
Answer ... Subject to a company’s articles of association, a company can indemnify the legal costs and/or financial penalties imposed on a former or current employee.