Get ready for more cartel prosecutions

The removal of the dishonestly hurdle, is likely to result in an increase in civil fines for companies and more criminal prosecutions for individuals. Picture: John Devlin

As well as substantial civil fines for the companies involved, there has always been the possibility of a criminal prosecution for individuals involved in any unlawful cartel practice, such as price fixing, sharing markets or bid rigging. One of the hurdles that the prosecution always had to overcome was to demonstrate that the individual cartel participant had acted “dishonestly”.

This is one of the main reasons why, to date, there has been only one successful prosecution. Its removal is therefore likely to make successful prosecutions of individuals participating in cartels far more likely.

As with any new watchdog, the CMA will be seeking to make an early impact, which will no doubt be assisted by the additional £12 million in funds in 2014-15 it will receive in order to help it deal more effectively with cartels.

All this, together with the removal of the “dishonesty” hurdle, is likely to result in an increase in the number of cartel investigations, which could be expected to result both in more civil fines for companies and more criminal prosecutions for individuals.

It’s fair to say that many of the civil fines imposed to date upon companies involved in cartel activities have usually stemmed from a lack of awareness that the particular activity was unlawful rather than acts of deliberate dishonesty.

More than ever now, businesses and their directors need to comply with competition law and make sure that all relevant staff are aware of what constitutes unlawful cartel activity and what should be done if they come across it.

• Andrew Cockburn is director of company formation specialist Oswalds, a part of the Jordans Group