On 14 September 2015, a company director was sentenced to 6 months’ imprisonment (suspended) for participation in an anti-competitive cartel, following an investigation by the Competition and Markets Authority (“CMA”). The director, Nigel Snee, was also ordered to carry out 120 hours community service.
Mr Snee, the former MD of Franklin Hodge Industries, pled guilty to dishonestly agreeing with others to: (a) fix prices; (b) divide up customers; and (c) rig bids between 2005 and 2012 in respect of the supply in the UK of galvanised steel tanks for water storage, all in contravention of section 188 of the Enterprise Act 2002 (“the cartel offence”).
He cooperated with the investigation and was a witness for the CMA at the subsequent trial of two other company directors, Clive Dean and Nicholas Stringer, who were acquitted in June 2015 – the jury not having been convinced that they had acted “dishonestly”. It should be emphasised that the law has now changed to remove the requirement for dishonesty from the cartel offence in respect of conduct from 1 April 2014 onwards. The CMA believes this will make it easier to pursue and succeed with prosecutions.
In sentencing Mr Snee, the judge noted that “the economic damage done by cartels is such that those involved must expect prison sentences”. He took as a starting point a custodial sentence of 2 years, but reduced it in Mr Snee’s case to reflect his early guilty plea; lack of previous convictions; the fact that he was not motivated by, and made no, personal gain; and his cooperation as a witness in the other trials.
The CMA is conducting a related civil investigation into whether the relevant businesses infringed the Competition Act 1998 by engaging in cartel activity concerning galvanised steel tanks.
These are our take home messages:
- The sentence imposed, and in particular the starting point adopted by the judge, sends a clear message that custodial sentences are likely where individuals are found guilty of the cartel offence.
- The removal of the dishonesty requirement makes it more likely that the CMA will successfully bring prosecutions in respect of the cartel offence.
- As well as custodial sentences, individuals can face significant fines and disqualification from acting as directors. Businesses can also be subject to substantial civil fines, and of course will also suffer operational and reputational damage.
As always, proactive compliance with competition law is the key to mitigating these risks. If you’d like advice on how to ensure compliance, please do get in touch.
On September 23, 2015