The Marine Hose Cartel: A New Era In International Co-Operation

First published in Competition Law Insight 12 February 2008.

The OFT Brings Its First Criminal Charges Against An International Bid Rigging, Price-Fixing And Market Allocation Cartel

The issue of criminal cartel enforcement in the UK is once again in the headlines, following an announcement shortly before Christmas that the OFT had brought charges for the first time for the cartel offence, four and a half years after the relevant provisions came into force.

The charges, which have been brought against three UK businessmen, relate to participation in the marine hose cartel. They follow an OFT investigation that has involved unprecedented co-ordination with overseas agencies, in particular the Department of Justice (DoJ) in the US, where the three UK businessmen have pleaded guilty and entered into plea agreements that have enabled them to return to the UK to "co-operate with the OFT's investigation of violations of the ? Enterprise Act of 2002 and to allow them to plead guilty to violating the Enterprise Act".

The charges mark not only an important development in our domestic competition regime, but possibly also a new era in terms of international co-operation against cartels. Cooperation to the extent seen in this case between the DoJ and OFT is unprecedented and has led to widespread uncertainty and speculation as to the influence the plea agreements reached with the DoJ may have on sentencing and procedure in England and Wales.

Criminal Cartel Liability In The UK

Section 188 of the Enterprise Act 2002 (the Act), which came into force on 20 June 2003, introduced into UK law a new criminal offence ? the cartel offence ? which applies only to individuals who dishonestly engage in the most serious and damaging forms of anticompetitive behaviour, that is, hardcore cartel conduct. The maximum penalty following conviction is five years' imprisonment or an unlimited fine, or both.

Although at the time that the cartel offence was introduced, a number of countries had criminal sanctions against individuals who engaged in hardcore cartels (for example, the US, Canada and Japan), only a few countries within Europe (principally Austria, France, Norway, Ireland and, in relation to bid-rigging, Germany) had such penalties. Moreover, no individual in Europe had received a custodial sentence for a competition law offence until 2006, when an Irish court sentenced an individual to a period of six months' imprisonment, suspended for a period of 12 months, in connection with an Irish...