Banned In Burnham And Beyond; First Competition Director Disqualification Case To Reach Trial

• Published date: 15 August 2020
• Subject Matter: orporate/Commercial Law, Anti-trust/Competition Law, Corporate and Company Law, Directors and Officers, Antitrust, EU Competition
• Law Firm: Arnold & Porter
• Author: Mr John Schmidt and Zeno J. Frediani

In the first competition director disqualification case to reach trial, the former director of an estate agency in the Burnham-on-Sea area in Somerset was disqualified by the UK High Court on 3 July 2020 from acting as a director for seven years.

The Competition and Markets Authority (CMA) found the estate agency to have been involved in a cartel. The CMA is increasing its use of these disqualification orders to pursue not only the companies that infringe competition law, but also the directors of those companies. This is something The Insolvency Service has been doing, almost as a matter of course, for a number of years. For directors, this means that they could be banned from corporate high office.

Underlining each of the lessons learned from this judgment is the importance of good governance and training. Competition law training is a good place to start to ensure a business is compliant, no matter which market it may fall within. As a director, failure to ensure such measures are in place may result not only in a fine of up to 10% of a businesses' annual worldwide turnover, but also disqualification for up to 15 years.

Background

The CMA used its powers to apply to the court for a competition disqualification order preventing Mr Christopher Martin from acting as a director of Garry Berryman Estate Agents Limited, and two group companies, The Property Group (2010) Limited and Warne Investments Limited. In 2017, the CMA had found Garry Berryman Estate Agents Limited and Warne Investments Limited entered into an anticompetitive agreement with various competitors to set minimum commission fees of 1.5% for residential property sales services in Burnham-on-Sea in Somerset, preventing local home owners from obtaining better offers.¹The CMA imposed a total fine of '370,084 on all the firms except the one to confess its participation in the arrangement under the CMA's leniency policy and co-operate with the CMA's investigation.

Lessons Learned?

No market gets left behind

While the CMA has in recent years focused its enforcement activity on large, regulated industries such as life sciences (see for example our Advisory on the CMA's consideration of discounts in the pharmaceutical sector), it is evident from this judgement that local markets are also important to the CMA. The decision reflects the CMA's priorities set out in its Annual Plan 2020 to 2021, which promises an exercise of the CMA's functions with particular regard to protecting consumers, including...