First UK Prison Sentences For Criminal Price-Fixing Will Encourage Greater Competition Law Compliance

The sentencing, on 11 June 2008, of 3 former executives to

significant terms of imprisonment for their part in a global

cartel to fix the price of marine hoses will send a powerful

message around the UK business community that the courts will

not tolerate serious anti-competitive behaviour such as

bid-rigging, customer sharing and price fixing.

The convictions and sentences relate to a sophisticated

cartel, involving companies in several jurisdictions, that is

alleged to have caused purchasers to pay at least 15% more than

the competitive price for the goods in question.

Guy Lougher , Head of the EU and

Competition Group at international law firm Pinsent Masons,

stated that "this first UK criminal prosecution for

unlawful anti-competitive behaviour has set a benchmark for

subsequent courts to follow. The trial judge's observation

that prison sentences could be even higher for any cartels

initiated after the implementation in the UK of the criminal

law provisions in June 2003 demonstrates that the UK courts are

prepared to use the full spectrum of the 5 year maximum prison

sentence. These judicial comments, coming on top of the

OFT's recent unilateral offer of 100,000 for

information leading to the uncovering of cartels, as well as

the OFT's use of powers to raid domestic premises, will

have a major unsettling effect on any companies and individuals

presently engaged in cartel activity. I expect these three

developments will make the OFT's already successful

leniency provisions even more attractive for any cartelists

tempted to break ranks."

The UK prison sentences of between 30-36 months exceeded the

duration of the sentences imposed by the US courts in 2007 on

the same individuals in relation to the same cartel. The US

prison sentences, which at the time were the lengthiest ever

imposed in the US on foreign nationals for antitrust

violations, will not now need to be served separately. This is

because the UK sentences satisfy the terms of an arrangement

between the US and UK authorities that permit the US prison

sentences to be served in the UK.

All three individuals were also the first in the UK to be

disqualified from acting as company directors for periods up to

7 years because they had infringed EU or UK Competition Law.

Given that this is the first such case, the Court has again set

the punishment at a high level because the maximum duration for

which an individual can be disqualified from acting as a

director for breaching the...

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