The First Disqualification Of A Director By The CMA

Financial penalties being imposed on companies for breaches of competition law is relatively common place. However, there can also be adverse consequences for the directors involved, as a decision reached by the Competition and Markets Authority (CMA) has recently demonstrated.

In December 2016, the CMA announced that it had secured its first director disqualification undertaking.

This decision sends a clear message that those individuals who show disregard for the law will be punished.

The Power to Disqualify Directors

Since 2003, the Competition and Markets Authority (CMA) has had the power, under the Company Directors Disqualification Act 1986 (the Act), to seek the disqualification of an individual, for a maximum of 15 years, from acting as a company director where: (i) a company of which he is a director has breached competition law; and (ii) his conduct makes him unfit to be concerned in the management of a company.

The CMA has the power under the Act to apply to the court for an order disqualifying a director from performing certain roles, for a specific period.

Alternatively, the CMA can accept a disqualification undertaking from a director to avoid the need for proceedings. This will usually result in a reduction being applied to the period of disqualification that the CMA is prepared to accept.

Both orders and undertakings are legally binding with the result that individuals can be criminally prosecuted if they act in breach of the disqualification.

The Competition Law Infringement

Mr Aston was the managing director of an online poster supplier, Trod Limited (Trod).

The CMA commenced its investigation into a price fixing scandal, concerning posters and frames in 2015, by carrying out dawn raids at Trod's business premises and the domestic premises of one of its directors, Mr Aston.

In July 2016, Trod admitted to the cartel. In particular, that it had agreed with one of its online competitors, GB Eye Limited, not to undercut each other's prices for items sold on Amazon UK for a period of more than four years.

In August 2016, Trod was fined GBP 163,371 as a result, which reflected a discount of 20% owing to its admission of breach and co-operation with the investigation.

GB Eye Limited was granted full immunity from fines having acted as the whistle-blower under the CMA's leniency programme. In November 2016, the CMA accepted a disqualification undertaking from Mr Aston instead of applying to the court for a disqualification order.

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