Third time’s a charm: The UK OFT brings third round of criminal cartel charges
On 13 January 2014 the Office of Fair Trading charged Peter Nigel Snell with “dishonestly agreeing with others” to fix prices, rig bids and allocate the market for galvanised steel tanks, used for water storage, between 2004 and 2012. The alleged arrangements related to a number of businesses, including Franklin Hodge Industries Limited, Galglass Limited, Kondea Water Supplies Limited and CST Industries (UK) Limited. This marks the third instance of the OFT bringing criminal charges in relation to an alleged cartel.
Snell is due to appear at Southwark Crown Court on 4 February 2014 for a Preliminary Hearing. If he is found guilty, he faces up to five years’ imprisonment, an unlimited fine, or both.
The OFT is undertaking a related civil investigation into whether the businesses alleged to have been involved have also engaged in any cartel conduct.
Although the OFT was successful in its first prosecution of 3 individuals in relation to a marine hose cartel, it has been cautious in using its criminal enforcement powers following the collapse of its case against four British Airways executives in 2010.
Cartel conduct was criminalised in Australia in July 2009 and directors and executives now face up to ten years imprisonment for these offences. While civil penalty cartel proceedings are the responsibility of the ACCC, criminal prosecutions for cartel offences must be referred to the Commonwealth Director of Public Prosecutions (CDPP).
As we approach the fifth anniversary of the new criminal offences, we are yet to see a criminal prosecution commenced in Australia. The ACCC has indicated that it will have regard to the following matters in deciding whether to refer a matter to the CDPP:
- whether the conduct was long-standing or had, or could have, a significant impact on the market in which the conduct occurred;
- whether the conduct caused, or could cause, significant detriment to the public, or a class thereof, or caused, or could cause, significant loss or damage to one or more customers of the alleged participants;
- whether one or more of the alleged participants has previously been found by a court to have participated in, or has admitted to participating in, cartel conduct either criminal or civil;
- whether the value of the affected commerce exceeded or would exceed $1 million within a 12 month period (that is, where the combined value for all cartel participants of the specific line of commerce affected by the cartel would exceed $1 million within a 12 month period); and
- in the case of bid rigging, whether the value of the bid or series of bids exceeded $1 million within a 12 month period.