The UK CMA’s concrete plans for another criminal cartel prosecution
On 7 March 2016, the CMA confirmed that it has commenced criminal cartel proceedings against Barry Kenneth Cooper following an investigation into suspected cartel activity in precast concrete drainage products in the UK. The CMA charged Mr Cooper under s 188 of the Enterprise Act 2002 for dishonestly agreeing with others to divide, supply, fix prices, and divide customers from 2006 to 2013.
The OFT (the CMA’s predecessor) started an investigation into suspected cartel activity in the supply of products to the construction industry in March 2013. It arrested seven individuals in connection with the investigation, Mr Cooper being the first to face charges. Mr Cooper will next appear in Southwark Crown Court on 4 April 2016 for a Plea and Trial Preparation Hearing.
Fourth time lucky? The UK’s mixed history of criminal cartel cases
This criminal cartel charge follows the CMA’s mixed success in prosecuting directors involved in another wholly domestic suspected cartel relating to galvanised steel water tanks. While Nigel Snee was arrested in 2012 and plead guilty in June 2014, two other directors were acquitted (by jury) of charges relating to the same alleged cartel in June 2015. In September 2015, Mr Snee was sentenced to 6 months’ imprisonment, suspended for 12 months, and ordered to do 120 hours’ community services within 12 months.
The water tank proceedings were the first criminal cartel proceedings in the UK since the OFT’s case against airline executives collapsed in 2010. The only other successful criminal cartel conviction was in 2008 against three directors that were implicated in the marine hose cartel. Those directors pleaded guilty to the UK criminal cartel charges under plea agreements with the United States Department of Justice.
These cases each applied the UK criminal cartel offence as it existed before April 2014 when the dishonesty element of the criminal cartel offence was removed, effectively creating a strict liability criminal cartel offence. Many saw the dishonesty element as a hurdle to prosecutions, and the reforms were designed to “provide for robust action to tackle cartels”. The Australian criminal cartel offences are similarly strict liability offences that do not require any dishonest intention.
The CMA signalled a clear focus on criminal cartel cases in its 2015-16 Annual Plan, in which it noted plans to bring proceedings or conclude investigations in at least one criminal cartel case in 2015/16 and, where it had requisite evidence, open “as many new criminal cartel investigations as possible”. The CMA also aims to increase the speed and number of cartel investigations it pursues both criminally and civilly, and to reduce the time taken to conclude enforcement investigations generally.
Meanwhile, in Australia…
Echoing the CMA’s determination to pursue criminal cartel cases, ACCC Chairman Rod Sims indicated in February 2016 that the ACCC expects one or two criminal cartel prosecutions this year (after earlier comments that the first criminal cartel case would be commenced in the first half of 2016). Chairman Sims noted that the ACCC has 20 active cartel investigations at any one time. However, there have been no criminal prosecutions in Australia since the criminal cartel regime was introduced in 24 July 2009. In mid-2014, the ACCC established a Serious Cartels Group to focus on serious (i.e. criminal) cartel investigations and referrals to the Commonwealth DPP, a symbolic commitment towards pursuing criminal cartel cases.
The UK criminalised cartel conduct in 2003, with the first successful convictions (in Marine Hose) taking place five years later in June 2008. However, UK authorities are yet to succeed in contested criminal cartel proceedings.
Although Australia’s criminal cartel laws are six years younger than the UK’s, the five year timeline for the first conviction has already come and gone. It remains to be seen whether the ACCC and DPP will enjoy more or less success in criminal cartel prosecutions than the OFT and CMA in the UK. Regardless, it is clear that competition regulators will continue to aim to prosecute individuals (such as executives and directors) implicated in cartel conduct.