In a recent speech Stephen Blake, Senior Director of Cartels and Criminal Group at the Competitions and Markets Authority (CMA), gave helpful insight as to the way the CMA deploys both its criminal and civil enforcement capacities.
The CMA is shortly to celebrate its first anniversary have been brought into being on 1 April 2014 by the Enterprise and Regulatory Reform Act 2013.
The CMA’s overall mission is to make markets work well in the interests of consumers, business and the economy.
In exercising its criminal jurisdiction the CMA will be likely principally to target cartel activity prohibited by the Enterprise Act 2012 (the Act). The offences prescribed by the Act only apply against individuals and not companies but carry a maximum penalty of 5 years in prison and/or an unlimited fine. Conviction can also lead to a director disqualification of up to 15 years and confiscation.
The CMA will prioritise what it terms as “hard core cartels” which might involve competitors agreeing to fix prices, share markets or customers, restrict production or supply or rig bids; in each case to the detriment of consumers.
In addition to cartel activity the CMA can also prosecute other anti-competitive behaviour. For example in October 2014 it secured convictions against 9 individuals operating a pyramid promotional scheme in contravention of the Consumer Protection from Unfair Trading Regulations 2008.
The CMA’s criminal enforcement function is modelled on that used by the Serious Fraud Office (SFO) in that in that it combines both an investigatory and prosecution function in the same agency. This enables skilled multi-disciplinary teams to work together under one roof.
In a significant contrast to the SFO however the CMA can and will operate a leniency programme, that is enshrined in the Act. This enables individuals who report wrong doing and act as a whistle blower to secure leniency including, if appropriate, full immunity from prosecution.
The CMA’s open position is that “without the upfront certainty of immunity from criminal prosecution, company directors and other employees involved in cartel activity would be highly unlikely to come forward simply to avoid a civil fine for on the company for which they work.”
The SFO has no separate statutory leniency framework that it can deploy (although it can prosecute the cartel offence under the Act). Indeed under the corporate Deferred Prosecution Agreement (DPA) scheme that the SFO has championed, and which has been available since February 2014 not only is there no leniency provision for individuals but companies may be required to demonstrate their co-operation by providing the SFO with the evidence which can then be used to prosecute individual officers and/or employees.
Critics of the DPA scheme (which is still to be used) argue that this failure to afford any protection against individuals will make it less like that companies will self-report behaviour. The PDA scheme is though in large part based on an assumption that companies will be willing to self report, and the level of self reporting that will actually flow remains to be seen.
In tandem with the criminal jurisdiction it has over individuals the CMA can also sanction companies found to have engaged in anti-competitive behaviour with unlimited fines using powers it has under the Competition Act 1998.
It seems likely that the CMA intends to increase its enforcement action against both individuals and companies and often the interests of senior individuals will be very different from those of the companies that they have worked for.
In those circumstances the individuals concerned need independent advice from expert Business Crime Solicitors. At Slater and Gordon Lawyers we have over 30 years’ experience in the field of business crime and are independently recognised as market leaders.
Our Business Crime Solicitors can assist if you:
- Are considering approaching the CMA as a whistle blower or want to apply for leniency.
- Are subject to an investigation by the CMA or are asked to assist with an CMA inquiry.
- Believe that you may be at risk of being prosecuted by the CMA.
- Have been charged with an offence and are facing court proceedings.
For expert legal advice and a no obligation consultation call our Business Crime Solicitors 24/7 on freephone 0800 916 9054 or contact us online and we will call you.
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