Global Competition Law is primarly a practitioner's guide presenting the most salient aspects of the major competition laws country by country, giving an overview of their structure and most charasteristic elements.
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Global Competition Law

The 1998 Act provides for criminal liability for failure to cooperate during the investigation phase. According to Sections 42-44 and Section 65, it is a criminal offense not to comply with a requirement imposed under the investigation powers of the Act, to intentionally obstruct an officer carrying out an on-site investigation, to intentionally or recklessly destroy, conceal or falsify documents  …

Criminal sanctions

When the CMA has decided that an agreement infringes the prohibitions of Chapter I or II, directions may be given to such persons as deemed appropriate to terminate the infringement. The direction may require an undertaking modify or terminate the agreement or conduct in question (1998 Act, Sections 32 and 33).

Failure to comply with a direction without reasonable excuse may lead the CMA to apply to the courts for an order requiring compliance within a specified time-limit. Breach of such court orders is considered contempt of court and punishable by a fine or imprisonment.

Cease and desist orders

Infringement of the Chapter I or Chapter II prohibition is punishable by a fine. Inflicting penalty necessitates proof that infringement has been committed intentionally or negligently (Section 36(3)). Under Section 36(8), the penalty may not exceed 10% of the undertaking's turnover achieved in the UK.

As regards the amount of the penalty, OFT Guideline 407 on enforcement and OFT Guideline 423 on Guidance as to the appropriate amount of a penalty, revised in September 2012, offer insight into the factors taken into consideration by the OFT. The 2012 Guidelines increases from 10% to 30% of the undertaking's turnover the maximum starting point for penalty calculations, in order to better reflect the seriousness of infringements such as cartel activities and serious abuses of dominant position. Since September 2012, penalties are calculated following a six-step approach: i) calculation of the starting point having regard to the seriousness of the infringement and the relevant turnover of the undertaking ; ii) adjustment for duration ; iii) adjustment for aggravating or mitigating factors ; iv) adjustment for specific deterrence and proportionality ; v) adjustment if the maximum penalty of 10 per cent of the worldwide turnover of the undertaking is exceeded and to avoid double jeopardy ; and vi) adjustment for leniency and/or settlement discounts.

The Enterprise and Regulatory Reform Act 2013 substitutes civil penalties for criminal penalties for failure to comply with investigation requirements. New Section 40A states that such penalty may not exceed £30,000 (EUR 33,000) in the case of a fixed amount or not exceed an amount per day of £15,000 (EUR 16,455).

Fines

Small and Medium-sized Enterprises (SMEs) may be immune from financial penalties for agreements that may infringe the Chapter I prohibition and conduct that may infringe the Chapter II prohibition. This immunity does not, however, apply to price fixing agreements. Statutory Instrument 2000 No 262 indicates the criteria used to determine if agreements or conduct is of minor significance.

Agreements are considered minor where the parties' combined turnover for the business year preceding the one during which the infringement occurred does not exceed £20 million (EUR 21.9 million). For an undertaking's conduct to be deemed minor with respect to the Chapter II prohibition, the ceiling is £50 million (EUR 54.8 million) turnover in the previous business year.

SMEs' immunity

Whistleblowing is a central plank of UK competition policy, which has been influenced by the corporate leniency policy of the US Department of Justice.

In order to encourage undertakings involved in cartel activities to inform the CMA of the cartel's existence, the CMA will offer total immunity from financial penalties for a Chapter I infringement to the first member of the cartel to come forward before any investigation has been initiated. Alternatively, cartel members who provide evidence of a cartel's existence after an investigation has begun, but before the CMA gives written notice of its intention to take an infringement decision, may be eligible for a 50% reduction of penalties. More precisely, the leniency scheme offers many options: i) type A immunity (automatic civil immunity for the undertaking and automatic criminal immunity for all of its current and former employees and directors who co-operate) is granted where an undertaking is the first to apply and there was no preexisting civil and/or criminal investigation into the activity at stake; ii) type B immunity (discretionary civil immunity for the undertaking and discretionary criminal immunity for all of its current and former employees and directors who co-operate) is granted where the undertaking is the first to apply but there was already a pre-existing civil and/or criminal investigation into such activity; iii) type B leniency consists in a reduction of, but not immunity from, a financial penalty imposed under the 1998 Act where the undertaking is the first to apply but there was already a pre-existing civil and/or criminal investigation into the relevant cartel activity; type C leniency consists in a reduction of up to 50% of the level of a financial penalty imposed under the 1998 Act where the undertaking was not the first to apply whether or not there was already a pre-existing civil and/or criminal investigation into the relevant cartel activity. In all cases, additional conditions regarding cooperation and future behavior apply in order to qualify for leniency.

When assessing the amount of any penalty the CMA may take the existence of a compliance program into account as a mitigating circumstance (For more detailed information on compliance programs, practitioners should refer to OFT 1341, How your business can achieve compliance with competition law and OFT 1340, Company directors and competition law and OFT revised Guideline 423). In order for a compliance program to reduce a penalty, the parties need to show that they engaged in a risk-based, four-step approach on top of which lies a clear and unambiguous commitment to competition law compliance made the senior management of the undertaking and especially the board. Step 1 consists in risk identification; step 2 implies assessing risk; step 3 involves risk mitigation, i.e. the setting up of appropriate policies, procedures and training with the aim of avoiding the identified risks and ensuring their proper detection and defining a course of action; step 4, finally, consists in regular review if compliance tools. Where the above conditions are satisfied, the CMA may make a reduction in the amount of the penalty by up to 10% (see OFT Guidelines 423 on penalties, OFT No-action Guidance (OFT 513, April 2003) and OFT Guidance 1495 of 8 July 2013 on Applications for Leniency and no-action in cartel cases). In the OFT 1495 Guidelines, the OFT clarified that it would not require legal professional privilege waivers from applicants as a condition for granting leniency either in civil proceedings under the Competition Act 1998 or in criminal cartel investigations conducted under the Enterprise Act 2002. 

In addition, on 20 March 2017, the CMA announced the launch of a “campaign to crack down on cartels”. The program is designed to encourage persons who have witnessed illegal activity to report it, by offering a reward of up to £100,000 (EUR 110 000) as well as promising them anonymity.

Leniency

The 1998 Act provides for criminal liability for failure to cooperate during the investigation phase. According to Sections 42-44 and Section 65, it is a criminal offense not to comply with a requirement imposed under the investigation powers of the Act, to intentionally obstruct an officer carrying out an on-site investigation, to intentionally or recklessly destroy, conceal or falsify documents requested by authorities, or to provide false information. Offenses will be tried either in the Magistrates' Court or Sheriff Court or, in case of more serious offenses, on indictment in the Crown Court or the High Court of the Justiciary. Fines or imprisonment may be imposed and will differ according to the offense committed and to whether the person is found guilty on summary conviction or on indictment. Fines on summary conviction may run to £5,000 (EUR 5,486), but are unlimited when a person is found guilty on indictment. Moreover, in case of an indictment, imprisonment of up to two years may be imposed for obstructing an investigation carried out pursuant to a warrant, for destroying documents or for providing misleading or false information (OFT Guideline 404, Powers of Investigation).

The 2002 Act also introduced a criminal offense for individuals who dishonestly engage in certain types of cartels. The cartel agreements specified in Sections 188-189 of the Enterprise Act do not cover all agreements which would be caught by the Chapter I prohibition, but only the specified offenses of price-fixing, market-sharing, bid-rigging and limiting the supply of goods or services. The offense only applies to horizontal agreements. Before the Magistrates' court, where summary trials are held, a convicted offender is punishable with a maximum of six month's imprisonment and/ or a fine up to the statutory minimum. Upon conviction on indictment before the Crown Court, an offender is punishable with up to a five years imprisonment and/or an unlimited fine. To improve cartel prosecution, the Enterprise and Regulatory Reform Act 2013 altered the definition of the cartel offense under Section 188 of the Enterprise Act 2002 by removing the condition of “dishonesty”. However, the Act also adds a list of circumstances in which the cartel offense is not committed (Section 188A) and of defenses to the commission of cartel offense (Section 188B) thus undermining the intended effect of the reform. Under Section 188A, there is no cartel offense where: i) customers are given relevant information about the arrangements before they enter into agreements with the product or service provider at issue; ii) in the case of bid-rigging arrangements, the person requesting bids is given relevant information about them at or before the time when a bid is made, or iii) in any case, relevant information about the arrangements is published, before the arrangements are implemented. The concept of “relevant information” comprises, inter alia, the names of the undertakings to which the arrangements relate; a description of the nature of the arrangements showing how they are covered by Section 188; the products or services to which the arrangements relate. Section 188B provides 3 kinds of defenses for individuals charged with the offense: i) they may either show that at the time of the making of the agreement, they did not intend that the nature of the arrangements would be concealed from customers or; ii) that, at the time of the making of the agreement, they did not intend that the nature of the arrangements would be concealed from the CMA or; iii) that, before the making of the agreement, they took reasonable steps to ensure that the nature of the arrangements would be disclosed to professional legal advisers for the purposes of obtaining advice about them before their making or (as the case may be) their implementation. Those amendments only apply to arrangements entered into after their commencement (See, for more detailed rules, CMA's Cartel offense Guidance - CMA9 of 12 March 2014). 

In addition, in the context of cartel offenses, the 2002 Act provides for immunity from prosecution for individuals in the form of a “no-action letter” issued by the CMA under Section 190(4) of the Act. The conditions to benefit from a no-action letter are quite the same as those required for immunity from fines under the leniency program: individuals must acknowledge their participation in the criminal offense, provide the CMA with any information they have about the existence and activities of the cartel, maintain cooperation throughout the investigation and until conclusion of the proceedings and must not have taken steps to coerce another undertaking to take part in the cartel and refrain from further participation in the cartel from the time of its disclosure to the CMA. Furthermore, the CMA must not already hold sufficient information to prosecute.

A draft no-action letter can be found in the OFT's Guidance on the issue of no-action letters for individuals (OFT 513, April 2003), supplemented by OFT's Guidance 803 of December 2008 on the handling of applications - Leniency and no-action.

Section 204 of the Enterprise Act empowers the CMA to ask a court to order that directors of companies which have committed a breach of competition law be disqualified, hence the name of these orders: Competition Disqualification orders (CDOs). Sectoral Regulators may also apply for CDOs in relation to their designated sectors. A CDO may be issued for breach of the Chapter I and II prohibitions of the 1998 Act or for breach of Articles 101 and 102 TFEU.

  The court must make a CDO against a person if it is satisfied that he or she is a director of a company that has committed a breach of competition law, and if the court considers that person's conduct (either active or passive, i.e. through omission) as a director makes him/her unfit to be involved in the management of a company.

  When assessing the director's conduct, the court must consider whether he/she contributed to the breach, failed to take steps to prevent it or ought to have known that the conduct violated competition law.

  Finally, the CMA may accept a Competition Disqualification Undertaking instead of applying for a CDO; this has the same effect as a CDO but is a binding commitment given to the CMA by the person in question rather than being ordered by the court (OFT's Guidance on Director disqualification orders in competition case, OFT 510, 2010).

Global Competition Law

1408. Criminal sanctions

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Les notions juridiques connexes

1408. Criminal sanctions

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Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise