An important watershed in the CMA’s prosecution of the criminal cartel offence

In a move that signals a significant development in the criminal enforcement of cartels in the UK, Mr Peter Nigel Snee, managing director of Franklin Hodge Industries, pleaded guilty on 17 June 2014 to the criminal cartel offence under section 188 of the Enterprise Act 2002. Mr Snee was charged with dishonestly agreeing with others to divide customers, fix prices and rig bids between 2004 and 2012 in respect of the supply in the UK of galvanised steel tanks for water storage. Mr Snee faces a potential custodial sentence of up to five years plus unlimited fines.

Mr Snee was originally charged in January 2014 following a criminal investigation by the Office of Fair Trading (OFT) (now the Competition and Markets Authority [CMA]). The CMA is also conducting a related civil investigation into whether businesses have infringed the provisions of the Competition Act 1998. The progress of the civil investigation is largely contingent on the progress of the criminal case but is expected to be taken forward given this latest development in the criminal case.

This is the first prosecution to be brought by the CMA under the criminal offence in four years since the collapse of the British Airways/Virgin Atlantic case in 2010 and represents a major step forward in criminal enforcement. The previous, and only, successful case brought under the criminal offence by the OFT was the Marine Hoses case, which saw three UK directors sentenced to custodial terms of between 20 and 30 months along with confiscation and director disqualification orders. However, the OFT had a limited role in bringing those prosecutions and the convictions followed on the back of the US criminal case. The galvanised steel tanks case represents the first independently, UK-run prosecution in which an individual has pleaded guilty to the offence. The guilty plea must indicate that the CMA has learnt its lessons in terms of dealing with evidence…  

Click on the link below to read the rest of the Eversheds briefing.

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