EU concerns rise over cartel conflicts

The Competition Commission's new guaranteed immunity procedure for cartel members is already bearing fruit, with 17 companies currently acting as informants, according to a senior commission source

But the regulator is seriously concerned about law firms representing more than one cartel member.

The concern is that joint legal representation may encourage continued collusion between cartel members, or at the very least it could appear to do so. However, the source said that the commission does not have the legal capability to stop this happening.

The whistleblowing programme is specifically designed to break cartels by linking leniency to cooperation and the value of incriminating evidence a company can provide on its fellow cartel members. Theoretically, unless there is continuing collusion, a law firm would almost always advise its client to cooperate as far as possible, making conflicts of interest a huge issue where the firm is representing more than one cartel member. However, it is common practice for UK law firms to represent more than one cartel member in both commission and Office of Fair Trading investigations.

One instance that raised eyebrows both inside and outside the commission was Freshfields Bruckhaus Deringer's decision to represent five members of the pharmaceutical cartel that attracted the biggest ever European fine – a total of £533m. The firm defended itself at the time by arguing that the move was client sanctioned and solid Chinese walls were put up. In that particular case, some of the client relationships predated the merger of the three firms.