CMA demonstrates commitment to active enforcement of revamped criminal cartel offence

Head of enforcement at the CMA, Sonya Branch, has made clear that the UK competition regulator is committed to “building up the CMA’s intelligence, investigation and enforcement capacity”.

Commenting on two strategic appointments to the CMA’s cartels and criminal leadership team this week, Ms Branch said that “the CMA is acting increasingly like a mainstream criminal enforcement agency”. One of the new appointees, David Harper, joins the CMA from the Metropolitan Police, highlighting the push towards increased criminal enforcement. 

This push follows the introduction of the revamped criminal cartel offence, introduced in April this year, which is intended to make it easier to secure convictions. Individuals found guilty of the cartel offence face: 

• Up to 5 years’ imprisonment and/or an unlimited fine;
• Director disqualification for a period of up to 15 years; and 
• The confiscation of assets under the Proceeds of Crime Act 2002. 

The CMA currently has four live criminal investigations underway. In June 2014, the CMA charged two individuals in connection with an on-going investigation into the galvanised steel tank water storage unit market. The outcome of these investigations is awaited. 

While the CMA has only convicted three individuals since the previous cartel offence, which was introduced in 2003, the sentences handed down were heavy. The individuals were sentenced to terms of imprisonment of between 20 months and 2 and a half years, and were disqualified from acting as company directors for periods of between 5 and 7 years. Two of the defendants were also the subject of confiscation orders totaling over £1 million. 

In a speech presented at the Business Crime – 2014 Conference last week, Ms Branch identified the CMA’s target areas for enforcement action: 

• Sectors that are in decline;
• Sectors where there have been changes in market conditions, e.g. where there are new market         entrants or where there are unexpected rises in input costs;
• Sectors where ‘everyone knows each other’; and
• Public procurement processes, which can be vulnerable to bid rigging. 

Given the CMA’s investment in its capabilities to undertake criminal prosecutions, it is widely anticipated that more criminal convictions will following in the future. Senior executives working in the CMA’s target sectors should be particularly mindful of the heightened enforcement risk.