On 14 September 2015, the director of Franklin Hodge Industries, Nigel Snee, was given a 6 month suspended prison sentence and 120 hours of community service for “dishonestly agreeing with others to fix prices, divide up customers and rig bids” relating to the supply of galvanised steel water storage tanks in the UK.
Following an investigation, Nigel Snee, Nicholas Stringer and Clive Dean, all from different companies, were each charged with the criminal cartel offence set out in section 188 of the Enterprise Act 2001. Snee had pleaded guilty to the offence and had been cooperating with the Competition and Markets Authority (CMA) investigation for over a year. Nicholas Stringer and Clive Dean were tried earlier this summer and acquitted, when a jury decided that the conduct of the defendants had not been 'dishonest'.
Snee appeared for sentencing this week. The sentencing judge first sought to emphasise the seriousness of cartel conduct, saying that prison sentences ought to be ‘expected’ as a result of such conduct. Snee’s early guilty plea and continued cooperation enabled the judge to apply a 75% reduction from a starting position of 2 years imprisonment, and to suspend the 6 month sentence for 12 months.
The CMA also continues with its separate civil investigation, looking into potential breaches of the Competition Act 1998, and it should be noted that the results of previous civil investigations have been substantial penalties for the businesses involved, irrespective of the outcome of the criminal case.
Dishonesty, which was so important in the trial of Stringer and Dean, is no longer a requirement of the criminal cartel offence. The CMA sought to highlight that defendants charged under the new offence will not have the opportunity to hide behind a lack of dishonesty.
The effect on convictions following the change in the law is yet to be seen, however it is clear that the reform sought to facilitate the successful prosecution of individuals who may have engaged in prohibited cartel activity, by removing the ‘dishonesty’ requirement of the criminal cartel offence. It should also be remembered that even if the CMA decides not to commence a criminal prosecution, they could seek a Director Disqualification Order against individuals whose companies are found to have committed competition law infringements.