A recent report from the National Audit Office has recommended that the Competition and Markets Authority (the body that replaced the Office of Fair Trading) (CMA) increase the number of cartel investigations it carries out. Expect the CMA to listen.

The case for more cartel investigations

A recent report from the National Audit Office (the NAO) has recommended that the Competition and Markets Authority (the CMA) "take further action to step up the flow of successful enforcement cases."

The report recognises the CMA has already made important steps forward in its cartel detection capabilities - for example, by enhancing its expertise in digital forensics - but stresses the need for the regime to build up a steady flow of successful high-profile cases, decisions and fines.

The report highlights the need for more cartel investigations by contrasting the UK competition authorities' aggregate fines of £65 million issued for cartel infringements between 2012 and 2014, with the almost £1.4 billion of fines imposed by its German equivalent (the Bundeskartellamt) over the same time period.

The CMA has responded positively to the report, specifically recognising the need for it to bring a greater number of competition enforcement cases. The unfavourable comparisons with the German enforcement regime will, no doubt, provide something of a benchmark for the CMA to target. In this regard, it is telling that the CMA's Chief Executive, Alex Chisholm responded to the report by reiterating the authority's "aim to become one of the leading competition agencies in the world".

West Midlands beware

A series of recent statements from senior officials at the CMA, combined with the rapid growth of its cartels division - the Cartels and Criminal Group (CCG) doubled in size between 2014 and 2015 - strongly suggest that the CMA are already preparing for a string of dawn raids in the very near future.

An insight into the CMA's likely thinking may be gleaned from its recent publication of a report it commissioned which found that businesses in the West Midlands had a lower understanding of competition law than across the rest of the UK.

The report notes that businesses in the West Midlands "were much more likely [than businesses in other regions] to contact their competitors to find out their prices" and "far less likely on average to know Competition Law well … with three in 10 (30 per cent) reporting that they had never heard of it. "

Sanctions available

The CMA has a wide range of sanctions which it may impose on against companies and individuals found to have been involved in a cartel.

The Competition Act 1998 allows the CMA to fine companies found to have been involved in cartels up to 10% of their annual worldwide group turnover.

In addition, individuals convicted under the Cartel Offence may face:

  • up to five years imprisonment; and/or
  • an unlimited fine; and/or
  • director disqualification for up to fifteen years; and/or
  • the confiscation of assets pursuant to the Proceeds of Crime Act 2002; and/or
  • an order requiring that they pay all or some of the costs of the prosecution.

Importantly, the CMA's leniency programme provides clear incentives for individuals and companies to proactively report cartels to the CMA, including the possibility of immunity for both individuals and companies.

For further information relating to the steps companies and/or individuals can take under the leniency programme please see our alert "CMA issues warning to cartelists: expect a prison sentence".