Price fixing has only been a criminal offence in the UK for the past five
years, so corporate experience with the new law is still relatively limited.
Moreover, lawyers believe that the willingness of the UK’s competition regulator
to investigate alleged abuses and bring criminal prosecutions means that UK
companies need to learn how to comply – and fast.
Michael Crooks, a partner at law firm Thomas Eggar, says that the definition
of price fixing and anti-competitive behaviour is wider than one might think.
“The offence is committed even if the ‘fixing’ is by way of unwritten, informal
or non-binding understandings,” says Crooks.
“Anti-competitive behaviour includes price-fixing, market sharing
arrangements, collusion in tenders, some refusals to supply, exchanging
sensitive information with competitors whether through trade associations or
otherwise, dictating to customers the prices at which they may sell on to third
parties, and some non-compete obligations,” he says.
Complying with the law
David Whibley, consultant at law firm Morgan Cole, says showing the regulator
that the company has proper controls in place to promote compliance with the
legislation is key to avoid falling foul of the law. As the UK is one of the few
jurisdictions in the European Union that deems price-fixing a criminal offence,
the OFT has set out the following guidelines:
• Demonstrate the company’s commitment to ensuring compliance. This might take
the tangible form of a presentation to the board on the law, and a statement in
a board minute making clear that the company recognises the importance of
• Establish policies and procedures that facilitate compliance. In appropriate
cases, an audit to investigate the status of the company is a good idea;
• Arrange education or training of all personnel in the company who need to
understand the law and the importance of compliance, particularly for sales and
marketing people; and
• Perform an ongoing evaluation and assessment of the success of compliance
policy, such as periodic reviews of the programme.
Peter James, a partner at law firm Clarkslegal, emphasises that the OFT
guidelines remind companies that “all relevant staff should receive regular
training in competition compliance”, including any employees who have any direct
contact with competitors, such as sales teams, logistics managers, business unit
managers and any other staff who have access to the prices charged or tenders
submitted by the company. “Any situation in which an exchange of company data is
likely to occur should be regarded as a risk area,” he says.
As part of the compliance policy, James recommends that companies could
consider issuing questionnaires to relevant staff, covering such issues as
whether they have ever had any involvement in any informal or formal discussions
or arrangements with competitors regarding price matching or anything similar,
and whether they have ever shared information included in a tender submitted by
the company with a third party.
But directors should not rely wholly on a compliance programme, warns Jeremy
Robinson, senior associate in the international competition group at solicitors
Bird & Bird. “Cartel activity is often covert and dishonest, and there may
be some who, knowing the law, decide to take risks by flouting it. These
people’s activities would not be stopped by compliance alone,” says Robinson.
“Directors should be aware of this possibility and take care to know what is
happening on their watch. For this reason, it is often helpful to undertake
regular audits or ‘mock dawn raids’ of the business, not merely to know how the
company would react if there were a real dawn raid, but to learn more about what
business activity is going on,” he says.
Blow the whistle early
Robinson also says that companies should blow the whistle at the earliest
opportunity once any hint of cartel involvement is discovered – even if not
initiated by the company itself. “There is a difficult situation where a company
receives unsolicited, commercially-confidential data which would be useful in
forming a cartel. If the company does nothing, it may be at risk later of being
found to have participated in the cartel. Here, the burden may fall on the
company to prove that it could not have been influenced by receipt of
confidential data. In that situation, the safest course is to notify the
anti-trust authorities, seeking immunity from penalties,” he says.
• In July 2007 the Office of Fair Trading fined British Airways £121.5m after
the airline admitted colluding with Virgin Atlantic to fix the prices of fuel
Companies can be fined up to 10% of their global turnover, but Virgin
Atlantic, which blew the whistle on the anti-competitive practices, escaped any
financial penalty. Criminal investigations regarding some of the individuals
involved are still pending, says the OFT. If convicted, the maximum penalty
could be five years in jail plus a fine, as set out under section 188 of the
Enterprise Act 2002.
• The regulator has also accused the UK’s largest supermarkets of colluding with
five leading dairy producers to raise the prices of milk, butter and/or cheese
and 2003, skimming UK consumers to the tune of £270m. Asda, Dairy Crest, Safeway
(pre-acquisition by Morrisons), Sainsbury’s, The Cheese Company (formerly
Glanbia Foods Ltd) and Wiseman soon admitted their involvement and in December
were rewarded with a reduced, collective fine not exceeding £116m. Arla Foods
may avoid a penalty if it continues to co-operate. However, the OFT is
continuing its case against Morrisons, Tesco and Lactalis McLelland.
• Three British businessmen were extradited from the US and charged in December
2007 with various Enterprise Act cartel offences including price fixing
relating to marine hose.
• Four global glass companies, including UK group Pilkington, were fined a total
of e487m by the European Commission in November 2007 for price-fixing.
For more information on potential prosecutions and ongoing cases, visit the
Office of Fair Trading at
To see the Enterprise Act 2002 in full, go to
and type Enterprise Act 2002 in the search field
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