First and (Possibly) Last UK Criminal Cartel Trial of its Kind

A trial began on 2 June in the first UK criminal cartel prosecution since the Competition and Markets Authority obtained its powers on 1 April 2014.  The case may also represent the last prosecution of its type under the old formulation of the statutory criminal cartel offence requiring proof of dishonesty.

The CMA alleges that two former executives of Kondea and Galglass (Clive Geoffrey Dean and Nicholas Simon Stringer) dishonestly conspired to fix the price of galvanised steel tanks supplied to building contractors.  The CMA announced the charges in July 2014.  Another individual, Peter Nigel Snee and managing director of Franklin Hodge Industries, has also pleaded guilty and is a witness in the Dean and Stringer trial. 

The CMA is bringing this prosecution under the old version of the criminal cartel offence contained in section 188 of the Enterprise Act 2002.  The Enterprise and Regulatory Reform Act 2013 (ERRA13) introduced changes to the definition of the cartel offence.    Under the (pre 1 April 2014) definition of the cartel offence an individual is guilty of an offence if he dishonestly agrees with one or more persons to make or implement, or cause to be made or implemented, arrangements whereby at least two undertakings will engage in one or more prohibited cartel activity.  Section 47 of ERRA13 removed the requirement that an individual must be acting “dishonestly” for these purposes. The cartel offence (subject to the amendments brought about by ERRA13) only applies to agreements within section 188(1) of the Enterprise Act made on or after 1 April 2014.  The original cartel offence (which requires that an individual acts “dishonestly”) continues to apply to ongoing investigations and prosecutions and cases involving agreements and arrangements which were made before 1 April 2014.  In respect of the post 1 April 2014 cartel offence, section 188A of the Enterprise Act sets out certain circumstances in which the cartel offence (as amended by the removal of the requirement to prove that the individual acted “dishonestly”) will not be committed.

The first and to date only criminal sanctions in respect of the cartel offence were obtained in June 2008 in the Marine Hose case.  However, the convictions were secured through a ground-breaking plea agreement with the US Department of Justice so it cannot be said that that case represents the UK’s first home grown criminal cartel conviction.

The trial is expected to last six to eight weeks.  It is significant that the CMA believes that it has sufficient evidence to support a case under the old rules, whereas now the evidential burden is lower.  Counsel for the defence has noted that the price fixing arrangements were aimed to protect jobs and has urged the jury to consider whether such acts would be perceived as dishonest by the standards of an ordinary person.