CMA Cartel Campaigns and the “Leniency Line”
Last week, the CMA, published its Annual Report for 2017/18 which stated that “at the end of 2017/18 we had no continuing criminal investigations under the cartel offence in the Enterprise Act 2002.” This announcement is perhaps surprising, given the CMA’s intentions which were announced in its Annual Plan 2018/2019 that it would be:
even more bold and innovative in how we carry out our work, including the interventions we make to address any problems we find, taking well-judged risks and decisive actions to achieve the best outcomes for consumers.”
In this document, the CMA also re-iterated that “Enforcement remains central to our purpose, and we will further step up the pace, scale and impact of our enforcement over the coming year.” In doing so, the CMA announced that in 2018/19 it will take forward a higher volume of cases and that it has increased its annual target for launching new competition enforcement investigations from six to ten new investigations.
The tough mantra contained in the CMA’s annual plan is consistent with the CMA’s press release in February 2018, in which it announced a new crackdown on cartels, following a 30% rise in cartel tips offs during 2017. The campaign is described as being part of "ramping up of the CMA's enforcement activity" and follows a recent award of an extra £2.8m of funding from the government. The press release describes "cartels" as being "businesses which cheat their customers by agreeing not to compete with each other so that they can keep their prices high."
The problem for many legitimate and well-meaning businesses is that they (and their employees) have little, or sometimes no, understanding of what constitutes a “cartel.” The everyday understanding of a "cartel" can often be something that involves an arrangement to supply illicit drugs – which is not consistent with its legal definition. As the CMA acknowledge "There are serious penalties for being in a cartel, but many workers in the UK know little about them, putting them and their companies at risk."
The CMA’s anticipation of an increase in enforcement activity coincides with the its anticipated rise in antitrust investigations and enforcements as a result of the UK’s withdrawal from the EU. The CMA has previously indicated that as a consequence of the CMA investigating the UK elements of major antitrust cases (which would previously have fallen within the exclusive competence of the European Commission), it expects to be taking on between 5-7 additional complex cartel cases per year. This view was reinforced in the recent National Audit Office report which examined progress made by the CMA in ensuring that the UK competition regime is prepared for Brexit. (See our related blog, #Brexit, the CMA and competition enforcement). It concluded that “EU Exit will place much greater demands … for example in preparing new legislation, setting up a new state aid body, or taking on more complex competition enforcement cases”.
The CMA's campaign earlier this year encourages businesses to be "safe, not sorry" by making initial reports to the CMA. As the press-release points out, this may mean that businesses are able to benefit from immunity from enforcement action. Further information on immunity can be found here.
As with many legal problems, the prevention is likely to be better than the cure, and an important starting point is to provide training to employees about cartels and competition law.
By providing training, employees can be educated so that they are better able to distinguish between legitimate communication with competing businesses, and illegitimate communication. In doing so, businesses can reduce the risk of having to make contact with the CMA. Investment in training could prove to be worthwhile as the CMA appears to have greater resources to investigate and prosecute suspected cartels.
Should you have any questions about the issues covered in this blog, please contact a member of our Criminal Law team.
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