The Serious Fraud Office (SFO) and the Competition and Markets Authority (CMA) have signed a Memorandum of Understanding (MoU) enabling the two regulators to investigate criminal cartel offences, either jointly or independently.
The criminal cartel offence under English law was enshrined in the Enterprise Act 2002, which criminalised the most serious and damaging forms of anticompetitive agreements in respect of production or supply of products or services in the UK. These include anticompetitive agreements, such as, bid rigging, direct or indirect price fixing, and sharing customers or markets. The Enterprise and Regulatory Reform Act 2013, which came into force on 1 April 2014, removed the requirement to prove that the individual had acted dishonestly – setting a lower threshold for prosecution and widening the scope of the offence. Note that the requirement to prove dishonesty continues to apply to cartel agreements prior to 1 April 2014.
Despite the widening of the scope of the criminal cartel offence, only a handful of criminal cartel cases have been brought since 2014. The move towards greater enforcement collaboration between the CMA and the SFO comes after former CMA Chair Andrew Tyrie’s comments last year that the CMA needed support from an agency with “specialist expertise” on criminal enforcement, given that the authority has brought very few criminal cartel cases since 2014.
The authorities will cooperate to share expertise, training, and information, as well as seconding staff to each other to reflect their “shared commitment to responding to cartel offences in a united, coordinated and robust manner”, in the words of SFO Director Lisa Osofsky. In cases where the CMA suspects criminal cartel activity, it will begin enquiries and may refer the case to the SFO where it considers this to be appropriate. Similarly, where the SFO receives information on suspected cartel offences, it will seek to refer this information to the CMA.
The MoU sets out that the authority that leads the investigation will be responsible for all costs of the investigation, and costs will be shared in cases led jointly. However, there has been no suggestion of increased budgets for either organisation. Even with shared resources, individuals who engage in cartel conduct risk becoming embroiled in lengthy investigations which can run for many years prior to trial.
It remains to be seen whether the MoU will lead to an increase in cartel convictions. The SFO has recently faced several challenges of its own, and may not have sufficient resources to expend on criminal cartel investigations. In fact, Ms Osofsky has recently commented on how “the capacity of the organisation to fight on competing fronts requires constant prioritisation”. Given the low level of success either authority has had with prosecution and with limited budgets and resources, it will be interesting to see if this move will lead to an increase in the cartel prosecution success rate.
What is clear, is that the UK authorities remain committed to taking measures to prevent and punish criminal cartel activity. Businesses must ensure they have appropriate compliance programmes in place to tackle cartel conduct and should seek legal advice immediately if they uncover any suspicious activity.
The authors would like to thank Fran Garvey for her assistance in preparing this article.