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{\author Kelly Hancocks}{\operator strot}{\creatim\yr2004\mo11\dy29\hr15\min48}{\revtim\yr2004\mo11\dy29\hr15\min48}{\printim\yr2004\mo11\dy2\hr10\min51}{\version2}{\edmins0}{\nofpages11}{\nofwords4800}{\nofchars27365}{\*\company OFT}{\nofcharsws32101}
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\qc \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid12265466 \fs24\lang2057\langfe2057\cgrid\langnp2057\langfenp2057 {\b\fs32\insrsid3478360 ACCC Conference: Sydney, Australia}{\b\fs32\insrsid3870825 ,}{
\b\fs32\insrsid3478360  November 2004
\par 
\par }{\b\fs32\insrsid12266425\charrsid12265466 Cracking Cartels:  Trends and Issues:  The UK Perspective}{\b\fs32\insrsid12938695\charrsid12265466 
\par }{\fs32\insrsid12266425\charrsid12265466 
\par }{\b\fs32\insrsid12266425\charrsid12265466 Simon Williams}{\b\fs32\insrsid12265466 
\par }{\b\fs32\insrsid12266425\charrsid12265466  Director of Cartel Investigations, }{\b\fs32\insrsid12265466 
\par }{\b\fs32\insrsid12266425\charrsid12265466 Office of Fair Trading}{\b\fs32\insrsid12265466 ,}{\b\fs32\insrsid12266425\charrsid12265466  United Kingdom
\par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15409172 {\fs32\insrsid12266425\charrsid12265466 
\par }{\insrsid12265466 
\par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid3870825 {\insrsid3870825 
\par }{\b\insrsid12266425\charrsid12266425 Background to UK Cartel Enforcement}{\b\insrsid12266425 
\par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15409172 {\b\insrsid12266425 
\par }{\insrsid8615563\charrsid8615563 A sig}{\insrsid12265466 nificant milestone in UK competition l}{\insrsid8615563 aw was the coming into force of the Competition Act }{\insrsid12265466 1998}{\insrsid286112  (\'93the Competition Act\'94)}{\insrsid12265466 
, }{\insrsid11891687 in March of 2000.  }{\insrsid1408870 The}{\insrsid11891687  Act sets out a basic prohibition }{\insrsid6370187 for anti-competitive behaviour }{\insrsid12265466 in Chapter 1 of P}{\insrsid12797573 art 1}{\insrsid12265466 
 (the so-called \'93C}{\insrsid12797573 hapter 1 prohibition}{\insrsid12265466 \'94)}{\insrsid3870825 .  The }{\insrsid12265466 C}{\insrsid12797573 hapter 1 prohibition closely follows }{\insrsid15991076 the wording of Article 81 of the Treaty of Rome.}{
\insrsid12266425 
\par }{\insrsid15991076 
\par The prohibition is to the effect}{\insrsid12265466  that a}{\insrsid2827843 greement}{\insrsid12265466 s}{\insrsid2827843  between undertakings, decisions by associations of undertakings }{\insrsid12265466 or concerted practic}{\insrsid4853294 
es which (a) may affect trade within the Unite}{\insrsid12265466 d Kingdom, and (b) have us their}{\insrsid4853294  objec}{\insrsid12265466 t or}{\insrsid4853294  effect }{\insrsid3761606 the prevention}{\insrsid3870825 ,}{\insrsid3761606 
 restriction or distortion of }{\insrsid11620912 competition within the United Kingdom are}{\insrsid3761606  }{\insrsid12265466 prohibited.
\par 
\par }{\insrsid11620912 The Compet}{\insrsid12265466 ition Act then provides a non-exhaustive list of }{\insrsid11620912 particular types o}{\insrsid12265466 f behaviour which will infringe the C}{\insrsid11620912 hapter 1 }{\insrsid12265466 
prohibition namely:
\par 
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\insrsid11620912 directly or indirectly }{\insrsid11215457 fixing purchase or selling prices;}{\insrsid12265466 
\par {\listtext\pard\plain\lang2057\langfe2057\langnp2057\langfenp2057\insrsid11215457 \hich\af0\dbch\af0\loch\f0 -\tab}}{\insrsid11215457 limiting or controlling production}{\insrsid12265466 ,}{\insrsid11215457  markets}{\insrsid12265466 ,}{\insrsid11215457  
}{\insrsid10243065 technical development}{\insrsid4394556  or investment;}{\insrsid12265466 
\par {\listtext\pard\plain\lang2057\langfe2057\langnp2057\langfenp2057\insrsid12265466 \hich\af0\dbch\af0\loch\f0 -\tab}sharing markets or sources of}{\insrsid4394556  supply;}{\insrsid12265466 
\par {\listtext\pard\plain\lang2057\langfe2057\langnp2057\langfenp2057\insrsid4394556 \hich\af0\dbch\af0\loch\f0 -\tab}}{\insrsid4394556 applying dissimilar }{\insrsid88308 conditions to equivalent transactions with other trading parties }{\insrsid5663825 
so as to place them at a}{\insrsid10834353  competitive disadvantage; and}{\insrsid12265466 
\par {\listtext\pard\plain\lang2057\langfe2057\langnp2057\langfenp2057\insrsid10834353 \hich\af0\dbch\af0\loch\f0 -\tab}}{\insrsid10834353 
making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which have no connection with the subject of such contracts.}{\insrsid15991076 
\par }\pard \qj \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0\pararsid15409172 {\insrsid10834353 
\par In conformity with }{\insrsid12265466 the UK\rquote }{\insrsid9337903 s status as a member of the European Union, section 60 of the Competition Act sets out }{\insrsid12265466 that UK authorities}{\insrsid16209787  should handle }{\insrsid5051063 
cases in such a way}{\insrsid5265844  as}{\insrsid5051063  to ensure consistency }{\insrsid5265844 with community law.}{\insrsid11756575   }{\insrsid10834353 
\par }{\insrsid11756575 
\par Essentially therefore, }{\insrsid2584128 types }{\insrsid12265466 of behaviour are caught by the C}{\insrsid2584128 hapter 1 prohibition }{\insrsid12602223 if their }{\i\insrsid12602223\charrsid7033640 object or purpose}{\insrsid12602223 
 is anti-competitive }{\insrsid11224548 or}{\insrsid7033640 ,}{\insrsid11224548  economically speaking}{\insrsid7033640 ,}{\insrsid11224548  }{\insrsid15034028 that is their }{\i\insrsid7033640 e}{\i\insrsid15034028\charrsid7033640 ffect}{\insrsid7033640 
.  Cartel i}{\insrsid2623637 nvestigations under the Competition Act are, of course, largely dealt with as }{\i\insrsid2623637\charrsid7033640 object}{\i\insrsid2579687\charrsid7033640  }{\insrsid2579687 
cases and therefore there is not generally a need to embark upon a detailed analysis }{\insrsid7033640 of the economic e}{\insrsid6778774 ffects of behaviour}{\insrsid7033640 . T}{\insrsid6778774 o a significant degree}{\insrsid7033640 , economic analysis
}{\insrsid6778774  }{\insrsid7033640 in our cartel investigations }{\insrsid6778774 is confined to }{\insrsid7033640 (a) assessing whether circumstantial 
evidence of collusion in particular cases is in fact capable of a plausibly innocent explanation and (b) }{\insrsid6778774 ensuring a proper definition of the market in which the prohibited activity is taking place}{\insrsid7033640 ,}{\insrsid6778774  }{
\insrsid2779969 so as to arrive at an appropriate penalty should an infringement be found to have occurred.}{\insrsid11756575 
\par }{\insrsid2779969 
\par The OFT may issue a }{\insrsid7033640 \'93Statement of O}{\insrsid2779969 bjections}{\insrsid7033640 \'94}{\insrsid2779969  where it believes an infringement }{\insrsid7033640 of the Chapter 1 prohibition }{\insrsid2779969 to have occurred}{
\insrsid7033640 .  The Statement of O}{\insrsid11958950 bjections will be issue}{\insrsid7033640 d to the parties who are considered by the OFT}{\insrsid11958950  to have been involved in the prohibited behavi}{\insrsid13639735 our.  Those parties}{
\insrsid3870825  then have an opportunity to submit}{\insrsid13639735  both written and oral representations}{\insrsid7033640  as to the OFT\rquote s provisional findings}{\insrsid13639735 .  On}{\insrsid16518255 
 a consideration of those representations, the OFT }{\insrsid7033640 may decide to issue a formal}{\insrsid15338352  infringement decision }{\insrsid1202965 and impose financial penalties }{\insrsid7033640 which are calculated }{\insrsid1202965 
in accordance with published guidance.}{\insrsid1669105   If an infringement decision}{\insrsid9970339  is issued, the parties against whom it is issued have the right of app}{\insrsid7033640 eal to an independent tribunal - }{\insrsid13109927 
the Competition Appeal Tribunal.}{\insrsid4201814 
\par 
\par The legal processes under the Competition Act are civil rather than criminal \endash  at least in the sense in which m}{\insrsid286112 ost lawyers would understand those}{\insrsid4201814  term}{\insrsid286112 s}{\insrsid4201814 .}{\insrsid13109927  }{
\insrsid2779969 
\par }{\insrsid13109927 
\par The Competition Act sets out a number of powers which assist the OFT in carrying ou}{\insrsid7033640 t investigations. T}{\insrsid13109927 he powers only come into play if there are }{\i\insrsid13109927\charrsid7033640 reasonable grounds for}{
\insrsid13109927  }{\i\insrsid13109927\charrsid7033640 suspecting}{\insrsid13109927  that there h}{\insrsid7033640 as been an infringement of the C}{\insrsid13109927 hapter 1 prohibition.}{\insrsid7033640 
\par 
\par }{\insrsid13109927 Section}{\insrsid3807911  26 of the Act permits the OFT to require a person to produce specified documents where it considers such information relates to any matter relevant to an investigation being conducted by the OFT.  }{
\insrsid13109927 
\par }{\insrsid3807911 
\par Section 27 of }{\insrsid7033640 the }{\insrsid3807911 Act permits an officer to enter premises with notice, or alternatively without notice}{\insrsid7033640 ,}{\insrsid3807911  }{\insrsid1205243 in order to require any person on
 those premises to produce documents}{\insrsid10889022  relevant to the investigation being conducted.  If the entry is to be conducted without notice}{\insrsid7033640 ,}{\insrsid10889022  }{\insrsid11805189 
the OFT must have reasonable grounds to suspect that the premises in question are or have been occupied by }{\insrsid13257589 a party to an agreement wh}{\insrsid7033640 ich is or has been in}{\insrsid4591895  potential breach of the C}{\insrsid13257589 
hapter 1}{\insrsid16410924  prohibition.}{\insrsid3807911 
\par }{\insrsid8605348 
\par }{\insrsid4591895 Section 28 and 28A permit a High C}{\insrsid8605348 ourt judge to grant officers of the OFT the power to search }{\insrsid14899981 premises, both business and domestic.  Ordinarily the judge, in deciding whether t
o issue the warrant, would be asked to satisfy himself that there are relevant documents on the premises which if the occupier were asked}{\insrsid4591895  to produce}{\insrsid4201814  them}{\insrsid13524747 , }{\insrsid4591895 
might lead those documents to be}{\insrsid13524747  concealed, removed, tampered with or destroyed.}{\insrsid8605348 
\par }{\insrsid4591895 
\par 
\par }{\b\insrsid4591895\charrsid4591895 The workload of the Cartels Branch
\par }{\insrsid14437317 
\par In terms of the origin of complain}{\insrsid4591895 ts coming in to the OFT\rquote s Cartels B}{\insrsid14437317 ranch, some 42% come from corporate customers, 26% from leniency applicants, 10% from competitors and 13% from }{\insrsid4201814 
members of the public as }{\insrsid14437317 individual customers.  Leniency i
s therefore a significant source of complaints for the branch, but perhaps not as much as we would wish.  For those cases under full investigation, the proportion deriving from leniency i}{\insrsid286112 ncreases to 35% of the total.  Unsurprisingly, l}{
\insrsid14437317 eniency applications are more likely to lead to full investigations than other s}{\insrsid4591895 ources of referrals}{\insrsid14437317  into the branch.
\par 
\par In the last twelve m}{\insrsid4591895 onths or so, the OFT\rquote s Cartels Branch has pursued}{\insrsid14437317  investigations in a number of areas including roofing (in relation to collusive tendering}{\insrsid1389091 
), the milk market, the market for the supply of care homes places, the market for the provision of education in the independent schools sector and a variety of other areas including cement, foam, double glazi}{\insrsid8935019 n}{\insrsid5249528 
g spacer bars, restaurant check}{\insrsid1389091  pads a}{\insrsid7408343 nd solicitors}{\insrsid4591895 \rquote }{\insrsid7408343  conveyancing fees.  No doubt this variety is commonly seen in other law enforcement agencies.  }{\insrsid4591895 
\par 
\par Our biggest case this last year - in terms of numbers of parties and volume - has been i}{\insrsid286112 n relation to private fee-charging}{\insrsid4591895  schools. The OFT has been investigating allegations that some of the UK\rquote 
s most famous private schools regularly exchanged information about prospective fee increases in such a manner as could be described as a concerted practice to fix fees through the means of information exchange on
 prices. The OFT has yet to form a firm conclusion about these allegations, but is likely to do so in 2005.}{\insrsid14437317 
\par }{\insrsid4591895 
\par }{\insrsid7408343 
\par }{\b\insrsid7408343\charrsid1648095 Some Recent Developments in the Law of Cartels in the UK}{\b\insrsid2584128\charrsid1648095 
\par }{\insrsid7408343 
\par }{\insrsid4201814 In the UK the number of pure c}{\insrsid3870825 artel}{\insrsid7408343  decisions issued by the OFT is still at a relatively low level, although there are a number of cases in the pipeline}{\insrsid8915798 
.  The OFT issued a collusive te}{\insrsid3761214 ndering }{\insrsid1648095 (or \'93bid rigging\'94) }{\insrsid3761214 decision in the case of }{\i\insrsid3761214\charrsid3870825 West Midlands Roofing}{\insrsid3761214  on the 17}{
\super\insrsid3761214\charrsid3761214 th}{\insrsid3761214  March 2004 with combi}{\insrsid1648095 ned penalties imposed of \'a3330,000}{\insrsid3870825  (roughly Aus $800,000)}{\insrsid13920175 .}{\insrsid10109406   Quite a few cases the OFT deals with }{
\insrsid16261562 will }{\insrsid4201814 see penalties}{\insrsid10623476  of}{\insrsid1648095  this order of magnitude.  The }{\i\insrsid1648095\charrsid3870825 West Midlands}{\insrsid1648095  decision}{\insrsid10623476 
 is currently under appeal before the Competition Appeal Tribunal.}{\insrsid7408343 
\par }{\insrsid10623476 
\par The OFT has had a number of substantially larger cases in areas concerning mixed hor}{\insrsid1648095 izontal and vertical effects.  For example, i}{\insrsid10623476 n }{\i\insrsid1648095 Replica Football K}{\i\insrsid10623476\charrsid1648095 it}{
\insrsid10623476 , the OFT fined a number of suppliers of }{\insrsid1648095 replica football kits a sum of \'a318.6 million (roughly Aus $50 million)}{\insrsid10623476 .}{\insrsid1648095  The OFT had determined that a number of companies had been party
 to various agreements which had resulted in price fixing for replica football kits. In the UK such kits are big business and parents nation-wide were dishing out sizeable sums to keep their children up to date with the latest kits for their favoured team
s. Such kits seemed to change with remarka}{\insrsid4263649 ble frequency and the cost of kits was surprisingly high. Since the OFT\rquote 
s action, the prevailing market price of these kits has fallen by about 40% and the fall has been sustained. Because }{\insrsid286112 replica football }{\insrsid4263649 kits are somewhat less esoteric than chemicals with baffling names whic}{
\insrsid286112 h are so often the subject }{\insrsid4263649 of cartel findings around the world, the }{\i\insrsid3870825 K}{\i\insrsid4263649\charrsid4263649 its }{\insrsid4263649 
case has been effective at demonstrating to the public the practical benefits of competition enforcement.}{\insrsid1648095 
\par }{\insrsid4263649 
\par }{\insrsid286112 Back to the law again: t}{\insrsid4263649 he OFT\rquote s decision}{\insrsid10623476  was a}{\insrsid286112 ppealed by one of its}{\insrsid1648095  addresse}{\insrsid3870825 e}{\insrsid1648095 s}{\insrsid4263649 ,}{\insrsid10623476 
 to the Competition Appeal Tribunal which handed down }{\insrsid3870825 judg}{\insrsid5528053 ment}{\insrsid3870825  on }{\insrsid10623476 1}{\super\insrsid10623476\charrsid10623476 st}{\insrsid10623476  October 2004}{\insrsid5528053 .}{\insrsid10623476 

\par }{\insrsid5528053 
\par The Competition Appeal Tribunal quoted from the European Court of Justice }{\insrsid8800136 Judgment}{\insrsid4263649  in }{\i\insrsid4263649\charrsid4263649 Cement}{\insrsid10842371  }{\insrsid8800136 as follows}{\insrsid4263649 
\par 
\par }{\insrsid8800136  \'93}{\i\insrsid3870825 \'85it is normal for [c}{\i\insrsid8800136 artels] to take place in a clandestine fashion}{\i\insrsid11157672 , for meetings to be held in secret\'85
and for the associated documentation to be reduced to a minimum.}{\i\insrsid5528053 
\par }{\i\insrsid11157672 
\par Even if}{\i\insrsid4263649  the C}{\i\insrsid11157672 ommission discovers evidence explicitly showing unlawful conduct between 
traders, such as the minutes of a meeting, it will normally be only fragmentary and sparse, so that it is often necessary to reconstitute certain details by deduction.  
\par 
\par In most cases, the existence of}{\i\insrsid4263649  an anti-competitive practise or agreement must be inferred}{\i\insrsid11157672 
 from a number of coincidences and indicia which, taken together, may, in the absence of another plausible explanation, constitute evid}{\i\insrsid4201814 ence of an infringement of the c}{\i\insrsid11157672 ompetition rules\'94}{\insrsid3220675 .}{
\insrsid11157672 
\par }{\insrsid3220675 
\par }{\insrsid4263649 Also quoting from the }{\i\insrsid4263649\charrsid2642246 C}{\i\insrsid3220675\charrsid2642246 ement}{\insrsid3870825  judg}{\insrsid3220675 ment it was said that}{\insrsid4263649 :}{\insrsid3220675  }{\insrsid4263649 
\par 
\par }{\insrsid3220675 \'93}{\i\insrsid4263649 it is sufficient for the C}{\i\insrsid3220675 ommission to show that the undertaking concerned participated in meetings }{\i\insrsid4263649 at }{\i\insrsid3220675 
which anti-competitive agreements were concluded, without }{\i\insrsid4263649 manifestly o}{\i\insrsid1324481 pposing them, to prove to the requisite standard that the u}{\i\insrsid4201814 ndertaking participated in the c}{\i\insrsid1324481 artel.\'94}{
\i\insrsid3220675 
\par }{\i\insrsid1324481 
\par }{\insrsid4201814 Furthermore}{\insrsid1324481 :
\par }{\insrsid4263649 
\par }{\i\insrsid1324481 \'93A party which tacitly approves of an unlawful}{\i\insrsid12940633  initia}{\i\insrsid4263649 tive, without publicly distancing}{\i\insrsid12940633  itself from its content or reporting it to the administ}{\i\insrsid11416587 
rative authorities, effectively encourages the continuation of the infringement and compromises its discovery.}{\i\insrsid1183136   That complicity constitutes a passive mode of participation in the infringement which is therefore }{\i\insrsid7155079 
capable of rendering the undertaking liable in the context of a single agreement.\'94}{\i\insrsid1324481 
\par }{\i\insrsid7155079 
\par }{\insrsid4263649 In the }{\i\insrsid4263649\charrsid4263649 Kits}{\i\insrsid7155079\charrsid4263649  }{\insrsid7155079 judgment the Competition}{\insrsid9844496  Appeal Tribunal took the opportunity to \'93clarify\'94 the standard }{\insrsid4201814 of }{
\insrsid9844496 proof required to prove infringement decisions in }{\insrsid4263649 UK }{\insrsid9844496 Cartel cases.  It said as follows}{\insrsid4201814 :}{\insrsid9844496  }{\insrsid4263649 
\par 
\par }{\insrsid9844496 \'93}{\i\insrsid9844496 \'85The reference by the Tribunal to \'93strong and co}{\i\insrsid4263649 mpelling\'94 evidence at [109] of N}{\i\insrsid9844496 app }{\i\insrsid4201814 [a previous ruling] }{\i\insrsid9844496 should 
not be interpreted as meaning that something akin to the criminal standard is applicable to these proceedings.  The standard remains the civil standard\'85
\par 
\par As regards price fixing cases\'85the Tribunal pointed out }{\i\insrsid4263649 in Claymore D}{\i\insrsid3626402 airies}{\i\insrsid3870825  [another previous ruling]}{\i\insrsid3626402  }{\i\insrsid3870825 that c}{\i\insrsid14905275 arte}{\i\insrsid4263649 
ls are by their nature hidden and}{\i\insrsid14905275  secret; little or nothing may}{\i\insrsid4263649  }{\i\insrsid14905275 be committed to writing.  In our view even a single item of evidence, or wholly circumstantial evidence}{\i\insrsid14887310 
, depending on the particular context and the particular circumstances, may}{\i\insrsid4263649  }{\i\insrsid14887310 be sufficient to meet the required standard.\'94}{\i\insrsid7155079 
\par }{\i\insrsid14887310 
\par }{\insrsid6898616 These various judicial statements}{\insrsid2507180  improve t}{\insrsid2642246 he ability of the OFT to bring c}{\insrsid2507180 
artelists to justice, firstly in clarifying the standard of proof to be applied in the UK and also by providing more detailed guidance as to the nature of the evidence that will be acceptable.  Due regard is clear}{\insrsid2642246 
ly had to the secret nature of c}{\insrsid2507180 artels and the }{\insrsid7687664 difficulty}{\insrsid2507180  of getting direct evidence, }{\insrsid7687664 particularly}{\insrsid2507180  in the case of well run and }{\insrsid7687664 sophisticated}{
\insrsid2642246  c}{\insrsid2507180 ar}{\insrsid6965421 tel arrangements. That said, the Tribunal clearly demands a high standard of proof (albeit not the criminal standard) in order to rebut the presumption of innocence.}{\insrsid14887310 
\par }{\insrsid2507180 
\par }{\insrsid6965421 
\par }{\b\insrsid2507180\charrsid2507180 Leniency
\par }{\insrsid2507180 
\par On the non-judicial front,}{\insrsid10575704  the O}{\insrsid2642246 FT }{\insrsid286112 has in the last year}{\insrsid2642246  consulted on}{\insrsid10575704  revised }{\insrsid7687664 leniency}{\insrsid2642246  rules. The proposed new rules
 (awaiting final clearance from the Secretary of State) would }{\insrsid10575704 make it easier to }{\insrsid7687664 fulfil}{\insrsid9469852  the }{\insrsid7687664 criteria}{\insrsid6965421 
 for leniency for undertakings reporting themselves for anti-competitive conduct}{\insrsid9469852 .  Previously, the OFT\rquote s leniency policy}{\insrsid4725702  barred any applicant who was judged to }{\insrsid6965421 have been an instigator of the c}{
\insrsid4725702 artel.  Now the }{\insrsid2642246 bar}{\insrsid7687664  will only operate if an applicant has taken steps to }{\insrsid6052461 \'93coerce\'94 another undertaking to t}{\insrsid6965421 ake part in the c}{\insrsid1135476 
artel activity.  Clearly }{\i\insrsid1135476\charrsid6965421 coercion}{\insrsid6965421  in the context of c}{\insrsid6815829 artels is a}{\insrsid1135476  somewhat a less likely}{\insrsid6815829  phenomenon}{\insrsid5315591  than }{
\i\insrsid5315591\charrsid6965421 instigation}{\insrsid5315591 .  I}{\insrsid2642246 t is hoped that in time this will encourage }{\insrsid5315591 more }{\insrsid2642246 applications for leniency.}{\insrsid2507180 
\par }{\insrsid5315591 
\par The OFT\rquote s le}{\insrsid6965421 niency notice also states that c}{\insrsid5315591 artel activ}{\insrsid6965421 ity specifically includes resale}{\insrsid5315591  price maintenance}{\insrsid6965421  (\'93RPM\'94) \endash  \'93vertical\'94 price fixing
}{\insrsid5315591 .  RPM is a common phenomenon in the UK }{\insrsid614363 and such cases of}{\insrsid2181875 te}{\insrsid6965421 n involve horizontal elements.}{\insrsid5315591 
\par }{\insrsid6965421 
\par 
\par }{\b\insrsid2642246 Cartels are getting more sophisticated}{\b\insrsid6965421\charrsid6965421 
\par }{\insrsid2181875 
\par Throughout the world, law enforcement jurisdictions }{\insrsid12067002 have be}{\insrsid6965421 en noticing for some time that c}{\insrsid12067002 artels \endash  particularly those likely to be the biggest and most damaging \endash 
 are becoming increasingly sophist}{\insrsid6965421 icated.  The operatives in the c}{\insrsid12067002 artels are becoming increasingly}{\insrsid2642246  careful to evade detection.  }{\insrsid6965421  In the UK, this }{\insrsid2642246 
has been a driver for }{\insrsid12067002 increase}{\insrsid2642246 d powers }{\insrsid6965421 to detect car}{\insrsid2642246 tels and }{\insrsid6965421 an increase in the severity of the penalties available}{\insrsid12067002 
.  The OFT has taken on a number of new powers in the}{\insrsid8525959  con}{\insrsid6965421 text of the criminalisation of c}{\insrsid8525959 arte}{\insrsid286112 ls under the Enterprise Act}{\insrsid2955631  2002 (\'93the Enterprise Act\'94)}{
\insrsid6965421 , discussed below}{\insrsid8525959 .
\par 
\par }{\insrsid6965421 
\par }{\b\insrsid8525959\charrsid8525959 Criminal Cartel Offence and Powers}{\b\insrsid12067002\charrsid8525959  }{\b\insrsid2181875 
\par }{\b\insrsid8940299 
\par }{\insrsid8940299 Section 188 of the Enterprise Act}{\insrsid3870825 , which came into force in June 2003,}{\insrsid8940299  sets ou}{\insrsid2642246 t the new criminal offence for c}{\insrsid8940299 artel behaviour.  The offence t}{\insrsid2256369 
argets individuals, in particular those that dishonestly agree that two or more undertakings will engage in price fixing, bid rigging, market sharing or limitation of production or supply}{\insrsid2236001 .}{\insrsid3870825  \'93Vertical\'94
 price fixing is not covered by the cartel offence.}{\insrsid8940299 
\par }{\insrsid2236001 
\par The offence applies where an individual makes or }{\insrsid1454769 implements such }{\insrsid6834964 agreements or causes such agree}{\insrsid10232292 ments to be made or imple}{\insrsid15156988 mented, irrespective or 
whether the agreement reached is actually implemented.}{\insrsid2236001 
\par }{\insrsid15156988 
\par If an agreement has been implemented in whole or in }{\insrsid14051923 part in the UK}{\insrsid10232055  then the fact that the agreement was ma}{\insrsid14051923 de outside of the UK}{\insrsid10232055  }{\insrsid13963441 is no barrier to a prosecution.}{
\insrsid15156988 
\par }{\insrsid13963441 
\par }{\insrsid4201814 A key element in the c}{\insrsid13963441 artel offence }{\insrsid750884 is }{\insrsid14051923 \'93}{\insrsid750884 dishonesty.}{\insrsid14051923 \'94}{\insrsid750884   }{\insrsid8468041 
This is a concept which is well understood by English }{\insrsid3870825 and indeed Australian criminal lawyers}{\insrsid12653321 .  }{\insrsid8468041  }{\insrsid9912225 
The test is met where right thinking people would consider that the action in question was dishonest }{\insrsid8666897 and that the defendant knew}{\insrsid6700615  that right thinking people would think the behaviour to be }{\insrsid5181395 dishonest.}{
\insrsid14051923  It will be interesting to see what juries will make of cartel behaviour by reference to this test.}{\insrsid13963441 
\par }{\insrsid5181395 
\par }{\insrsid14051923 The criminal c}{\insrsid859019 artel offence is therefore aimed at individuals.  It will exist alongside }{\insrsid6251949 the earlier Competition Act 1998}{\insrsid6892796  which deals with undertakings.  }{\insrsid5181395 
\par }{\insrsid6892796 
\par }{\insrsid24428 It is the OFT\rquote s intention tha}{\insrsid1982432 t the criminal and civil regimes will operate in parallel }{\insrsid15271231 in th}{\insrsid14051923 e sense that there}{\insrsid15271231  may well be a cr}{\insrsid1787460 
iminal investigation of individual}{\insrsid15271231 s and a parallel civil investigation of the undert}{\insrsid14051923 akings in relation to the same c}{\insrsid15271231 artel.  In such cases, }{\insrsid7740876 it is obviously necessary to ensure }{
\insrsid1787460 that the civil proceedings do not prejudice any criminal proceedings}{\insrsid14051923 .  This means in practic}{\insrsid227891 e that the OFT will need to be careful to judge whether, in some cases, it is undesirable }{\insrsid7089015 
to reach a final decision in}{\insrsid1521727  a civil case until the criminal trial has been determined.}{\insrsid6892796 
\par }{\insrsid11955293 
\par It has been recognised by the OFT that it does not have }{\insrsid4201814 anything like }{\insrsid11955293 the depth of experience in criminal investigation and prosecution }{\insrsid884400 that other agencies posses}{\insrsid7089015 s}{\insrsid884400 
.  It is for this reason that the OFT has reached an agreement with the UK\rquote s Serious Fraud Office}{\insrsid4201814  (}{\insrsid286112 \'93}{\insrsid4201814 SFO}{\insrsid286112 \'94}{\insrsid4201814 )}{\insrsid884400 .  The}{\insrsid1408331  S}{
\insrsid4201814 FO}{\insrsid14051923  }{\insrsid1408331 is}{\insrsid14051923  given the}{\insrsid1408331  remit under its Criminal Justice Act}{\insrsid14051923  1987}{\insrsid6753172  }{\insrsid4150090 
to investigate cases of serious or complex fraud and prosecute them as appropriate.  }{\insrsid14051923 
\par 
\par }{\insrsid4150090 To that end, Cartel behaviour can be seen as a }{\insrsid10558374 species}{\insrsid4150090  of fraud and therefore comes within the remit of the SFO if the matter is sufficiently ser}{\insrsid14051923 ious or}{\insrsid4150090 
 complex on the facts.  Where so, it is likely that}{\insrsid14051923  an investigation into a large c}{\insrsid4150090 artel will begin with the OFT and its investigation teams and at some stage, perhaps after the }{\insrsid10558374 initial}{
\insrsid4150090  process of raids, will be transferred to the jurisdiction of t}{\insrsid14051923 he SFO}{\insrsid4150090  for them to take forward.  Where this occurs, the memorandum of understanding }{\insrsid10558374 betwe
en the SFO and the OFT calls for OFT investigators to be seconded to SFO case teams with a view to ensuring continuity and a mix of experiences.}{\insrsid11955293 
\par }{\insrsid16405952 
\par To date}{\insrsid7089015 ,}{\insrsid16405952  one case has been referred by the OFT }{\insrsid4091549 to the SFO and is currently under investigation.  In the case in question}{\insrsid14051923 ,}{\insrsid4091549 
 members of the OFT have been seconded to the SFO case team and a quite separate investigation is also under}{\insrsid286112  way under the Competition Act}{\insrsid14051923  exclusively conducted by}{\insrsid4091549  the OFT}{\insrsid4208561 .}{
\insrsid14051923  Statutory gateways exist which should allow relevant evidence gathered by each team to be disclosed to the other.}{\insrsid16405952 
\par }{\insrsid286112 
\par }{\insrsid1995952 The penalty on conviction for the cartel offence is up to five years imprisonment or an unlimited fine. The Enterprise Act also introduced a new power to disqualify directors for up to 15 years. A \'93Competition Disqualification Order
\'94 must be made if the company of which a person is/was at the material time a director commits a breach of competition law and that person\rquote s conduct as a director makes him/her unfit to be concerned in the management of a company. It is 
important to stress that a breach of competition law could mean a breach of the civil C}{\insrsid14100963 hapter 1 prohibition, so that this}{\insrsid1995952 
 potentially highly effective penalty of director disqualification could be applied without the need for any criminal investigation and conviction.}{\insrsid286112 
\par }{\insrsid4208561 
\par Under the Enterprise Act}{\insrsid746154  new po}{\insrsid14051923 wers are granted to the OFT by P}{\insrsid746154 arliament to assist}{\insrsid4201814  it}{\insrsid746154  in }{\insrsid14051923 investigating the c}{\insrsid8616124 
artel offence.  These powers include the ability to }{\insrsid10103137 compel the }{\insrsid4201814 production of documents and }{\insrsid10103137 answers to questions.  }{\insrsid14051923 
\par 
\par }{\insrsid10103137 The use of }{\insrsid14051923 these kind of \'93}{\insrsid10103137 compulsive}{\insrsid14051923 \'94}{\insrsid10103137  powers in criminal inve}{\insrsid4201814 stigations in the UK}{\insrsid2886940  has been somewhat circumscribed by }
{\insrsid7803142 the jurisprudence }{\insrsid5518840 of the Europe}{\insrsid14051923 an Court of Human Rights}{\insrsid7089015  in as much as it held that the admission of any evidence obtained from a suspect using compulsory que
stioning powers would amount }{\i\insrsid7089015\charrsid7089015 prima facie}{\i\insrsid7089015  }{\insrsid7089015 to a breach of their privilege against self-incrimination}{\insrsid14051923 .  The e}{\insrsid5518840 
ffect of this is that compulsive powers are likely to be used}{\insrsid14051923 ,}{\insrsid5518840  in the main}{\insrsid14051923 ,}{\insrsid5518840  against third parties who may have information relevant to a criminal inve
stigation.  This is particularly so in the case of compulsory interviews.  In the case of documents, there is somewhat more latitude under present case law to enable production by compulsion from suspects themselves.
\par 
\par The OFT also has the power, unsurprisingly, to execute search warrants under the Enterprise Act both in relation to residential and business premises.}{\insrsid8672044   
\par 
\par The E}{\insrsid14051923 nterprise Act also amended both the R}{\insrsid8672044 egulation of Investigatory }{\insrsid5377212 Powers Act }{\insrsid11605989 2000 (\'93RIPA\'94)}{\insrsid5377212  to grant the OFT powers of }{\insrsid14051923 \'93}{
\insrsid5377212 intrusive surveillance}{\insrsid14051923 ,\'94}{\insrsid5377212  and the Police Act 1997}{\insrsid14051923 ,}{\insrsid6696248  to grant the OFT powers to interfere with private property in the cou}{\insrsid14051923 
rse of an investigation into a c}{\insrsid6696248 artel offence.
\par 
\par }{\insrsid9125234 The benefits of audio and visual surveillance }{\insrsid13185831 have been seen most spectacularly}{\insrsid11605989  in the }{\i\insrsid7089015 L}{\i\insrsid11605989\charrsid7089015 ysine}{\insrsid15870707  investigation}{
\insrsid12791906 s in the United States}{\insrsid11605989 .  Some of you will have heard that great line from the P}{\insrsid12791906 resident of the Archer Da}{\insrsid4201814 niels Midland Company asserting}{\insrsid12791906 
 in a hotel room in Atlanta Georgia}{\insrsid11605989  at a cartel meeting that \'93our}{\insrsid88201  competitors are our friends}{\insrsid5513550 .  Our customers are our enemies.\'94  }{\insrsid4208561 
\par }{\insrsid5513550 
\par We awa}{\insrsid11605989 it the day in the UK}{\insrsid5513550  when Chief Executives of companies }{\insrsid6833124 proudly proc}{\insrsid11605989 laim such sentiments within ear}{\insrsid6833124 shot of our secretly installed cameras and microphones}{
\insrsid11744204 .}{\insrsid5513550 
\par }{\insrsid11744204 
\par }{\insrsid11605989 As mentioned, t}{\insrsid11744204 he OFT\rquote s new powers of surveillance are enshri}{\insrsid11605989 ned within the RIPA. RIPA }{\insrsid15409871 was amended by the Enterprise Act and by }{\insrsid11605989 P}{\insrsid1922414 
arliamentary statutory }{\insrsid1059423 instrument}{\insrsid11605989  so as to include the OFT}{\insrsid4201814  within its ambit}{\insrsid1059423 .  Under RIPA the OFT has powers to conduct \'93directed surveillance\'94}{\insrsid14310211  and}{
\insrsid11605989 , as mentioned above, }{\insrsid14310211 intrusive surveillanc}{\insrsid11605989 e}{\insrsid14310211 .  }{\insrsid11744204 
\par }{\insrsid14310211 
\par Directed surveillance is any f}{\insrsid11605989 orm of surveillance in which the}{\insrsid14310211  intended target is unaware that it is taking place}{\insrsid4201814  and which is not intrusive surveillance. In practice this usually means }{
\insrsid15998185 \'93}{\insrsid4201814 low impact}{\insrsid15998185 \'94}{\insrsid4201814  surveillanc}{\insrsid15998185 e rather than surveillance involving}{\insrsid4201814  more sensitive }{\insrsid15998185 techniques like the }{\insrsid4201814 
use of eavesdropping devices and such-like}{\insrsid14310211 .  Surveillance is defined widely }{\insrsid345766 as including monitoring}{\insrsid11605989 ,}{\insrsid345766  observing }{\insrsid12864491 and listening to persons}{\insrsid11605989 ,}{
\insrsid12864491  their movements}{\insrsid11605989 ,}{\insrsid12864491  their conversations or their activities or communication}{\insrsid12736326 s.}{\insrsid14310211 
\par }{\insrsid12736326 
\par }{\insrsid15998185 Directed}{\insrsid12736326  surveillance can be used both in relation t}{\insrsid11605989 o investigations for the civil c}{\insrsid12736326 artel offenc}{\insrsid14100963 e under the Competition Act}{\insrsid12736326 
 or the criminal cartel offence under the Enterprise Act.}{\insrsid3679246   }{\insrsid2379261 Of course if you observe a number of people }{\insrsid11605989 from competitor companies }{\insrsid2379261 going into a hotel conference room t
hat does not give you decisive eviden}{\insrsid11605989 ce that they are talking about c}{\insrsid2379261 artels}{\insrsid11605989  (although if Adam Smith }{\insrsid9338506 is to be believed perhaps it does!)}{\cs17\super\insrsid3478360 \chftn 
{\footnote \pard\plain \s16\ql \li0\ri0\widctlpar\aspalpha\aspnum\faauto\adjustright\rin0\lin0\itap0 \fs20\lang2057\langfe2057\cgrid\langnp2057\langfenp2057 {\cs17\super\insrsid3870825 \chftn }{\insrsid3870825  \'93
People of the same trade seldom meet together, even for merriment and diversion, but the conversation usually ends in a conspiracy against the public or some contrivance to raise prices\'94 
\par  Adam Smith, }{\i\insrsid3870825\charrsid3478360 Wealth of Nations}}}{\insrsid2379261   However the ability to conduct observations of this kind could be important as part of }{\insrsid10031151 a }{\insrsid2379261 circumstantial case}{\insrsid12660361  }{
\insrsid9338506 and as \'93leverage\'94 - for example where a company\rquote s representative denied attending a certain meeting}{\insrsid12660361 , photographic }{\insrsid2047080 evidence }{\insrsid9338506 to prove the fact }{\insrsid12660361 
of their attendance}{\insrsid9338506  could prove very useful}{\insrsid2047080 .}{\insrsid12736326 
\par }{\insrsid2047080 
\par Intrusive surveillance is }{\insrsid15998185 essentially }{\insrsid2047080 any surveillance in relation to residential premises or private vehicles}{\insrsid15998185 . In its more typical form, it will involve the use of eavesdropping devices}{
\insrsid2047080 .  This category of }{\insrsid9571556 surveillance is clearly more sensitive and for that reason requires ultim}{\insrsid9338506 ate authorisation by a \'93S}{\insrsid9571556 urveillance}{\insrsid9338506  C}{\insrsid9571556 ommissioner,}{
\insrsid9338506 \'94}{\insrsid9571556  }{\insrsid6043420 who is a senior}{\insrsid15998185  retired judge whose job it is}{\insrsid6043420  to consider the proportionality and the }{\insrsid9338506 necessity of proposed actions of these kind}{
\insrsid6043420 .  Intrusive surveillance also inevitably involves }{\insrsid7089015 an element of S}{\insrsid9338506 tate-}{\insrsid14897633 sponsored trespass }{\insrsid2445148 and that particular aspect of an operation requires additional and s}{
\insrsid10504126 eparate authorisation under the Police Act 1997.}{\insrsid2047080 
\par }{\insrsid10504126 
\par }{\insrsid6454692 Were the OFT to use a listening device in non-re}{\insrsid4876163 sidential premises, this would }{\insrsid6454692 not count as intrusive surveillance but there would probably still be an element }{\insrsid4876163 of trespass (unles
s the occupier }{\insrsid6516291 fully consented)}{\insrsid12850790 .  If there is an element of trespass then Police Act authorisation would be required.  Such authorisation }{\insrsid7089015 must }{\insrsid9338506 be given by a Surveillance C}{
\insrsid12850790 ommissioner.  }{\insrsid9338506 
\par 
\par }{\insrsid12850790 The use of intrusive surveillance and any surveillance which involves property interference can}{\insrsid9338506  only be authorised by a Surveillance C}{\insrsid12398493 ommissioner in the context of the prevention or detection of }{
\insrsid9338506 \'93}{\insrsid12398493 serious}{\insrsid9338506 \'94}{\insrsid12398493  crime.  It follows from this that these powers can o}{\insrsid9338506 nly be used in relation to the c}{\insrsid12398493 artel offence}{\insrsid15664616  }{
\insrsid9338506  - }{\insrsid15664616 and only in relation to more serious example}{\insrsid9338506 s of c}{\insrsid6235224 artel misbehaviour}{\insrsid9338506  at that}{\insrsid6235224 .}{\insrsid10504126 
\par }{\insrsid6235224 
\par Of course the old principle of English law is }{\insrsid10771469 that anything is lawful }{\insrsid8552212 unless}{\insrsid9338506  specifically made unlawful by Act of P}{\insrsid8552212 arliament or indeed by the common law}{\insrsid9338506 
 made by the judges}{\insrsid8552212 .  What RIPA does is to ensure that the process of authorisation is conducted within a statutory regime to ensure appropriate }{\insrsid11628783 checks and balances and that the whole process }{\insrsid8217663 
is compatible w}{\insrsid9338506 ith the European Convention on Human R}{\insrsid8217663 ights to which the UK}{\insrsid9338506  is a signatory.  Indeed the C}{\insrsid8217663 onvention has now been incorporated into UK law }{\insrsid14229754 
under the Human Rights}{\insrsid14100963  Act 1998 and it is unlawful }{\insrsid12062082 for p}{\insrsid7089015 ublic organisations to act}{\insrsid12062082  }{\insrsid15998185 in }{\insrsid7222255 such a way }{\insrsid15682790 as is incompat}{
\insrsid9338506 ible with the C}{\insrsid9254906 onvention rights}{\insrsid15682790 .}{\insrsid9338506   The effect of this is that }{\insrsid9254906 unauthorised surveillance would }{\insrsid9338506 not }{\insrsid9254906 be a crime in the }{
\insrsid9338506 UK}{\insrsid9254906 .  However if it was done }{\insrsid9338506 without}{\insrsid9254906  the proper authorisations processes, the result would almost certainly be that the evidence in question would be }{\insrsid5384175 
inadmissible in court}{\insrsid4879193  and of course significant reputational damage would accrue to the agency concerned.}{\insrsid6235224 
\par }{\insrsid5384175 
\par The new powers of surveillance }{\insrsid4879618 undoubtedly}{\insrsid5384175  provide us with new and imaginative opportun}{\insrsid4879193 ities for the investigation of cartels in the UK}{\insrsid5384175 
.  It remains to be seen to what extent they will be able to be successful}{\insrsid4879193 ly deployed.  Ideally a whistle}{\insrsid5384175 blower}{\insrsid2100771  will need to come forward who will be in a sufficiently intimate posi}{\insrsid4879618 
tion withi}{\insrsid4879193 n a company or indeed within a c}{\insrsid4879618 artel}{\insrsid5384175  }{\insrsid4879193 to know about forthcoming meetings of c}{\insrsid7935762 artelists sufficiently }{\insrsid10186105 in advance for the author}{
\insrsid14158274 ities to take appropriate steps.  Powers of intrusive surveillance}{\insrsid7889553  and Police Act interference are likely to be used rarely in as m}{\insrsid4879193 uch as whistle}{\insrsid7889553 
blowers with the kind of detailed knowledge that we would require are not likely to come to our attention with }{\insrsid3420787 great frequency.  Nevertheless}{\insrsid214677 ,}{\insrsid4879193  c}{\insrsid3420787 artelists }{\insrsid3554283 need
 to be well aware that no conversation they may have in the future}{\insrsid4879193  about price fixing}{\insrsid3554283  can be regarded as completely }{\insrsid7089015 \'93safe}{\insrsid4879193 \'94}{\insrsid7089015 .}{\insrsid5384175 
\par }{\insrsid3554283 
\par }{\insrsid10113601 The OFT has taken on additi}{\insrsid4879193 onal powers to run informants - }{\insrsid3239604 so called }{\insrsid12330945 \'93Covert Human Intelligence S}{\insrsid3239604 ources}{\insrsid4879193 \'94.  }{\insrsid15998185 
These powers are capable of use in both civil and criminal cartel investigations. }{\insrsid11404239 
Again, the legislation does not make lawful that which would have previously have been unlawful.  Rather it provides a statutory framework within which informants}{\insrsid4879193 \rquote }{\insrsid11404239  actions can be properly authorised
 and subjected to a process of ongoing review. }{\insrsid4879193  The definition of a Covert Human Intelligence Source in the }{\insrsid11404239 legislation }{\insrsid265025 
is a wide one.  Essentially any person who forms or maintains an existing relationship with somebody else wholly or partly for the purpose of getting information out of the third party for the benefit of the OFT}{\insrsid15998185 
, in circumstances where the third party is unaware of this State-sponsored subterfuge,}{\insrsid265025  would be deemed}{\insrsid4879193  to qualify }{\insrsid15998185 for authorisation}{\insrsid8261032 .  }{\insrsid538885 I}{\insrsid8261032 
t remains to be seen the extent to which }{\insrsid7411166 the ability to deploy informan}{\insrsid538885 ts will enhance the process of c}{\insrsid7411166 a}{\insrsid1733923 rtel busting.  }{\insrsid538885 We are still in very early days. }{
\insrsid8412336 
\par 
\par }{\insrsid538885 
\par }{\insrsid15998185 
\par }{\b\insrsid4876584\charrsid4876584 Criminalisation and Leniency}{\b\insrsid8412336 
\par }{\b\insrsid4876584 
\par }{\insrsid7830533 If a criminal offence for cartel conduct}{\insrsid8139553  is to be introduced}{\insrsid7830533 ,}{\insrsid8139553  then any existing leniency policy operating in the c}{\insrsid7830533 ontext of the civil regime for c}{\insrsid8139553 
artel enforcement would be significantly undermined without a parallel capacity to grant immunity from }{\insrsid15998185 criminal sanction}{\insrsid8139553 .  }{\insrsid4131525 
The OFT is fortunate that within the Enterprise Act it has the power to grant immunity from prosecution to individuals involv}{\insrsid7830533 ed in c}{\insrsid4131525 artel behaviour.  This has allowed the OFT to create the so called \'93no-action letter
\'94 regime under which it is possible to gra}{\insrsid7830533 nt individuals }{\insrsid4131525 immunity from prosecution at the same time as a company itself is granted immunity from civ}{\insrsid7830533 
il fines under our relatively well established civil leniency programme}{\insrsid4131525 .  Generally speaking the granting of a no-action letter giving immunity from prosecution to individuals is automatic in relation to employees}{\insrsid7830533 
 or ex-employees of a company where that company}{\insrsid4131525  is itself the first to come in seeking le}{\insrsid7830533 niency from civil sanctions}{\insrsid13123239 .  However the individuals in questi}{\insrsid7089015 on have to admit their guilt,
}{\insrsid13123239  must not have coerced others}{\insrsid7830533  and must cooperate}{\insrsid7081567  fully}{\insrsid7830533  - }{\insrsid7081567 in particular by disclosing all relevant information. }{\insrsid1539233 
\par }{\insrsid15998185 
\par }{\insrsid7081567 In other circumstances}{\insrsid1539233 ,}{\insrsid4522483 
 the grant of a no-action letter giving immunity from prosecution is more discretionary.  For example the Director of Cartel Investigations would not grant immunity to an individual in circumstances where the OFT was already in the
 process of gathering information with a view to criminal }{\insrsid6908729 charges }{\insrsid1539233 being laid }{\insrsid6908729 in due course}{\insrsid14304949 .  }{\insrsid4876584 
\par }{\insrsid14304949 
\par Criminal lawyers will be familiar with the pitfalls of granting immunity }{\insrsid1539233 from prosecution to individuals who were themselves involved in the criminal enterprise.}{\insrsid16655899   The }{\insrsid5339350 other pa}{\insrsid1539233 
rticipants in the crime who were less fortunate or less cooperative and face trial as}{\insrsid5339350  defendants in the dock}{\insrsid1539233 ,}{\insrsid5339350  will inevitably either blame t}{\insrsid1539233 he immunity party for the wrong}{
\insrsid5339350 doing as much as they can}{\insrsid1539233  - or if that is difficult -}{\insrsid5339350  they will at the very least argue that }{\insrsid1539233 the credibility of any person who has been granted immunity}{\insrsid5339350 
 and who is now a }{\insrsid5208488 witness}{\insrsid5339350  for the prosecution is f}{\insrsid1539233 undamentally undermined}{\insrsid5339350 .  For this reason, the OFT will need to proceed with some care in its decisions about the granting of
 immunity from prosecution in}{\insrsid1539233  those}{\insrsid5339350  }{\insrsid1539233 \'93}{\insrsid5339350 discretionary}{\insrsid1539233 \'94}{\insrsid5339350  cases.  The granting of immunity must not be allowed to undermine }{\insrsid1539233 the }
{\insrsid16535783 mount}{\insrsid1539233 ing of }{\insrsid16535783 a successful prosecution}{\insrsid1539233  where there is strong evidence}{\insrsid16535783 .  The preferred situation of course will be one where the immunity applicant p}{
\insrsid1539233 layed a peripheral role in the c}{\insrsid16535783 artel relative }{\insrsid79446 to the roles of the individuals who are actually being prosecuted.  Alternatively an immunity applicant might not be giving evidence }{\insrsid349044 
for the prosecution at all if there was sufficient stand}{\insrsid1539233 -}{\insrsid349044  alone evidence available which the immunity applicant had merely been a catalyst for}{\insrsid15275792  the OFT}{\insrsid13376112  subsequently finding.}{
\insrsid14304949 
\par }{\insrsid13376112 
\par }{\insrsid15998185 As the SFO}{\insrsid8735795  is expecte}{\insrsid15998185 d to be the prosecutor for the c}{\insrsid8735795 artel offence (with the O}{\insrsid1539233 FT given reserve powers to prosecute}{\insrsid8735795 ) }{\insrsid6825750 
the Director of Cartel Investigations will need to liaise carefully wi}{\insrsid15998185 th the SFO}{\insrsid16394250  about the grant of immunity, in}{\insrsid1539233  those circumstances where the c}{\insrsid16394250 artel investigation has already }{
\insrsid10487038 shifted to the SFO\rquote s jurisdiction }{\insrsid13447889 or indeed where it is anticipated that it will shift to their jurisdiction i
n due course.  It is in this respect rather handy that the existing Director of Cartel Investigations is himself a fo}{\insrsid1539233 rmer case controller from the SFO.}{\insrsid8997757   }{\insrsid13376112 
\par }{\insrsid8997757 
\par }{\insrsid1539233 
\par }{\insrsid15998185 
\par 
\par }{\b\insrsid8997757\charrsid1539233 The benefits of a Cartel offence}{\b\insrsid1539233 
\par 
\par }{\insrsid14100963 It is too early to give a full assessment of}{\insrsid8997757  the benefits to the UK competition regime of the introduction of a}{\insrsid6556326  criminal c}{\insrsid8997757 artel offe}{\insrsid6556326 
nce.  Early signs are that it has si}{\insrsid14100963 gnificantly helped in pushing}{\insrsid8997757  competition compliance up the board room agenda.  That said, there is still significant ignorance particularly amongst }{\insrsid4017459 med
ium and smaller sized businesses in the UK about the illegality }{\insrsid136126 of collusive behaviour with one}{\insrsid6556326 \rquote }{\insrsid136126 s competitors.  In the case o}{\insrsid6556326 f people who have entered into c}{\insrsid136126 
artel behaviour without ful}{\insrsid8148209 l awareness of its ramifications, they are unlikely to be found dishonest in the sense in which that term is defined in UK law.  For tha}{\insrsid15998185 t reason, what one might rather generously call}{
\insrsid6556326  \'93accidental c}{\insrsid8148209 artelists\'94 are likely to face sanction under }{\insrsid464005 a civil regime rather then a criminal regime.}{\insrsid8997757 
\par }{\insrsid464005 
\par When a }{\insrsid6556326 jurisdiction introduces a }{\insrsid464005 crimin}{\insrsid15998185 al c}{\insrsid7089015 artel offence}{\insrsid13452829 , }{\insrsid6556326 careful }{\insrsid13452829 
thought needs to be given to the interaction between the prosecutor and the investigator.  If they are two different agencies, it is important that they have a close understanding with each other as to how each agency will operate.  A regulator}{
\insrsid6556326 \rquote }{\insrsid13452829 s civil leniency policy is likely to be }{\insrsid12785911 undermined if that regulator is unable to }{\insrsid10450546 offer immunity from prosec}{\insrsid2059288 ution beca}{\insrsid6501970 
use the granting of immunity is, for example, only able to be given }{\insrsid6556326 by the S}{\insrsid6501970 tate prosecution agency }{\insrsid6556326 and/}{\insrsid16004662 or the Attorney General.}{\insrsid9056761 
  It would mean that people considering approaching the regulator and confessing}{\insrsid1842150 
 would need to have reached an appropriate understanding with two different agencies as to how they would react.  The OFT, as mentioned earlier, is fortunate that it has the ability to operate both a leniency regime}{\insrsid11874513 
 for undertakings under the civil Competition Act}{\insrsid9975372  and a no-action regime granting immunity from }{\insrsid7089015 criminal }{\insrsid9975372 prosecution to individuals}{\insrsid6556326 
 under the Enterprise Act (the position is somewhat different in Scotland where only the Lord Advocate may grant immunity from }{\insrsid7089015 criminal }{\insrsid6556326 prosecution.)}{\insrsid464005 
\par }{\insrsid6513672 
\par }{\insrsid9176345 Another point needs to be made in relation to criminalisation:  The work involve}{\insrsid6556326 d in introducing a criminal regime}{\insrsid9176345  is substantial.  It is important that the regulator ensures that its e
xisting regime of sanctions is not made }{\insrsid732720 less efficient by all the energy and effort being deployed }{\insrsid12013357 
by key people into making criminalisation a success.  The balancing act that has to be struck may mean that the full effects of a criminal offence }{\insrsid5252142 might not be felt for some considerable time to come.  That is certainly the positio}{
\insrsid15998185 n in the UK}{\insrsid5252142 .}{\insrsid6556326  }{\insrsid8199195 
\par 
\par }{\insrsid6556326 However, in a sense, the greatest short-term benefit we are experiencing from crim}{\insrsid15998185 inalisation }{\insrsid6556326 is that it provides a tremendous catalyst for the improvement of investig
ation technique. For example, we have had to completely revamp our documentary control procedures to meet criminal standards. When we conduct raids, material is bagged up and sealed and kept in a secure exhibits store. Movement of documents thereafter is 
carefully controlled and monitored. Every document }{\insrsid8199195 seized or otherwise garnered in as part of an investigation}{\insrsid6556326 
 is carefully catalogued. Any information in any form which may be relevant to an investigation (exculpatory as well as inculpatory) is }{\insrsid8199195 now require
d to be recorded in durable form and retained. These improvements have occurred at a time when the messages coming from our Competition Appeal Tribunal are that if the OFT expect to have their infringement decisions upheld in the serious matter of cartels
, they will need to demonstrate robust evidence gathering technique.}{\insrsid5252142 
\par }{\insrsid8199195 
\par }{\b\insrsid8199195\charrsid8199195 Conclusion
\par 
\par }{\insrsid8199195 In conclusion, cartel enforcement in the UK is }{\insrsid4524259 at the beginning of a brave new world.  We do not know how things will turn out but we are confident }{\insrsid8199195 that the most serious forms of c}{\insrsid4524259 
artel misbehaviour can }{\insrsid8199195 now }{\insrsid4524259 be dealt with using appropriately serious sanctions.}{\insrsid8199195  The stakes are now much higher for cartelists and \endash  arguably \endash  for the OFT too.}{
\insrsid5252142\charrsid4876584 
\par }