Let's talk antitrust

Peter Scott: Richard, hi. Thank you for coming to talk to us about the role of individuals and the sanctions that might deter individuals from getting involved in cartel conduct. I’d like to start the questions by asking you about the approach that the CMA is taking to deterring individuals where notwithstanding, four years or so ago now, a change in the criminal law to allow prosecutions to be brought without the element of dishonesty, what we can instead see is an increase in the number of director disqualification orders. Talk us through that if you would.

Richard Whish QC: Well, it is interesting. It’s always been the case that a director who committed the criminal offence could be disqualified as acting as a company director and there were disqualifications after the marine hose cartel and after the galvanised steel tank cartel, but that’s a provision that’s always existed in company law that a director who commits a criminal offence could be disqualified. But, of course, we’ve also in this country got, quite separately, the possibility of disqualifying a director who is a director of a company which committed a competition law offence, not a criminal offence. And that power hadn’t been used until very recently, but the CMA used it in the case of Trod Limited, a case that is often called posters and frames, where an undertaking to not act as a director was given. And then very recently there was an investigation of estate agents in Burnham on Sea in Somerset and we learned recently that two individuals there have been disqualified from acting as company directors, and I stress not in circumstances where the criminal offence had been committed but where there was an infringement of Chapter I of the Competition Act.

Peter Scott: Those cases, Richard, are cases involving typically quite small companies where the individuals concerned were effectively running the company. Do you think there are any lessons there to be learned in respect of much bigger organisations, global companies, and the threat they face?

Richard Whish QC: It is a very interesting point because what we have not seen is the director or directors of a major plc or Inc or SA being disqualified and maybe this will all move to a different level as and when that happens, and so I have to say the world post‑Brexit is very interesting from this point of view because at the moment the big cartels are investigated in Brussels by the Commission which does not have this power. In the future the same big cartel may be investigated both in Brussels and in London and, of course, the CMA will have these powers, so it may be that we will see quite a striking difference in the post‑Brexit era.

Peter Scott: And, Richard, a question about the process that companies go through when deciding whether or not to blow the whistle on any cartel activity. We’ve seen over the last three years the number of leniency applications has gone down quite markedly at Commission level, less so at CMA or DOJ level but still a reduction, and I think you’ve talked to Mark Simpson in the past about the impact that private damages actions have had potentially on that trend. But when companies are going through that balancing exercise, to what extent do you think an increase in either the risk of criminal prosecution or being disqualified as a director will have on that decision-making process.

Richard Whish QC: Well, obviously it’s a relevant consideration. There’s the corporate fine, there’s the possibility of huge damages, but clearly anyone making a decision on whether to blow the whistle must be taking into account individual circumstances as well. Prison – obviously a highly relevant consideration, but company director disqualification also and I can only suppose it will add to the incentive to blow the whistle if there are more company director disqualifications in the future.

Peter Scott: Richard, in circumstances where the CMA now can perhaps bring director disqualification proceedings much more quickly, almost as part of the administrative process as against circumstances where they might need to bring a criminal prosecution with the setbacks that they have faced in the past, notwithstanding the fact that dishonesty is no longer a requirement of that criminal offence, do you think in future the default position will be that the CMA will aim for director disqualifications instead of that higher bar of criminal prosecution?

Richard Whish QC: Well, I wouldn’t necessarily say instead of. I’m sure they will always look at a case to ask whether it is suitable for prosecuting the criminal offence, but I’m sure that they will be thinking in every case is there a possibility of company director disqualification? And it’s probably something they need to think right from the outset so that the file is, as it were, maintained with that possibility in mind.

Peter Scott: Thank you very much Richard.