A competition law expert has said that successful convictions
would have a "fabulous deterrent effect" on companies'
behaviour.
Under a reported deal cut between the oil industry executives
and US prosecutors three men would be tried in the UK for price
fixing and would serve a sentence here, as long as they pleaded
guilty.
Operating a cartel was made illegal for the first time by the
Enterprise Act in 2002, but the Office of Fair Trading (OFT) has
not yet prosecuted anyone under the new law.
Bryan Allison and David Brammar of Dunlop Oil and Marine and
consultant Peter Whittle are accused of price-fixing in the market
for hoses which connect oil tankers and storage facilities.
Lawyers acting for anonymous companies that have taken a claim
for compensation against the companies the men worked for said that
they believed that the alleged activity increased the price of the
goods by more than 10-12%, a common benchmark indicating
over-charging in competition cases.
Edward Anderson, a competition law specialist at Pinsent Masons,
the law firm behind OUT-LAW.COM, said that a successful case could
have a major impact on the way companies do business.
"People talk about the huge fines that [the European Commission]
can levy, 10% of turnover. But seeing that people have actually
been put away would have a fabulous deterrent effect for the OFT,"
said Anderson.
"They don't need six or seven cases, if these guys go to prison
then people will look at that and say, I need to find out what I
need to do to make sure this doesn't happen to me," said
Anderson.
The deal cut with US prosecutors is a first, and is being seen
as part of a strategy by the US to pressurise other countries into
taking more action in cartel and price-fixing cases. The US
authorities are said to be prepared to allow the men to return and
serve a sentence in the UK, which they would discount against the
US sentence.
Should any UK sentence be shorter than that in the US, it is
understood that prosecutors would reserve the right to extradite
the men to serve the rest of a US sentence.
The prosecution is the first to reach the courts in the UK under
the Enterprise Act, but Anderson said that this should not be read
as a failure.
"When this act came into force people realised that this was
something that would arise very infrequently, so it is no surprise
that there is very little precedent to look at," he said. "The
level of evidence you require for a criminal prosecution is very
high, and if you are dealing with sophisticated cartels they do
everything possible to hide correspondence and documents. You also
need to show intent, which is very difficult to prove," he
said.
