(by Scott Summers) The Office of Fair Trading (OFT) has charged Peter Nigel Snee under section 188 of the Enterprise Act 2002. It is alleged that he ‘dishonestly agreed with others’ to fix prices, allocate markets and rig bids in the market for galvanised steel tanks for water storage, between 2004 and 2012. This is the UK’s first criminal cartel prosecution since the collapse of the British Airways trial back in 2010, which left a number of unanswered questions about the ‘dishonesty’ element and the UK cartel offence in general. The Snee case will fall under the existing cartel offence. The Enterprise and Regulatory Reform Act 2013 will, from 1 April 2014, strip the ‘dishonesty’ element and introduce new carve-outs and defences to the offence.
After the collapse of the British Airways trial, the OFT conducted a Board-led review into the case. This identified a ‘highly unusual combination of factors’ as responsible for the failure, relating to the complexity of the case and the processes used within it. The Board also expressed concerns about the nature of the agreement chosen for prosecution: namely, that it involved just two firms and that a cartel of this nature may lead to the reliability of the witnesses being questioned.
Criminal cartel prosecutions will generally rely on evidence from immune witnesses who are employees of the revealing firm. This is a very unusual arrangement for the UK, where criminals are generally not offered protection or plea agreements in return for giving evidence against their co-conspirators. There is therefore a danger that juries will question the value and legitimacy of evidence provided by such individuals. Where a cartel case involved only two firms, as in the British Airways case, this danger is particularly pronounced. Here, the jury is just as likely to focus on the ‘injustice’ of the immune witnesses getting off scot-free whilst their defendants (the co-conspirators) are left to face criminal prosecution. Indeed, the jury may question the legitimacy of the OFT’s leniency programme and its decision to prosecute only one firm’s directors.
If we consider this in the context of the current case of Peter Snee, it is interesting that the OFT has again decided to prosecute only the director of a single firm within a cartel. As has been shown above, if no other members of the cartel are prosecuted, this could have implications should the case go to trial. The jury may again struggle to comprehend the reason why Peter Snee is the only defendant from the cartel who should face criminal conviction, unless the OFT plans to mount the prosecution without evidence from immune witnesses.
Should the case go to trial, the OFT must also ensure that it affords adequate scrutiny to any evidence provided by the leniency applicants and other witnesses. This was a major criticism of its handling of the British Airways case. Here, the case collapsed partly owing to the disclosure of 70,000 new emails by Virgin Atlantic’s lawyers during the trial. If there had not been such an apparent over-reliance on the cooperation provided by Virgin Atlantic, the outcome of the case may have been very different. It would have benefited from the OFT ensuring that the evidence was reliable, thoroughly tested and further supported by other sources, such as independent documentation and witnesses.
With this latest bite of the cherry, it is imperative that the OFT scrutinises and corroborates any evidence it presents to the court, particularly the evidence it receives from leniency applicants. This should now be achievable if the OFT has learnt from its past mistakes. However, the problem of convincing a jury that a single defendant deserves a prison sentence, while his co-conspirators turned immune witnesses get off scot-free, is a much more challenging task. The prosecution would need to present the jury with strong evidence and a coherent argument which not only illustrates the defendant’s culpability, but also that he is deserving of criminal sanctions. What is certain is that this latest prosecution will be one of great significance to the OFT (and the new Competition and Markets Authority) in establishing legitimacy for the current UK criminal cartel offence and, moreover, credibility for the OFT / CMA as a criminal prosecuting body. If the OFT’s prosecution of Peter Snee is successful and the dishonesty element does not prove a significant hurdle to overcome, it will raise the question as to whether it was necessary to drop the dishonesty element as part of the amendments made by the Enterprise and Regulatory Reform Act.