Criminal Trial for Price Fixing Collapses
The trial of four BA executives who have been accused of price fixing has collapsed after only one week. They were charged with colluding with Virgin Atlantic to fix the price of fuel surcharges. It appears that the Office of Fair Trading failed to disclose key information to the defence. An e-mail was only recently discovered which indicated that Virgin had increased its fuel surcharge without consulting BA. This undermined the Crown’s case.
Cartel activity was made a criminal offence under the Enterprise Act 2002. Individuals can now be prosecuted for their participation in price fixing, market sharing or bid rigging activities. This was the first trial in the UK under the new criminal offence. To commit the offence the Crown must establish that the individual is acting “dishonestly”. The collapse is disappointing as it was hoped that the trial would have shed some light on the test of “dishonesty”.
There is therefore still a degree of uncertainty for directors and senior employees as to whether they might be prosecuted in the future for engaging in price fixing and market sharing. How dishonest must the individual be to commit an offence? For example, what if the individual is bullied by his superiors or competitors into discussions on prices? What if he is pressurised into discussions in order to meet financial targets? Similarly, the individual might be unaware that what he is doing is actually illegal. We will need to wait for another trial before we have more clarity on the dangers of taking part in a dialogue with your competitors on pricing or other market activity.
The stakes remain high as individuals can go to prison for up to 5 years if convicted. However it has taken almost 7 years for ther first prosecution to reach the courts and has failed at the first hurdle. This will be a blow to the OFT and it may be that no further prosecutions will be brought for as long as there is a requirement to show dishonesty. It remains to be seen whether the next government will remove this requirement.
For more information, please contact:
Glasgow: Colin Miller or Douglas McLachlan - tel: 0141 228 8000
The information contained in this article is given for general information only, reflects the current law on the date of the article, and does not constitute legal advice on any specific matter