Interface between Leniency, Direct Settlement and Criminal Sanctions –A UK perspectiveEuropean Competition Day, Brno

Philip CollinsChairman

Office of Fair Trading, London

Outline

● The UK cartel regime

● Cartel penalties

● Recent highlights

● Leniency and immunity from criminal prosecution

● Revised OFT leniency and no-action guidelines

● Plea agreements?

● Conclusions

The UK cartel regime●Two separate regimes

civil - directed mainly at undertakings (public/private enforcement)

criminal - directed at individuals

●Regimes are complementary

proceedings under both regimes or one only (most likely civil)

parallel or sequential proceedings criminal regime alongside Art 81 cases

●Equip for possibility of criminal enforcement

criminal standard for evidence gathering separate teams

Cartel penaltiesCivil

● Undertakings fined up to 10 per cent global turnover

● Director Disqualification Orders

up to fifteen years disqualification from directorship

Criminal

● Imprisonment of up to five years and/or unlimited fines

• Director Disqualification Orders

• Confiscation of assets

personal benefits confiscated under Proceeds of Crime Act 2002

Recent highlights: leniency and informants reward scheme

● All pursued cartel cases involved leniency

● 14 civil cartel infringement decisions

● Focus on higher impact cases, with more decisions in the pipeline

● Informant rewards scheme

up to £100,000

opens up important new source of leads

Recent highlights: criminal regime• Marine hose

Significant prison sentences: 3 and 2.5 years (reduced to 30 and 20 months)

Director Disqualification Orders: 7 and 5 years

Proceeds of crime: over £1m confiscated

• Charges brought in Passenger fuel surcharges• Use of criminal investigation powers

First search of domestic premises in Marine hose

• Separate parallel EU Commission Art 81 EC case in Marine hose

• Strong deterrence message

Deloitte report

• Why not more cases?

Recent highlights: early resolution● Early resolution (“direct settlement”), most recently:

BA/Virgin (£121.5m) Dairy RPI case (combined maximum over £120m) Tobacco (combined maximum £132.2m)

● Key elements

Admission of liability Procedural cooperation Reduced penalty OFT still issues infringement decision

● Complementary to leniency

● Discretionary

• Significant resource savings to OFT and parties

● Relevant only to civil cases

Leniency and immunity from criminal prosecutionLeniency must include process for criminal immunity

● Automatic guarantee of criminal immunity for Type A immunity applicants

● No automatic guarantees for Type B and C leniency applicants

● OFT can grant immunity from prosecution in England and Wales only

● Sufficient assurance?

International cartels?

Separate prosecutors?

Revised OFT guidelines on leniency and no-action● Importance of practical guidance: revised OFT

guidelines (December 2008) reflect OFT’s growing experience

Complement formal policy Provide practical guidance Give predictability and transparency

• Additional explanations and guidance on:

Key requirements: ‘genuine intention to confess' and 'continuous and complete cooperation‘

Criteria for discounts Requirements for criminal immunity How leniency information will be used Carrying out of internal investigation

Plea agreements?

● Marine hose- US plea agreements only

US plea agreements were not binding on UK courts

No UK sentencing guidelines: little certainty

US plea agreement prevented seeking lower sentences in UK

● Need to better align criminal and civil regime?

Early resolution relevant only to civil cases

Key incentive: certainty and reduction of penalty

If similar incentives for criminal cases: enforcement strengthened?

Conclusions● Criminal regime a valuable addition to civil regime –

but must focus on appropriate cases

● Leniency and early resolution (“direct settlement”) are complementary but work differently – early resolution needs to be discretionary

● Criminal immunity an essential feature of leniency policy

● Practical guidance for advisers and companies is vital

● Need to explore full range of corporate and individual sanctions within regimes to maximise deterrence

Interface between Leniency, Direct Settlements and Criminal Sanctions – a UK perspectiveEuropean Competition Day, Brno

Philip CollinsChairman

Office of Fair Trading, London