Executives acquitted in the first contested UK criminal cartel prosecution to reach a jury verdict

Defeat for the Competition and Markets Authority (CMA): a not guilty verdict has been handed down in the criminal prosecution of executives accused of fixing the prices of galvanised steel water storage tanks.​

On 24 June 2015, the two executives accused of criminally conspiring to fix the prices of galvanised steel water tanks were found not guilty of the UK cartel offence. The executives were prosecuted under the original section 188 Enterprise Act, which requires the jury to be convinced that the accused acted dishonestly. Section 188(1) provides that "an individual is guilty of an offence if he dishonestly agrees with one or more other persons to make or implement, or to cause to be made or implemented, arrangements of the following kind relating to at least two undertakings (A and B)." Sections 188(2) and (3) prescribe various such arrangements, including price fixing within the UK.

This is the third prosecution under the offence as originally drafted. The first, in the Marine Hose cartel, saw three executives plead guilty in the UK following an agreement between the US Department of Justice and the then Office of Fair Trading, under which the executives would be returned to the UK to serve prison sentences imposed by the United States concurrently with sentences imposed in the UK. The UK judge in fact imposed longer sentences than the US had done, but these were reduced on appeal to mirror the US sentences. Anything shorter would have seen the prisoners returned to the US to serve out their sentences. 

The second prosecution was of four British Airways executives accused of colluding to increase passenger fuel surcharges after Virgin Atlantic blew the whistle on the arrangements. That trial collapsed, with the acquittal of the executives, on technical grounds, but not before the difficulty of proving dishonesty had been raised and found its way to the Court of Appeal. There, the judges agreed that it was sufficient for the accused to be guilty of dishonesty - it was not necessary for all the parties involved to be so.

Even in jurisdictions such as the Republic of Ireland and the United States, where criminal prosecutions of individuals accused of cartel offences are more common, juries are not always convinced by allegations of criminal anticompetitive behaviour. So it proved in the prosecution of individuals accused of involvement in the supply of galvanised steel tanks for water storage.

The defendants, former directors Clive Dean of Kondea Water Supplies and Nicholas Stringer of Galglass were accused of dishonestly agreeing with others to divide customers, fix prices and rig bids between 2004 and 2012 in respect of the supply in the UK of galvanised steel tanks for water storage. Both pleaded not guilty. One further executive, Nigel Snee, pleaded guilty to the charges, and a fourth, Ian Dixon, agreed that he had acted dishonestly as part of an immunity application and so escaped prosecution

The judge encouraged the jury to take the defendants’ good character into account, and to weigh the value of the third and fourth executives' testimony with great caution. The jury reportedly also heard the barrister representing Mr Stringer argue in his closing arguments that “There is nothing wrong with manufacturers talking about prices or reaching an agreement on prices”. While it may be true that doing so would not necessarily render either of the individuals guilty of the criminal cartel offence, the comment would ring alarm bells with any competition authority or competition lawyer.

The CMA, then, has been roundly defeated in this trial on proving the offence including the element of dishonesty. Its predecessor, the Office of Fair Trading (OFT), was perhaps prescient in its determination to eliminate the test from the cartel offence. The revised offence, which came into effect on 01 April 2014 and applies to conduct from that date, no longer requires a finding of dishonesty. While the defeat is doubtless a sore one, the CMA can take comfort from the fact - and individuals should be aware - that in future prosecutions, the Authority will not have to prove dishonesty beyond a reasonable doubt. The CMA is continuing its cartel investigation into the companies involved.

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