Lecture notes
In-depth study into cartels - Anti-trust law
- Module
- Competition Law (319)
- Institution
- Lancaster University (LU)
Lecture notes explaining what a cartel is, the effect, the offense, etc. Complementary to W3 L1
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Competition Law 319W3 L2:
Cartel’s inability to pay the fine as the profit has been discarded to shareholders already.
Therefore, a risk of ‘corporate death sentence’ – which effectively bankrupts a company through very
large fines.
So you cant just keep increasing fines as a deterrence as there will come a point at which the firm
can’t pay so, it becomes counterintuitive.
because you effectively drive companies out the market and reduce competition so it has the
opposite effect than the one you wanted to create.
Thus, an individual penalty has a better effect at stopping companies entering a cartel
The Original Cartel Offence - The Fall
Collapse of the ‘BA Four’ Trial
- British airways and virgin accused of fixing fuel surcharges on long haul flights between the 2
companies.
- It was discovered because virgin went to the authorities and blew the whistle.
- OFT at this point wasn’t experienced as a criminal prosecutor.
- BA defence: based on the dishonesty test. It was wrong that virgin, who were part of the
agreement had dishonestly agreed they were part of the cartel but weren’t being prosecuted.
(because they blew the whistle) = unfair?
- Argued it wasn’t a cartel as it was a conversation of emails between two ppl in the company.
If you’re going to try and use individual criminal sanctions to enforce competition law, you
have to treat competition law more like crime.
Companies can pay off individual sanctioned fines with ease.
Companies can also financially indemnify you – as the fall guy, if caught, you go to prison
but get a bonus from the company.
So the individual sanction often has to be jail as it’s the one thing the company cant pay you
out for/indemnify you for.
IB v R [2009] EWCA Crim 2575
- How the criminal law interacts with Art 101 -> can they co-exist?
- Yes, there’s no conflict between the two rules and if there’s a case under both, the criminal
trial has to go first.
- Prosecution collapsed part way through trial after it was revealed that the OFT hadn’t
disclosed all evidence - 10,000 emails were not disclosed to the defence, some of which may
have been exculpatory.
Galvanised Steel Tanks
- Galvanised Steel Tanks used for sprinkler systems.
- Had a long running cartel. Someone blew the whistle.
- One convicted after guilty plea, two others acquitted in June 2015.
- Defence: they weren’t dishonest in what they were doing – wasn’t for their own benefit but
for the company and employees (to prevent bankruptcy).
- Jury accepted the moral culpability argument.
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