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In 2008, at Southwark Crown Court in London, the Office of Fair Trading (OFT) successfully prosecuted three former executives of Dunlop Oil who were found to have been involved in the marine hoses cartel. The cartel is believed to have inflated the price of marine hoses - used to transport oil from tankers to shore - by around 18% and cost the UK Ministry of Defence millions of pounds.
The Dunlop executives were jailed for between 20 months and 2 ½ years on the basis of convictions for the criminal cartel offence set out in section 188 of the Enterprise Act 2002. Section 188 makes it an offence for any individual dishonestly to agree with others to make or implement arrangements relating to price fixing, limiting/preventing the supply or production of goods or services, market sharing or bid rigging.
The marine hoses cartel convictions were the first, and are to date the only, convictions that have been made under section 188. The other major criminal cartel prosecution (in the British Airways/Virgin Atlantic passenger fuel surcharge case) collapsed at trial in 2010. However, the OFT's success in securing the marine hose convictions is somewhat tainted because they were secured on the back of a US plea bargain agreement (i.e. guilt was established and the proceedings focused only on the appropriate penalty).
The OFT's poor track record in securing criminal convictions resulted in the requirement for dishonesty being removed from the cartel offence. From 1 April 2014, dishonesty will no longer need to be established. The intention is to make it easier for the new Competition and Markets Authority - which will supersede the OFT - to secure future convictions.
However, just a few months before the CMA takes over and the law changes, the OFT is having another go under the existing law. Earlier this week, it issued criminal charges against Peter Nigel Snee (Managing Director of Franklin Hodge Industries) for allegedly agreeing with competitors to allocate customers, fix prices and rig bids in connection with the supply of galvanised steel water storage tanks in the UK between 2004 and 2012.
These latest charges perhaps signal a desire on the part of the OFT to burnish its enforcement credentials before disappearing.
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