Interface between Leniency, Direct Settlement and Criminal Sanctions – A UK perspective European Competition Day, Brno Philip Collins Chairman 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 penalties Civil ●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 prosecution Leniency 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 perspective European Competition Day, Brno Philip Collins Chairman Office of Fair Trading, London