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The UK Cartel Offence: Lame Duck or Black Mamba?

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  • Andreas Stephan

    () (Centre for Competition Policy, University of East Anglia)

Abstract

A criminal offence requiring Ghosh dishonesty was introduced in the UK by the Enterprise Act 2002, primarily to enhance cartel deterrence as a complement to corporate fines. Yet the first convictions resulted from a US plea bargain in 2008. This paper identifies three obstacles to enhancing deterrence through the cartel offence. First, Norris v USA and a public survey suggest relatively weak perceptions of cartels persist in the UK. It was envisaged that convictions would remedy this, but prosecutors will continue to be very selective about the cases they bring to trial if there are doubts as to whether price fixing alone is viewed as objectively dishonest. Secondly, any increase in criminal enforcement risks discouraging leniency applications to the European Commission, because corporate immunity granted on the Community level does not automatically protect employees from criminal prosecution in national courts. There is also no conclusive mechanism for direct settlement, as there is in the US. Thirdly, sizeable benefits and purportedly low detection rates mean deterrence may be weak if custodial sentences do not become the norm. Further sanctions such as Director Disqualification Orders can play an important role in ensuring cartelists do not seek immediate reemployment at a high level.

Suggested Citation

  • Andreas Stephan, 2008. "The UK Cartel Offence: Lame Duck or Black Mamba?," Working Papers 08-19, Centre for Competition Policy, University of East Anglia.
  • Handle: RePEc:ccp:wpaper:wp08-19
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    File URL: http://www.ccp.uea.ac.uk/publicfiles/workingpapers/CCP08-19.pdf
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    Keywords

    cartel offence; deterrence; dishonesty; Enterprise Act 2002; Norris v USA;

    JEL classification:

    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law
    • K21 - Law and Economics - - Regulation and Business Law - - - Antitrust Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices

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