Riya Popat.
B.A.LL.B (Hons.)/pursuing LLM in International Business Law
“Critical analysis of the statement: Handcuffs
provide the best possible deterrent. The only
effective sanction in Competition Law is
imprisonment.”
May, 2019.
Abstract:
My paper is a “Critical analysis of the statement: Handcuffs provide the best
possible deterrent. The only effective sanction in Competition Law is imprisonment.”
It quintessentially falls under the Competition Law purview especially under EU and
US antitrust laws as I have compared and referred to them for my research. The
central idea of my research is to address the debate on best punishment for cartel
which is in favour of individual criminal sanctions. It draws out flaw in EU
competition law in terms of penal provisions for cartels and therefore concludes of
how and why is individual criminal sanction most suitable over already available
sanctions in EU competition law as compared to US antitrust law. The comparison
and reasons hold significance as in the history of antitrust laws United States of
America (hereafter US) and European Union (hereafter EU) have been the
jurisdictions that enforces Competition Law most comprehensively and
aggressively by far. This idea is relevant and applicable today as a voice of change
required to make the competitive markets more effective, efficient and fare which
is the underlying objective of Antitrust Law.
I. Introduction:
Criminal sanctions under competition law can be traced all the way back to the
enactment of the Sherman Act in 1890 in the United States [US]. In fact, Canada`s,
criminal antitrust law has existed even longer than the US, since 1889. However,
outside of America criminal penalties for anti-competitive acts have been creeping
in only gradually, in the last decade or two and as a matter of fact these have
become a global trend. United Kingdom [UK], Greece, France, Romania, Austria,
Hungary, South Africa, Australia, New Zealand are names of few following the rage.
Furthermore, such criminal deterrents have mainly been focused upon, “the
supreme evil of antitrust”1, Cartels. The question which arises that what shall be
the best method to combat these Cartels regarded as ‘cancers on the open market
economy’2? The UK white paper, ‘A World Class Competition Regime’, argued in
favour of criminal threat against infringing individuals since ‘individuals are more
likely to think very carefully before engaging in cartels’ and if instructed to enter
cartel by the management are more likely to become whistle-blowers under a
criminal regime3. Likely, most other scholars and sources have suggested
imprisonment as the only effective sanction to resist cartels.
On the same note, though individual sanctions for cartel damages have gained
momentum and are seeping into European enforcement culture there is yet no
centralised and entirely coordinated policy in European Union [EU] level, this
author shall argue incarceration as most effective method to resist cartels in EU
under the scope of this essay. In doing so, first shall discuss upon the theoretical
framework of imprisonment as a criminal sanction for cartels. Second, shall
evaluate the strengths of handcuffs as individual criminal sanction. Third, shall
assess the arguments against incarceration of imprisonment for individuals. Third,
shall give a brief account of cartel violations most suited handcuffs and why
alternatives to handcuffs are not really effective? However, shall conclude with
provisions upon careful adoption of handcuffs to prevent failures as in UK.
1 Thomas O. Barnett, ‘GLOBAL ANTITRUST ENFORCEMENT’ [September 26, 2007] PL 1.
2 Mr Mario Monti, ‘Fighting Cartels Why and How? Why should we be concerned with cartels and
collusive behaviour?’[SPEECH/00/295, 3rd Nordic Competition Policy Conference Stockholm, 11-12
September 2000] http://europa.eu/rapid/press-release_SPEECH-00-295_en.htm.
3 Department of Trade and Industry, ‘A World Class Competition Regime’, [July 2001] p. 40.
II. Theoretical and Legislative Framework
Before we understand the reasons for employment of imprisonment as the best
method to resist cartels in EU, it is pertinent to mention the needs of the same
being deterrence, retribution, rehabilitation and incapacitation. Deterrence seeks
to prevent future activity, either in a general (public-focused) or specific (individual-
focused) sense4. Retribution posits that individuals should face a criminal charge
due to the fact that they have committed a moral wrong5. Rehabilitation attempts
to treat an individual engaging in unlawful behaviour in order to prevent habitual
reoffending6. Incapacitation refers to the prevention of activity through the direct
deprivation of the ability or capacity to engage in such activity7.
While, the theories of rehabilitation and incapacitation should be discarded: a
priori, they represent unsuitable justifications for the creation of an antitrust
regime that imposes the criminal sanction of imprisonment, the European Court of
Justice has put forward that the competition law fines have both retributive and
deterrent goals8. The principle strength of deterrence and retributive theories is
that they regard individuals should be treated as an end in themselves, not as
means towards the end9.They regard people as moral agents who can understand
reprobative function of law but can fall foul of temptation and break law. Therefore,
penal sanction would act as supplementary preventative measure to reinforce the
moral censure it embodies. Thus, though the theories have been used in various
areas of law, it is particularly suitable for cartel regulation10.
4 Walker,N., ‘Punishment, Danger and Stigma: the Morality of Criminal Justice, Barnes & Noble’ [1980]
pp.26.
5 Galligan, D., ‘The Return of Retribution in penal theory’, [1981] pp.144.
6 Packer, H., ‘The Limits of the Criminal Sanction’ [Oxford University Press, 1968] pp.48.
7 Morris,N., ‘Dangerousness and Incapacitation’ [1994] pp.238.
8 Case C-41/69, Chemiefarma NV v Commission of the European Communities.
9 Kant, I., ‘Foundations of the Metaphysics of Morals’ [Liberal Art Press, New York, 1959] pp.429.
10 Rodger, B.J. and A. MacCulloch, ‘Competition Law and Policy in the EC and UK’, [2015] pp.218.
In fact, The Danish 2012 committee, echoing the optimal deterrence theory,
assumed that economically speaking the corporate fines up to 10% of the preceding
year’s turnover are not sufficient to create a deterrent effect and that due to the
graveness of the cartel violations custodial sentences besides fines should be
available. The committee also pointed out that while substantial fines seem to
deter mostly the company management, custodial sanctions would deter the
employees as well and make it easier for the company to establish compliance at
all levels of the firm11. The Swedish Governmental report noted as an advantage of
a criminalization of cartels that it would be especially deterrent against individuals
who may enter cartels, and fines alone against companies would not always be
deterrent enough against such individuals12. Similarly the Finnish memorandum
prior to the enactment of the Competition Act 2011 acknowledged that the
deterrent effect could be improved if natural persons were also held accountable13.
In Ireland the working group in 2002 decided in favour of retaining the criminal
penalties, principally due to the view that deterrence would be created14.
III. Arguments for Incarceration:
In light of imprisonment as the most effective deterrent benefits of imprisonment
of individuals are: First, it can improve upon the existing sanction of fining
undertakings or companies in a sufficiently high fashion with an aim to induce them
to comply with law as the authorities can control their agents. This, apparently is
not always the case as firms are not able to impose serious sanctions on their
11 ‘Rapport fra udvalget om Konkurrencelovgivningen’ [March 2012] pp. 35-40. (translated: Report
from the Committee on Competition Law)
12 SOU 2006: 99 pp. 537-539 [press release to be accessed online in
https://www.regeringen.se/49bbb1/contentassets/e8146fae16bf4579b963c1552533d520/en-ny-
konkurrenslag-hela-dokumentet-sou-200699
13 Työ- ja elinkeinoministeriön julkaisuja, ‘Kilpailulain uudistamista koskevan työryhmän
mietintö’[TEM raportteja 16/2017] pp.51-87. (Translated as Publications of the Ministry of
Employment and the Economy, ‘Report of the Working Party on Competition Law Reform’ , [TEM
reports 16/2017])
14 The Competition and Mergers Review Group 2000, pp. 77-78. It can be accessed online at
https://dbei.gov.ie/en/Legislation/Legislation-Files/Competition-and-Mergers-Review-Group-Final-
Report-2000.pdf
agents, sometimes the management itself is controlling the firm or the employee
responsible for the cartel has left the firm by the time it is detected and there is
little that the undertaking can do.
Second, Cartel agreements between undertakings, including price-fixing, output
restrictions, market sharing and bid-rigging agreements, are prohibited at EU level
by Article 101 Treaty on the Functioning of the European Union (TFEU) unless the
agreement is exempted by Article 101(3) TFEU. Exemption is highly unlikely for
hard-core cartel agreements. The fine for which in EU competition law is the
relevant percentage of value of relevant sales which tends to be 10% as per Article
23 of the Regulation 1/2003. If effectual deterrence is required by fines alone it
would require minimum level of fines to be unfeasibly exorbitant like 150% of the
turnover in the products concerned by the violation15. Raising to such execcsive
level of fines would be repugnant as it would breach the statutory ceilings on the
amount of fines which can be legally imposed, it would surpass the firms ability to
pay resulting in incompelete deterrence and expensive side-effects, also mostly
profits from cartels are not preserved instead paid out as taxes, dividends, salaries
and wages.
Further, liqudating assets of firms involved in cartels is often improbable to produce
sufficient revenues to pay the fines and such extortionate fines could compel
companies into bankruptcy leading to undesirable social costs. Moreover,
imposition of such excessive fines in absence of perfect markets can have incidence
upon stakeholders, bondholders, creditors, employees and taxes ending up in
suffering for consumers. Such unpleasant outcomes can be modified if
incarecartion is employed incase of cartels.
Third, imprisonment increases effectiveness of linency and whistleblowing
programmes. It is done so not only on the basis of fear but also revenge against
employers, as Donald Baker points out that disgruntled current employees, fired
employess, former trade association employees, ex spouses even ex-lovers shall be
15 C.D. Ehlermann and I. Atanasiu, European Competiton Law Annual 2001: ‘Effective Private
Enforcement of EC Antitrust Law [Hart Publishing 2003] pp. 411-452.
anxious to finger the individual they think are involved in cartels16. Also, OECD
advocates that in countries where individuals have right aginst self-incrimination
making it difficult to obtain evidence such individual criminalization for cartels shall
allow voluntary co-operation because of threat regarding personal sanctions17.
Fourth, evidences from US prove it to be the most efficacious punishment, in
Joseph Bauer`s words ‘The sight of A. Alfred Taubman, the extremely wealthy
chairman of the board of Sotheby`s, the world famous auction house, convicted
and sentenced, at the age of 78, to a one year term of imprisonment and substantial
fine for participating in a price-fixing conspiracy, doubtless sent a message to other
business executives about the risks and penalties for this kind of behaviour18. Also,
when Scott Hammond (member of US Department of Justice) called attention to
how threat of criminal prosecution in US deterred a significant number if global
cartels from extending their conspiracy into US, referring to cartels that had every
opportunity to target US consumers because they sold in the US market19. Further,
William Kolasky indicated that power of criminal enforcement of cartels against
individuals especially when conspirators knew their conduct was unlawful and
therefore kept away from US20.
Fifth, Prison sentence has by far been the only sanction that sends a distinctive
moral message to spontaneously abide law and reinforce moral commitments by
undertakings21. Sixth, incarceration leads to loss of acquired social capital. It not
only sends a special message conveyed by fines but also sends it more effectively
as imprisonment for businesspeople are much more newsworthy than fines and
16 D.I Baker, ‘The Use of Criminal Law Remedies to Deter and Punish Cartels and Bid-Rigging
[Washington Law Review,2003] pp.694-696
17 OECD, ‘Report on the nature and impact of hard core cartels and sanctions against cartels under
national competition laws’, [DAFE/COMP (2002)7, 9 April 2002].pp.4-28.
18 J.P. Bauer, ‘Reflections on the Manifold Means of Enforcing the Antitrust Laws: Too Much, Too Little,
or Just Right?’ [Loyola Consumer Law Review 303, 2004] pp. 307.
19 S.D. Hammond, ‘Cornerstones of an Effective Leniency Program’, [paper presented before the ICN
Workshop on Leniency Programs, Sydney, 22-23 November 2004].pp.1-4.
20 W. Kolkasky, ‘Criminalizing Cartel Activity: Lessons from the U.S. Experience’, [fifth lunch talk of the
Global Competition Law Centre, Brussels, 29 September 2004] pp.11-12.
21 J. Adenaes, ‘General prevention revisited: research and policy implications’ [66 Journal of Criminal
Law & Criminology, 1975] pp. 341-343.
allures more publicity22. Last, the publicity of prison sentence in the business world
results in loss of chances of future employment leading to the most effective style
of deterrence. Thus the above mentioned arguments help in advocating individual
incarceration as the best deterrent against greatest economic harms in the modern
world that comes not from traditional property offences such as theft or fraud, but
from sophisticated forms of corporate wrongdoing that are largely hidden.
IV. Arguments against Incarceration:
Turning to different but closely related ideas in relation to handcuffs being the best
deterrent, two main arguments are: First, the moral argument that doubts whether
competition law infringements are sufficiently “immoral” to justify criminal
enforcement. In relation to it, opponents of individual criminalization concede the
social injuries caused by cartels but contend that whether there is enough
recognition in the population that cartels deserve required amount of moral
condemnation to employ individual imprisonment which should be the remedy of
last resort23. They suggest the popular opinion shall not advocate individual
criminalization.
In regards to recognition of cartel as criminal by lay persons a necessity for
criminalising it, one would end up with a very short list. Mostly, the legislator has
to criminalize it for sending a signal that cartel is considered worthy of
condemnation24. Coming to popular opinion not supporting individual
criminalisation Professor Stephan reports that even lay people seem to consider
price fixing as akin to fraud25. Therefore , it supports the argument that cartels
violate the norm against deception and although it would not be desirable to apply
the general fraud provisions to competition cases—because the general criminal
22 G.J. Werden and M.J. Simon, ‘Why price fixers should go to prison’, [1987] pp. 928.
23 M. Dreher, ‘Wider die Kriminalisierung des Kartellrechts’ [Wirtschaftund Wettbewerb,2011] pp.232,
237.
24 Baumann and Arzt, ‘Kartellrecht und allgemeines Strafrecht’ [1970] pp. 134
25 Florian Wagner-von Papp; David Viros; Daniel Zimmer; William E. Kovacic;Andreas Stephan,
‘Individual Sanctions for Competition Law Infringements: Pros, Cons and Challenges’, [GW Law School
Public Law and Legal Theory Paper No. 2016-26] pp. 14-44. This paper can be downloaded free of
charge from the Social Science Research Network: http://ssrn.com/abstract=2782090.
law institutions for these provisions are not tailored to the requirements of
competition law—, the very thin doctrinal line between fraud provisions and other
hard core horizontal cartels which should amply demonstrate that from a moral
perspective there is hardly any difference, if any at all26.
Second, the utilitarian argument that fears of criminal enforcement endangering
the effectiveness of the existing enforcement mechanisms. Therefore, one has to
proceed with great caution in the implementation as to whether criminalisation is
desirable depends very much on the institutions in each jurisdiction. For example
in Germany, while constitutional arguments against immunity provisions have
often been made, they have not succeeded in the courts, and the immunity from
criminal enforcement for criminal tax avoidance in § 371 tax code relating to self-
reported tax evasion clearly shows that where there is a will, there is a way.
Moreover, The European Union can lend a helping hand in “Regulation 2” that
would overcome any constitutional concerns in the Member States27.
Another argument against criminalisation is that it may lead to over deterrence. To
the extent the cartel offence is narrowly drafted to catch only horizontal hard core
cartels, this is arguably a negligible problem. Moreover, arguments against
criminalisation largely ignore the international dimension. At least to the extent a
cartel affects import commerce into the US (or fulfils The Foreign Trade Antitrust
Improvement Act conditions), there already is criminal liability for Europeans28.
While this criminal liability in the US may have been a footnote in earlier times,
today all potential cartelists should better factor the possibility of extradition into
26 A. Stephan, ‘Four Key Challenges to the Successful Criminalization of Cartel Law’, [2 Journal of
Antitrust Enforcement, 2014] pp.333–336.
27 Florian Wagner-von Papp; David Viros; Daniel Zimmer; William E. Kovacic; Andreas Stephan,
‘Individual Sanctions for Competition Law Infringements: Pros, Cons and Challenges’, [GW Law School
Public Law and Legal Theory Paper No. 2016-26] pp. 14-44. This paper can be downloaded free of
charge from the Social Science Research Network: http://ssrn.com/abstract=2782090.
28 United States v. Nippon Paper, 109 F3d 1 (1st Cir 1997); United States v. Hui Hsiung, 778 F.3d 738
(9th Cir. 2015) cert. denied, 135 S. Ct. 2837, 192 L. Ed. 2d 875 (2015).
their calculation29. Further, introduction of individual criminalization could be an
expensive affair but through effective educational ways the same could be possibly
be nullified. Thus, as there as pros and cons to every deterrent, after throwing light
upon both the sides in my understanding handcuffs as a part of criminal
competition law enforcement is not only possible and desirable but also stands out
as most effective one from all other available sanctions. However, great care has to
be taken in its implementation that shall be discussed in the following part.
V. Implementation Strategies:
Before discussing about the strategies that would be suited for implementation of
incarceration upon individuals for cartels, let us first consider cartels for which
imprisonment shall be most suitable. Viewing in same line, Prison sanctions should
be imposed for clear cut violations. Alternatively, it can be concluded that
imprisonment should lie for cartels, where there is evidence that the individuals
knew that they were violating the law and behaved in flagrant disregard for the law,
with wilfulness being presumed in cases of clear-cut violations30. On the basis of
above mentioned criteria it would seem that imprisonment shall be prudent for
cartels like horizontal, naked price fixing, bid rigging and market allocation
schemes. As to other cartels like vertical agreement cartels, it would seem that they
are usually easier to detect, as the victims of the violation will very often beaware
of it , also the borderline between anti-competive and pro-competitive behaviour
is often less obvious. For those kinds of violations fines on undertakings or fines on
undertakings combined with director disqualification, may be sufficient31.
29 P. Girardet, “What if Uncle Sam Wants You?”: Principles and Recent Practice Concerning US
Extradition Requests in Cartel Cases, [Journal of European Competition Law & Practice 286, 2010].pp.
6-12.
30 See note 16.pp. 621.
31 Wouter P.J Wils ‘Is Criminalization of EU Competition Law the Answer?’ [paper presented at
Amsterdam Centre for Law and Economics Conference Remedies and Sanctions in Competition Policy,
Amsterdam, 17-18 February 2005] pp. 36-37.
As mentioned earlier, implementation strategies have to be set up with great care
in consideration that imprisonment is a much more onerous punishment than fines.
Conditions for imprisonment sanction to be effective in practice32are: firstly,
provision of a dedicated investigator and porsecutor like in US, the Department of
Justice Antitrust Divison has a National Criminal Enforcement Section in
Washington D.C., as well as seven field officies, in Atlanta, Chicago, Cleveland,
Dallas, New York, Philadelphia and San Francisco dedicated to investigating and
prosecuting criminal cases. While In EU, the absence of sufficiently well resourced
and dedicated investigator and prosecutor may to a significant extent explain the
ineffectiveness of criminal enforcement in those Menber States (France, Austria,
Luxembourg and Netherlands) which have decriminalized their enforcement in last
20 years.
Secondly, sufficient powers of investigation must be provided for just like the
success in US, to put in Terry Calvani`s words US Department of Justice Antirust
Division began using F.B.I. to assist cartel investigations that equipped it with
advanced investigative techniques used to combat serious crime helping the, to
employ computer forensics, ‘wire’ witnessess, conduct ‘ambush’ interviews etc33.
Moreover, they also involve Corporate Leniency Policy (including Amnesty Plus
Option34) and Individual Liniency Policy under which it can guarantee immuntiy
from porsecution to co-operating companies or individuals35.
Thirdly, In EU judges or juries must be willing to convict to make criminal sanctions
a credible one for cartels36 similar to US37. Lastly and most importantly the need for
political and public support identical to US that has a long tradition of fairly broad
32 Ibid.
33 T. Calvani, ‘Enforcement of Cartel Law in Ireland’, [in B.E. Hawk (ed.), 2003] pp.7-8.
34 G.R. Spartling, ‘Making Companies an Offer They Shouldn`t Refuse’, [paper presented at the Bar
Association of the District of Columbia`s 35th Annual Symposium on Associations and Antitrust,
Washionton D.C., 16 February, 1999].pp.1-6.
35 Possibility on the basis of judgement of US Supreme Court in United States v Booker, [12th January
2005] (that declared the US Sentencing Guidelines).
36 P.F. Kunzlik, ‘Globalization and hybridization in antitrust enforcement: European “borrowings from
the U.S. approach’ [The Antitrust Bulletin, Summer 2003].pp.6-9.
37 See note 16.pp.694-696.
and sometimes noisy support of antitrust law and enforcement38 that lacks in EU
but can be improved as suggested by John Coffee that the limited empirical
evidence on public attitudes toward while-collar crimes suggests that the public
learns what is criminal from what is punished not vice-versa39. Also, steps taken by
U.K. and Ireland in criminalizing cartels depicts high chances of change creeping in.
Therefore, adopting to successfully proven methods of implementation as in US
shall support the effectiveness of individual imprisonment as a criminal sanction in
EU for cartels.
VI. Effectiveness of alternatives to Handcuffs.
Turning to, enlightenment upon the alternatives (fines on individuals, director
disqualification and private actions for damages) to Handcuffs and measuring their
effectiveness shall help us understand the need of individual incarceration and it
being an unparalleled deterrent for cartels in EU. As far as fines on individuals is
concerned it would not be equally effective as imprisonment, the main reason
being possibility and capability of Companies to relatively easily compensate their
agents in advance for taking the risk of being fined and/or indemnify them ex post
when they have to pay the fine. While, the key benefit of imprisonment is that it is
out of the question to transfer the penalty ex post, further extra arduous to arrange
for a premium to reimburse the perils in advance40. Nonetheless, fines on
individuals could have at the minimum have a condemning effect and thus can be
regarded as third best option when imprisonment or director disqualifications are
not available.
In regards to, Director Disqualification under the Enterprise Act 2002 in U.K. as per
which upon application from Office of Fair Trading, the competent court should
make Competition Disqualification Orders [CDO] against a company`s director in
case of breach of competition law by the said company and the court regards
38 Ibid.
39 J.C. Coffee, ‘Paradigms lost: the blurring of the criminal and civil law models- and what can be done
about it’, [101 The Yale Law Journal’ 1875] pp.84.
40 C.D. Stone, ‘The Place of Enterprise Liability in the Control of Corporate Conduct’, [ The Yale Law
Journal 1, 1980] pp. 45-65
director`s conduct unfit to be involved in the management of the company. The
maximum period of Director Disqualification under CDO is 15 years during which it
would be a crime for the director to be directly, indirectly or in any way be
concerned or take part in the management of the company. Director
Disqualification is not very functional as if the director is aged it may simply turn
out to be a comfortable retirement period and the company could absolutely
expiate any financial loss suffered by its ex director. Moreover, it limits the usage
the sanction to directors only allowing the middle management to escape from its
realms. However, it has its own advantages of having a stigmatic effect and sending
a moral message when the director is not aged or the company is incapable of
compensating the loss suffered by director. In comparison, the effect and message
it potentially can send is lower than imprisonment but definitely higher than fines
on individuals.
With respect to Private Damages` effectiveness it can never be matched to that of
individual imprisonment. Basically, as discussed earlier the main problem with fines
on companies is that the level below which fines shall usually not stop hard-core
cartels would be approximately 150% of the annual turnover in the products
related to the violation and the same mostly exceeds companies` ability to pay. The
said problem not only exists for damages but also for fines or even for the
combination of two. Additionally, even if private actions to companies are
amalgamated with fines on companies it cannot bring the advantages of individual
penalties, namely the increased effectiveness of leniency and whistle blowing
programmes41. To sum up imprisonment can not only improve the existing
sanctions but also have an enhanced restraining effect for commission of cartels.
41 W.P.J. Wils, ‘The Combination of the Investigative and Prosecutorial Function and the Adjudicative
Function in EC Antitrust Enforcement: A Legal and Economic Analysis’ [27 World Competition 201,
2004] pp. 201-224.
VII. Conclusion:
In conclusion, enterprise of criminalizing hard-core cartel conduct and introducing
custodial sanctions should be of importance for all modern economies. However,
this reasoning is justified inter alia by the rectitude of the criminal justice system.
Further, it`s adoption should not impetuously be proceeded without careful
contemplation upon all the elements of the regime to prevent the project from
turning into a liability rather than an asset. Essentially, a few components` failure
might subvert the whole venture, as the UK experience may confirm. Where, under
section 188 of Enterprise Act 2002 the original cartel criminalization`s success is
solely attributable to the guilty pleas. Even, the only contested case was never tried,
the collapse of the case harmed the legitimacy of the offence and the OFT as a
prosecutor and reduced any threat of conviction, thereby vitiating the deterrent
effect of the offence and its main reason of existence42.
43
Also, the dishonesty requirement turned out to be a fail for intention of its
adoption was to operate as a filter but it focused on defendant`s state of mind as
under Ghosh test rather than harm inflicted by infringements. Further it was aimed
to signal the wrongfulness of cartel behaviour but because the first element of
Ghosh test seeks to reflect current norms rather than developing new community
norms leaving no clear broad consensus in the UK that cartel conduct is dishonest,
a trial under the original offence may even fail at this first step. Moreover, it was
fruitless since it was unable to preclude defence arguments that the breach was
not reprehensible. However, instead of circumventing defences, the constituent
may summon them. Second part of the Ghosh`s test states a defendant may
attempt to raise a defence that at the time of committing the offence he believed
he was acting honestly according to the standards of ordinary honest people. He
may thus try to raise a ‘Robin-Hood defence’44, by arguing for example that in a
42 Andreas Stephan, ‘How dishonesty killed the cartel offence’ [6 Criminal Law Review, 2011].pp.446-
456.
43 ELÉONORE MAY MICHELS,’ The Real Shortcoming of the UK Cartel Offence: A Lack of Public and
Political Support’, [Global Antitrust Review 2014].pp. 70.
44 Angus MacCulloch, ‘Honesty, Morality and the cartel offence’ [28 European Competition Law
Review2007].pp.353-358.
time of economic decline he engaged in a cartel to avoid dismissal. As the judge is
restricted from directing the jury on what dishonesty means45, the jury may be
swayed to find that the second condition was not met.
However, aiming improvements Enterprise and Regulatory Reform Act 2013 made
several exclusions46 that clearly improved the dishonesty requirement. While, the
adoption of statutory defences for an individual to show that he did not intend that
the nature of the arrangement would be concealed from his customers before they
agreed to purchase the goods or services, from the CMA. Also, to show that before
making the agreement, he took reasonable steps to ensure that the nature of the
arrangements would be disclosed to a professional legal adviser for the purposes
of obtaining advice about them before their making or their implementation47.
These merely concern the ‘spiral of delinquency’48, but fail to address the moral
wrongfulness of cartel behaviour, which goes far beyond the lying and deceiving of
keeping the cartel agreement a secret.
45 Ariel Ezrachi, ‘Criminalising Cartels: Critical Studies of an International Regulatory Movement’, [Hart
2011].pp.140.
46 See note 43
47 Ibid
48 Christopher Harding and Julia Joshua, Regulating Cartels in Europe (2nd edn, OUP 2010), 51.
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