Bloomberg News

U.K. Antitrust Regulator Plans Change of Cartel Penalties

October 26, 2011

(Updates with lawyer’s comment in fifth paragraph.)

Oct. 26 (Bloomberg) -- Britain’s antitrust regulator said it’s preparing new guidelines for fining companies that join price-fixing cartels after several of its high-profile penalties were reduced by as much as 80 percent on appeal.

Fines may be set starting at 30 percent of the revenue from the cartel, while standards will change for companies seeking leniency through early cooperation with authorities, the London- based Office of Fair Trading said today. The change would put the U.K. in line with the European Union’s competition watchdog in Brussels and may result in higher penalties, the OFT said.

The proposed changes “are designed to give us access to a greater range of fines, in order to better reflect the seriousness of the infringements,” OFT Chief Executive Officer John Fingleton said in a statement. The changes are also based on recent court decisions, he said.

The proposals follow decisions this year by the Competition Appeal Tribunal in London, which slashed the OFT’s fines over cartels in the construction and recruitment industries. Hays Group Plc, Britain’s largest recruitment company, and U.S. competitor CDI Corp. won reductions of their price-fixing fines in April by about 80 percent. A month earlier, the court cut fines for a dozen companies in a construction cartel, including Kier Group Plc, whose 17.9-million pound fine was reduced to 1.7 million pounds.

“The recent appeals have reinforced the growing disquiet among companies and practitioners that the OFT’s current approach to calculation of fines is too mechanistic,” said Suzanne Rab, a competition lawyer with King & Spalding in London.

The proposal also clarifies when leniency and settlement discounts are applied and gives more detail about the expected level of cooperation required from companies that win leniency, the OFT said. The OFT additionally proposed introducing a new step in the process to consider whether the penalty is “proportionate” and not “excessive,” the regulator said.

--Editor: Christopher Scinta

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net

To contact the editor responsible for this story: Christopher Scinta at cscinta@bloomberg.net


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