Wednesday, March 22, 2017

Antitrust and Cartel Activity Targeted by Authorities - and Not Just in Freight and Logistics

We Have Seen Huge Fines in Recent Years - Now Whistleblowers Offered Incentives
Shipping News Feature
UK – WORLDWIDE – With shipping, logistics and associated transport sectors recent record as regards corruption as viewed by the global authorities costing companies right across the industry literally billions, it seems those groups which have escaped prosecution in the past, despite their involvement, by turning 'states evidence' may now actually be able to make a profit from their just discovered honesty. The freight sector has been cursed with the stigma of antitrust and cartel activity and now it seems anyone, in any almost industry, might profit by turning whistleblower.

The Competition and Markets Authority (CMA) is targeting illegal cartels, businesses which cheat their customers by agreeing not to compete with each other in order to keep their prices high. The practice stops ordinary people and other businesses from getting a fair deal as well as stifling competition. The new campaign ‘Cracking down on Cartels’ will encourage people who have witnessed illegal activity to report it, by offering a reward of up to £100,000 as well as promising them anonymity.

Meanwhile, as with those we have seen avoid prosecution in the past, under the CMA’s leniency scheme firms can avoid the punishing penalties of up to 10% of their total turnover and prison sentences of up to 5 years for staff if they are the first to confess their cartel. Andrea Coscelli, CMA Acting Chief Executive, said:

“Cartels are a form of stealing that cheat ordinary people as well as other businesses by undermining competition, and we are committed to tackling them wherever we find them. Cartels are carried out in secret to make you think you are getting a fair deal, even when you are being conspired against to keep prices high. Cartels are both harmful and illegal, and the consequences of breaking the law are extremely serious. That is why we are launching this campaign, to help people understand what cartel activity looks like and how to report it so we can take action.”

In the UK individual whistleblowers have often been treated as pariahs in the past, the NHS and Hospital Trusts spring to mind, but these of course are not generally commercial matters, whilst we have seen numerous logistics outfits leap forward to be the first to offer up evidence against supposed competitors in their haste to avoid prosecution for corrupt and conspiratorial behaviour they have often been a major part of.

The CMA has researched their subject and come to some surprising conclusions. The Authority says that, whilst most businesses have a shared ethical sense that conduct such as price-fixing is unfair or wrong, less than a quarter of businesses claim they knew competition law well and that only 16% of them knew that informants could get a reward for reporting a suspected cartel, whilst just 15% knew that the CMA operates a leniency programme for businesses and individuals that confess their involvement in a cartel and cooperate with the CMA.

This research has led to the creation of the first advertising campaign run by the CMA specifically designed to stamp out cartel activity and encourage people to report it to the CMA. Adverts will appear in people’s social media feeds, such as Twitter and LinkedIn, as well as on key websites. Plenty of information is available for companies which are unsure of the regulations whilst small businesses are specially catered for by way of a dedicated web page.

As stated the penalties for antitrust and cartel activity can be very severe with that 10% of annual turnover and 5 year prison sentences set in the UK. Directors can be disqualified for up to 10 years whilst the CMA claims these penalties can be reduced or eliminated altogether where a business or individual reports their involvement in a cartel and co-operates fully with the CMA’s investigation.

To report a cartel to the CMA email cartelshotline@cma.gsi.gov.uk or ring 0800 085 1664 or +44 (0)20 3738 6888 whilst to confess your own involvement in such activity and apply for leniency, or for confidential guidance: call +44 (0)203 738 6833.

Editors Note: For an insight into the widespread collusion in the freight industry simply type cartel into the News Search box to view previous articles, but you may need some time to read them all!