Civil Engineering Reference
In-Depth Information
21.3.3 Other consequences
There are other consequences which are worthy of note. For instance, if an agreement
contains a provision which is anti-competitive, that provision is void. If the provision
in question cannot be severed from the agreement, then, under s.2(4) of the 1998 Act,
the whole agreement is void. here is also the issue of adverse publicity to consider. A
business's reputation can be severely damaged by coverage in the mainstream and/or
trade press relating to its involvement (or possible involvement) in anti-competitive
activities. Also, as competition investigations require a significant amount of man-
agement input, this management resource has to be diverted away from running the
business in order to deal with the investigation. So the business may continue to suffer
in operational terms for the duration of the investigation.
21.3.4 Personal sanctions
Whiletheabovesanctionsandconsequencesimpactdirectlyonthebusinessinques-
tion, the individuals involved in cartel activities may also face personal sanctions.
These sanctions include being disqualified from acting as a director for up to 15 years
(see ss.9A and 9B, Company Directors Disqualification Act 1986, and OFT guidance
'Directorsdisqualiicationordersincompetitioncases'(OFT510)).However,themost
notable personal sanction is that an individual who is found guilty of the cartel offence
could receive a prison sentence of up to five years and/or an unlimited fine (see s.190
of the 2002 Act).
21.4 heChapterIprohibition
The Chapter I prohibition (which is set out in s.2 of the 1998 Act) targets anti-
competitive agreements, in other words, agreements between competitors (see OFT
guidance 'Agreements and concerted practices' (OFT401)). In practical terms, there
are two key questions to consider: (1) is there an 'agreement'?; and (2) is the subject
matter or the behaviour to which the agreement relates prohibited?
21.4.1 Is there an agreement?
The scope of what constitutes an agreement for the purposes of the Chapter I prohi-
bition is very wide. There is no need for the agreement to be in writing, to be formal
or to be legally binding. A 'gentleman's agreement' or 'a nod and a wink' will be suf-
ficient. The Chapter I prohibition also applies to a concerted practice - this is where,
though there is no agreement as such, there is some degree of understanding between
competitors as to the co-ordination of future behaviour in the market (see paragraphs
2.11-2.13 of the OFT guidance 'Agreements and concerted practices' (OFT401)).
Decisions of associations of undertakings, such as trade associations, will also be
caught by Chapter 1 in the sense that they represent the agreement of the members.
