Marine Hose cartel jailings send stark warning to UK boardrooms
The jailing of the three marine hose cartelists in the first criminal convictions secured by the Office of Fair Trading (OFT) sends the clearest possible message to UK boardrooms that competition compliance needs to be high on the corporate agenda.
The unprecedented level of cooperation and coordination between the OFT in the UK, the European Commission (EC) and US Department of Justice (DoJ) signals a much tougher stance by the three agencies.
For the US and now the OFT, securing substantial jail sentences for individual cartelists is seen as the single most effective deterrent for cartel behaviour, more so than even the multi-million dollar fines routinely handed down on the companies involved.
If the UK follows the US, cartelists should be very worried. In the US, the percentage of defendants sentenced to jail increased from 38% in 2000 to 87% in 2007 while the average prison term imposed on foreign defendants in international cartel cases has increased from 3.4 months to 12 months*.
The actions taken by the OFT, DoJ and EC, and the length of the sentences handed down, reinforce the need for companies to maintain effective competition compliance programs. It is vital that management and employees understand the competition rules which apply to them, and the significant risks involved in any cartel activity.