First UK Cartel Offence Aquittals

The news broke yesterday that the first fully contest trial in relation to the ‘old’ UK cartel offence results in both defendants being acquitted after the jury deliberated for “only a couple of hours”. As the ‘old’ cartel offence is no longer with us, being substantially amended in ERRA 2013, the wider impact of the acquittal might be perceived as being limited, but there are still lessons to be learned from what we know about the acquittal.

The fullest media reporting of the acquittal can be found, as ever, in the FT. They firstly describe the acquittals as a ‘damaging loss’ for the CMA, but lay the blame for the acquittal as relating to the difficulty of proving the ‘dishonesty’ element in the cartel offence as it was originally formulated.

From the statement issued by the defendants after the acquittal it appears that the defence argued that:

the issue in the trial was whether there was greed, and there was none. … The market was failing the product by creating unfair competition, which had become ruinous. It seems that a jury has concluded that open competition is not always the only consideration in business.”

That was, of course, only the view of the defendant’s defence team, and the jury themselves may have had a different view, but it clearly indicates that in this case the case put didn’t necessarily revolve around the legality of the conduct, but rather the motives of those involved.

Much of the discussion of the problems surrounding dishonesty have focused on what Rebecca Williams called the ‘bootstraps problem’. That was the problem of trying create a moral sense of criminality around behaviour by making it a criminal offence. If society in general, or a jury in particular, did not see behaviour as wrong, would they find it to be dishonest. This case also suggest that even if a jury did find that behaviour, in itself, was wrong (in this case the CMA claims there was evidence of ‘deliberate deceit’), they would also have to be convinced that the defendant was doing it for the wrong reasons; and not for arguable legitimate reason like protecting safety, or avoiding ‘wrongful bankruptcy’.

There is also a case selection issue worthy of note. Following the collapse of the BA Four trial the OFT were legitimately criticised on the basis that they had gone for a high profile case, rather than a strong one. This time the CMA could not have been accused of going for a high profile industry, but this time the small size of the target undertakings presented another set of challenges in painting a picture of them as engaging in clearly criminal actions. If the CMA had been prosecution Forex traders involved in market manipulation I doubt any jury in the land would have bought an argument that there behaviour was only to avoid ruinous competition.

The dishonesty element is no longer part of the UK cartel offence ,and we will probably not see many more cases in which it is an issue, but that doesn’t mean that the CMA can ignore the question of the ‘wrongfulness’ of cartel activity. I still hold the view that unless the prosecutor can clearly should the jury that the behaviour not only technically falls within the offence, but also that it is wrongful in a societal sense there is a real risk of jury nullification in future cartel cases.

My advice to the CMA – when picking cases for cartel prosecution – only go after the very bad, and the bankers.

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