Decision

Decision for Associated Lead Mills Ltd (OF1052652) & Envirowales Ltd (OG1070327)

Published 9 February 2023

0.1 In the Eastern Traffic Area

1. Written Decision of the Deputy Traffic Commissioner

1.1 Associated Lead Mills Ltd (OF1052652) & Envirowales Ltd (OG1070327)

2. Background

Associated Lead Mills Ltd (ALM) and Envirowales Ltd both hold restricted goods vehicles operator licences. In April 2022 it was drawn to the traffic commissioner’s attention that Maurice Sherling and Graham Hudson, two of the directors of these companies, had in May 2021 been disqualified for three and four years respectively from being directors after a Competition and Markets Authority (CMA) investigation into anti-competitive behaviour as directors of International Metal Industries Ltd (IMI), an associated company, had resulted in IMI being fined just over £1.5 million in November 2020. A High Court Order given in July 2021 had allowed Messrs Sherling and Hudson to continue to act as directors of ALM, Envirowales Ltd and associated companies under a certain number of strict conditions, including the continuation of other, named, people as directors, and continuing regular searches of the companies’ emails and of the text and phone call records of Messrs Sherling and Hudson.

There were clear potential implications in all this for the fitness to hold a licence of ALM and Envirowales and of Maurice Sherling and Graham Hudson to continue as directors. Worryingly, the CMA noted in its report that the two directors’ accounts of their actions lacked credibility because they were contradicted by the documentary evidence or were internally inconsistent.

None of this was notified to the traffic commissioner’s office until 25 April 2022, when a number of changes at director level in the two companies were notified. It should have been notified within 28 days of the companies incurring the large fine from CMA in late 2020, as it was a matter which could affect the fitness of the companies concerned.

3. Public inquiry

At the public inquiry held to consider the matter in Cambridge on 24 October 2022, barrister Toby Sasse made the following points on behalf of the companies and Messrs Sherling and Hudson:

• the fine imposed by the CMA had almost all been paid off (payment had been in instalments by agreement) and would be fully discharged by December 2022;

• the conditions imposed by the Court Order had all been complied with;

• the anti-competitive misconduct had been in 2014-17 and had thus ceased five years ago; the directors had undertaken extensive competition law training in the period since;

• the regulatory compliance of the companies had now been greatly strengthened; a whistle-blowing policy was now in place;

• the misconduct was not related to any road transport issue or roadworthiness of vehicles (being largely related to fixing of lead prices);

• the High Court had, in allowing Messrs Sherling and Hudson to continue to act as directors of ALM and Envirowales (plus associated companies in the group), recognised that their expertise and knowledge of the industry were essential for the viability of the companies. The CMA had accepted the ruling of the High Court;

• the companies and their directors had rehabilitated themselves and could not be said to be unfit, today, to hold an operator licence.

I have considered the large amount of documentary evidence presented and the points raised by Mr Sasse. There is no doubt in my mind that the conduct of Maurice Sherling and of Graham Hudson has been reprehensible, both in the original anti-competitive behaviour which involved price-fixing activity with another company in the same industry, and in the “not credible” accounts which they both subsequently gave to the CMA.

I further considered whether the extent of the misconduct rendered the companies unfit to hold their operator’s licences. I have taken into account that, for a standard licence holder mandatorily to lose its good repute (not exactly similar to the requirement of “fitness” for a restricted licence holder, but not markedly different either), it must have been convicted of “more than one serious offence”. I accept that there have been no convictions in this present case, as it is a civil rather than a criminal matter. Nevertheless, findings of anti-competitive behaviour, a £1.5 million fine and disqualifications from being directors are, taken together, of a similar degree of seriousness to a conviction. Very serious damage to the companies’ and the directors’ fitness to hold a licence has been done.

However, I have been mindful of the fact that the High Court has chosen to allow the two directors concerned to continue to act as such during the period of disqualification (three years for Mr Sherling and four for Mr Hudson) for the companies in the group and under tight conditions (including monitoring of their phone records). While the Court was not explicitly applying the test of fitness to be a road operator, it was nevertheless considering whether it could trust Messrs Sherling and Hudson to continue to act as directors and concluded that it could (with the aforementioned conditions). I have therefore decided not to make a finding of unfitness which would prevent Messrs Sherling and Hudson from being able to act as the Court has decided that they may.

I do though warn both the companies and the directors that any repetition of the kind of misconduct in which they engaged over the period 2014-17 would constitute behaviour akin to a second serious offence and render inevitable a conclusion that they are unfit to hold an operator’s licence. As it is, they are very much on probation and I expect them to continue to satisfy the Court’s conditions absolutely, until their disqualification periods end.

Nick Denton

Deputy Traffic Commissioner

27 October 2022