Cartels: confess and apply for leniency
Information on how to confess a cartel, the CMA’s leniency programme and what to expect if the cartel activity was in Scotland.
The Office of Fair Trading (OFT) closed on 31 March 2014. The Competition and Markets Authority (CMA) took over its responsibilities for cartels enforcement on 1 April 2014.
Cartels are a particularly damaging form of anti-competitive activity. They are generally conducted in secret and cause serious damage to businesses and the economy and increase prices for consumers. The CMA’s leniency policy helps the CMA detect and take action against cartels.
Leniency for businesses
A business which has participated in a cartel may receive total or partial immunity from fines if it comes forward with information about the cartel, provided certain conditions for leniency are met.
The first cartel member to report and provide evidence of a cartel will be granted total immunity, provided the CMA is not already investigating the cartel, does not otherwise have sufficient information to establish the existence of the cartel and the other conditions for leniency are met.
In this situation, the business will receive:
- immunity from fines
- immunity from criminal prosecution for any of its cooperating current or former employees or directors
- protection from director disqualification proceedings for all of its cooperating directors
Detailed guidance on the different types of leniency and when leniency may be available is set out in the ‘Applications for leniency and no-action in cartel cases – detailed guidance on the principles and process’.
Leniency for individuals – no-action letters
An individual who comes forward with information about their involvement in a cartel may receive immunity from prosecution (a ‘no-action letter’) provided they satisfy certain conditions, including admitting taking part in the cartel and cooperating completely and continuously throughout the investigation.
Cartel activity in Scotland
Where cartel activity has taken place wholly or partly in Scotland, the CMA will decide whether to grant leniency to businesses. However, the CMA cannot give guaranteed immunity to individuals for criminal offences which are to be prosecuted in Scotland. The CMA will report an individual’s cooperation to Scotland’s Lord Advocate who will give ‘serious weight’ to any CMA recommendation that immunity should be granted. The Lord Advocate will also take notice of the CMA’s leniency guidance when deciding whether to grant criminal immunity to individuals.
For more detail on the handling of leniency applications involving cartel activity in Scotland see the Memorandum of Understanding with the Crown Office in Scotland.
Get information about leniency and apply
Call 0203 738 6833 for confidential guidance on the CMA’s leniency programme, to check whether leniency may be available or to make a formal application for leniency. Leniency enquiries should be made during office hours.
Before calling, it is important to understand the conditions for leniency, which include providing information and cooperating with any investigation.
If you are not a participant, but think you have experienced a cartel please call the cartels hotline on 0800 085 1664 or 0203 738 6888 or email email@example.com. Visit the report anti-competitive business practices page for more information on reporting cartels.
You may get a financial reward for an information that leads to investigation. For more information see the CMA’s ‘Informant reward policy’.
Further information on leniency and no-action
You can read a range of further information on the CMA’s leniency and no-action policies and procedures, including the conditions for leniency, below:
- Applications for leniency and no-action in cartel cases – quick guides for businesses and individual and detailed guidance on the principles and process
- Guidance as to the appropriate amount of a penalty
What a cartel is
In simple terms, a cartel is an agreement between businesses not to compete with each another. The agreement is usually secret and often informal.
Typically, cartel members may agree on one or more of the following:
- output levels
- credit terms
- which customers they will supply
- which areas they will supply
- who should win a contract, often called bid rigging
Cartels can happen in almost any industry and can involve goods or services at any stage of the supply chain, including manufacturing, distribution or retail. However, there are some sectors where cartels might occur more often, for example where:
- there are few competitors in a market
- the scope for competition on quality or service is limited because products are similar
- there are already established communications channels between competitors
- there is excess capacity in the industry or a general recession
Cartels are prohibited by Chapter I of the Competition Act 1998 and Article 101 of the Treaty on the Functioning of the European Union of the EC Treaty. It is also a criminal offence under the Enterprise Act 2002 for an individual to take part in the most serious types of cartels, which involve price-fixing, market sharing, limiting production or supply or bid rigging.
You can read more information on the CMA’s powers of investigation and enforcement below:
Penalties for involvement in cartels
Severe penalties can be imposed on individuals and businesses involved in cartels. Individuals may be sent to prison for up to five years and businesses may be fined up to 10% of worldwide turnover. Any company directors involved in the cartel may also be disqualified from acting as a director for up to 15 years.
You can find more information on the penalties for participating in a cartel below: