Criminal antitrust trials are relatively rare primarily due to the high risk on both sides. Defendants risk getting slammed with a lengthy jail sentence (or, for a corporation a huge fine) if they don’t negotiate a plea. And, the government, recognizing “proof beyond a reasonable doubt” is a high bar to meet, is often flexible and offering a significant “discount” for a resolution. But cases do go to trial and one just concluded in the UK.
Nicholas Stringer, former managing director of Galglass, and Clive Dean, of Kondea, were both acquitted at Southwark Crown Court of dishonestly rigging bids and fixing the prices of galvanized steel water storage tanks between 2005 and 2012. The trial followed a guilty plea by a third defendant, Nigel Snee, former managing director at Franklin Hodge, a Hereford-based liquid storage tank manufacturer. Mr. Snee has not yet been sentenced. The UK Competition and Markets Authority (“CMA”) commendably announced not just the charges against these individuals (here) but followed up by reporting the acquittals on its website (here).
The case may be viewed as somewhat of an embarrassment to the British enforcers. “The UK’s competition watchdog has suffered an embarrassing court blow after a jury found two directors not guilty of price-fixing.” As a former prosecutor, I would not view a loss as an embarrassment without knowing a lot more about the case. If a prosecutor’s office never loses a case, it probably isn’t bringing enough cases. But, the loss follows on the heels of what was an embarrassing loss by the CMA’s predecessor, the Office of Fair Trading. That office botched a high-profile criminal prosecution of four British Air executives for price-fixing. As reported in the UK Telegraph (here):
An official review found that “management oversight” and “weakness in investigation processes” were factors in the collapse of the high-profile case, which cost the taxpayer £1.5m. The OFT’s board review highlighted the “failure” to secure vital email evidence that led to the failure of the former’s first-ever contested criminal case.
“Dishonestly Rigging Bids”
An important feature of the recent trial was that the defendants were for indicted for “dishonestly rigging bids.” The current UK bid rigging/price-fixing statute has removed “dishonestly” from the charge, although certain affirmative defenses are still available to a defendant such as showing the “victims” of the offense knew about the arrangement.
I wonder what role the “dishonestly” element played in the prosecution? Did the defendants admit that there was an agreement concerning submission of bids, but argue that the agreement was not dishonest? Or did they simply deny that there was an agreement? It would be most welcome if someone with knowledge of the case would share a “guest post” with us.
Some argue that having to prove that bid-rigging agreements are “dishonest” places too high a burden on the prosecution. I have a different take on it. In an article I wrote for Antitrust Magazine (Antitrust, Vol. 29, No. 2, Spring 2015), I argued that in the United States the “per se” rule should be amended to “per se plus” with the plus being some proof that the customers were deceived into believing that there was competition when in fact there was not. I believe that with current jail sentences in the United States at a maximum of 10 years, the prosecutor should be willing to stand before the jury and demonstrate that the defendants’ conduct was dishonest. And, if the prosecution cannot meet that standard, then other options besides a felony criminal case can be pursued. (The CMA is continuing a civil investigation into suspected cartel conduct in respect of the supply of galvanised steel tanks for water storage.)
Thanks for reading. (If you can’t access a copy of my article and would like one, please let me know.)