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Criminal cartel enforcement: turning the tide?

Posted on 26 October 2020

The Serious Fraud Office (SFO) and Competition and Markets Authority (CMA) have announced a new Memorandum of Understanding (the Memorandum) on cooperation in the investigation and prosecution of individuals for cartel offences – although the move to closer cooperation make some sense, it is unclear whether it will enough to turn the tide on a woeful record of enforcement.

The Memorandum

On 21 October 2020 the SFO and the CMA entered into the Memorandum to "co-operate to investigate and/or prosecute individuals in respect of the criminal cartel offence, established by section 188 of the Enterprise Act 2002 (EA02)".

The Memorandum follows similar agreements in 2003 and 2014 around the enforcement of criminal cartels, but this represents a change in the level of cooperation between the two entities, including express provision, for the first time, for the possibility of joint investigations.  The Memorandum makes clear that the SFO and the CMA 'envisage collaborating in this area to ensure effective and efficient investigation or prosecution of the criminal cartel offence in appropriate cases.'

In addition, the Memorandum commits both the SFO and the CMA to an agreement to cooperate and share technical expertise, relevant know-how and training; second staff to one another; and share intelligence in regular update meetings.

Formally, the process by which a decision will be made to undertake an investigation into a criminal cartel offence remains unchanged under the Memorandum:

  1. Where the CMA receives intelligence that there has been criminal cartel activity, it will undertake any initial criminal enquiries; where the SFO receives intelligence that there has been criminal cartel activity (prior to a referral from the CMA), it will refer this intelligence to the CMA to conduct the initial enquiries.
  2. If the CMA deem that the case would be more appropriately dealt with by the SFO, the case may be referred to the Director of the SFO to make an informed decision.
  3. The Director of the SFO will consider whether to accept the matter for investigation at that time, or to ask the CMA to conduct further enquiries. The SFO and CMA will meet to agree the nature and scope of these enquires.
  4. Following any further enquiries, the Director of the SFO will reconsider the decision to commence an investigation.

Bright future?

The CMA's record on prosecuting cartel offences has been poor, with only a handful of successes since the introduction of the offence, notwithstanding the reform of the law, in 2014, to remove the requirement to prove dishonesty. This latest agreement was foreshadowed in a talk last year by the then-Chairman of the CMA, Lord Andrew Tyrie, in which he suggested that that the CMA's criminal enforcement powers should be picked up by an agency with "specialist expertise".

However, notwithstanding those comments, the Memorandum is by no means a complete surrender of criminal jurisdiction to the SFO by the CMA; on the contrary, the CMA retains the option to conduct its own criminal cartel investigations, including the option, for the first time, to request that SFO staff are deployed to the CMA to assist in those CMA-led investigations. 

In light of the historic difficulties faced by the CMA it makes some sense for the CMA to look for closer ties with the SFO and the coordination of law enforcement to ensure the proper management of cases is obviously something to be welcomed. The unknown is whether the SFO – which is itself fighting on various fronts at the moment amid allegations of its own prosecutorial failings – will have the appetite to engage with the CMA on difficult and complex cartel investigations and whether it will be enough to turn the tide on a record of enforcement failure.

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