Court of Appeal rules on jurisdictional issue relating to cartel offence

14 December 2009

Katharine Wilson

On 9 December 2009, the UK Court of Appeal issued its judgment in a case concerning the jurisdiction of the Crown Court in relation to the cartel offence under section 188 of the Enterprise Act 2002 (the Act). The defendant in the case is not mentioned by name, but appears to be one of the four executives charged with the cartel offence in relation to the British Airways-Virgin price fixing case. The Court of Appeal held that the Crown Court does have jurisdiction to try the case and impose punishment, because the cartel offence provision is not concerned with the substantive issue of whether or not EU competition law was infringed, so its enforcement did not have to be reserved to a body designated as a national competition authority under EU Regulation 1/2003.

Section 188 of the Act provides that an individual commits an offence if he or she dishonestly agrees to make or implement certain arrangements, such as price fixing or bid rigging. The maximum penalty on conviction on indictment is five years imprisonment, together with an unlimited fine. In addition to the criminal cartel offence, UK law also contains provisions in the Competition Act 1998 that are broadly equivalent to the main competition provisions at EU level, Articles 101 and 102 TFEU.

The defendant in question had argued at first instance that the Crown Court had no jurisdiction to try the case or impose punishment in a case such as this where the offence had a European dimension (because the agreements in question had an effect on trade between EU Member States) and that only the national competition authority designated by the UK under EU Regulation 1/2003 (the Modernisation Regulation) had any powers of enforcement in such circumstances. The Crown Court has not been designated by the UK under the Modernisation Regulation; the relevant designated body in the UK is the Office of Fair Trading (OFT). The Crown Court judge disagreed with this argument and the defendant appealed the point to the Court of Appeal.

The Court of Appeal held that, although section 188 of the Act is “one arrow in the UK legislative quiver designed to prevent anti-competitive practices”, it did not form part of “national competition law” in the context in which that phrase is used in the EU Modernisation Regulation. The Court found that the test for what constitutes national competition law was whether the relevant law had the objective of applying Articles 101 or 102 (i.e. deciding substantively whether those provisions had been infringed), rather than whether it pursued the overall objective of preventing anti-competitive practices.  This meant that section 188, being concerned with criminal enforcement, was not a “national competition law” (for purposes of the EU Regulation) which could only be enforced by a designated national competition authority (the OFT).

The result of this was that the Crown Court could not, as a jurisdictional matter, be prevented from imposing a penalty in such a case. In any event, the Court of Appeal held that there was no basis for the argument that the Modernisation Regulation gave exclusive jurisdiction for the punishment of an offence which was part of national competition law to the designated competition authority in a particular EU Member State.

The trial of the four executives will be the first case in which a full trial has taken place in the UK on the basis of the cartel offence. It had been scheduled to start on 18 January 2010 at Southwark Crown Court. However, it is understood that the start date for the trial has now been postponed to 12 April 2010.

Source: IB v R [2009] EWCA Crim 2575, judgment of 9 December 2009