Personal liability

and competition law

around the world
In September 2020, the UK’s competition enforcer,
the Competition and Markets Authority (CMA),
launched a new guidance document in conjunction
with the Institute of Risk Management designed
to help managers and directors understand and
address competition law risk. Launching the guide,
Andrea Coscelli, the CMA chief executive noted,
“Individuals are far less likely to break the law if
they know they may be held directly responsible
for it. And the public rightly expects there to be
personal responsibility for very serious wrongdoing
in firms.” Competition law and anti-competitive practices
This initiative to encourage senior leadership of Competition law is designed to protect businesses b. Anti-competitive agreements (excluding cartels)
companies came only a couple of months after the and consumers from anti-competitive behaviour in are less obviously injurious to competition,
CMA had successfully secured its first contested order to deliver open, dynamic markets and enhanced but nonetheless may result in a reduction of
competition disqualification order (CDO). There, the productivity, innovation, and value for customers. competition in certain situations. Examples
High Court imposed a seven-year ban on the director Although the precise approach of competition laws include joint selling or purchasing agreements,
of an estate agent in Burnham-on-Sea who had been differs by jurisdiction, they typically target three types retail price agreements between suppliers and
found to have engaged in price fixing with five other of conduct: (a) cartels; (b) other anticompetitive retailers, and long exclusivity periods.
local estate agents. agreements; and (c) abuse of dominant position.
c. Abuse of dominant position is a type of conduct
The CMA is not alone in its focus on ensuring individual a. Cartels are the most serious anticompetitive whereby a business enjoys a dominant position in
responsibility and accountability for breaches of agreements. They occur when two or more a market, and certain types of behaviour in which
competition law. As shown in the infographic below, businesses agree – directly or indirectly – not to it engages may harm competitors or consumers.
laws imposing personal liability for various types compete with each other. Such practices may
of competition law breaches have become more include price fixing; bid rigging; limiting production;
prevalent, with many countries now assigning some market or customer sharing; or exchange or
form of personal civil or criminal sanction for breaching disclosure of commercially sensitive information.
competition law. These developments highlight the
significance of effective competition law compliance
for the benefit of individuals.
The growing threat of personal responsibility Only four prosecutions have ever been made against In practice, these sanctions have remained rare – partly
individuals involved in cartel cases; these relate to the because the French Competition Authority has stated
While the United States and Canada can trace the roots
Marine Hose cartel (2008), the Air Passenger Fuel that in cases where parties benefit from the leniency
of their criminal antitrust laws back to the nineteenth
Surcharge cartel (2011), the Supply of Galvanised Steel programme, individuals shall not be prosecuted or fined.
century, individual liability for breaches of competition law
Tanks cartel (2015), and the Supply of Precast Concrete Since 1986 and until 2016 there have been an average
has only proliferated globally in the twenty-first century.
Drainage Products cartel (2017). It is worth mentioning of only about two criminal convictions per year, resulting
The United States that in the Marine Hose cartel case, the defendants mostly in fines and suspended prison sentences. More
In the United States, individuals may be sentenced to pleaded guilty in the UK to avoid a likely custodial recently, there has been increased cooperation between
up to 10 years in prison and/or fines $1 million for any sentence in the United States, so a jury did not hear the competition and criminal authorities. From 2013 until
anticompetitive practices. In fiscal year 2018 alone, 59 case, since disqualification orders are a decision solely for 2017, the average conviction rate increased to 3.8
individuals were sentenced in the United States, 21 of the judge to make. convictions per year, the average fine was about €8,000
whom were sentenced to incarceration time. and there were five suspended prison sentences.
Civil sanctions are available in the form of competition
The UK disqualification orders (CDOs). A CDO may disqualify a Historically, these convictions usually related to cases
In the UK, the criminal cartel offence was introduced director from acting as a director for up to 15 years where of bid-rigging in public markets, where the individuals
in 2003 by the Enterprise Act 2002 and subsequently there has been a competition law breach by the company involved often committed additional offences such
bolstered in 2014 by removing the requirement for the which the individual was a director of and the director as forgery, corruption or misuse of company assets.
offence to have been conducted ‘dishonestly’. Criminal has been deemed unfit to act as a director. Of note for Nevertheless, there are at least five persons reported to
sanctions in the UK are available only in respect of cartel directors, this includes not only situations where the have actually served up to one year in prison – the first
activity, and individuals may be sentenced to up to five director participated in the competition law infringement one in 1995 (possibly the first European incarceration for
years in prison and/or fined an unlimited amount. but also where the director (1) had reasonable grounds competition law breaches).
to suspect the competition law breach and did nothing
Germany
to stop it; or (2) did not know, but ought to have known
German law, in line with most European jurisdictions,
that the conduct amounted to a breach. In other words,
does not criminalise any anticompetitive practices,
it is not sufficient for UK company directors to ignore
although section 298 of the German Criminal Code
competition law, as the CMA may pursue a CDO where a
criminalises bid rigging, and persons can be sentenced to
director failed to act when they should have.
up to five years in prison or fined.
Until 2018, only three directors had been disqualified; the
However, personal administrative fines exist under section
first one was in 2016. However, the CMA has recently
81(4) of the Act against Restraints of Competition and
increased its efforts, as it now considers CDOs in all
section 17(2) of the Act on Regulatory Offences, which
anticompetitive cases, and, consequently, in May 2020,
impose fines of up to €1 million for intentional competition
the CMA secured its 20th disqualification of a company
violations or €500,000 for negligent competition violations
director, with more cases pending.
by a person. Such fines are imposed more aggressively
France than average. In 2018 a total of 20 individuals were fined
Rather reversely, France decriminalised anti-competitive approximately €2 million (about €100,000 per person)
practices in 1986, yet the decriminalisation was not from prosecutions by the German Federal Cartel Office,
absolute. Currently, persons may be penalised under while 2014 was the apex year when 81 persons were
Article L.420-6 of the French Commercial Code, which fined a record total of approximately €10 million.
stipulates that if a natural person fraudulently intervenes
in an anticompetitive practice in a personal and decisive
manner, the person risks imprisonment for up to four
years and/or a fine of up to €75,000.
The threat of personal liability globally * Click on flag for more information
Red Borders: Jurisdictions where personal liability attaches
to competition law AND include a criminal regime*
Yellow Borders: Jurisdictions where personal liability
attaches to competition law without a criminal regime*

Americas Asia

Brazil Canada United States Australia Hong Kong India Japan South Korea

Europe, Middle East & Africa

Belgium Denmark France Germany Greece Ireland Israel Kazakhstan

Netherlands Norway Russia Saudi Arabia South Africa Spain Turkey UAE

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If you have questions or would like
additional information on the material
covered in this mailing, please contact
one of the authors – listed below – or
the Reed Smith lawyer with whom you
regularly work. Authors
About our antitrust and competition team
We offer the full spectrum of antitrust and
competition services across key jurisdictions
in Europe, Asia, the Middle East, and the
U.S. We are committed to advising you on
complex national and multi-jurisdictional
antitrust and competition issues with the
highest level of commitment and excellence. Marjorie Holmes Ross Mackenzie Emma Weeden Vaibav Adlakha Dimitrios Pittas
Our distinguished team has a diverse Partner, London Partner, London Associate, London Associate, London Trainee, London
knowledge and experience base and long +44 (0)20 3116 2986 +44 (0)20 3116 3647 +44 (0)20 3116 3857 +44 (0)20 3116 3451 +44 (0)20 3116 3351
track-record of success, both at the local mholmes@reedsmith.com rmackenzie@reedsmith.com eweeden@reedsmith.com vadlakha@reedsmith.com dpittas@reedsmith.com
and international level.
Our antitrust and competition lawyers also Contributing Reed Smith authors
have a deep bench of industry specific
knowledge and experience. As your
business evolves and you expand into new
markets bringing about new challenges, we
can help you design innovative, forward-
thinking solutions tailored to meet your
specific business needs. We are keenly
focused on building strategies that bridge
the gap between legal requirements and
Jennifer Driscoll Tilman Siebert Michaela Westrup Corinna Kammerer Audrey Augusto
commercial objectives.
Counsel, Washington, D.C. Partner, Munich Counsel, Munich Associate, Munich Associate, Paris
+1 202 414 9269 +49 (0)89 20304 193 +49 (0)89 20304 189 +49 (0)89 20304 162 +33 (0)1 76 70 40 58
jdriscoll@reedsmith.com tsiebert@reedsmith.com mwestrup@reedsmith.com ckammerer@reedsmith.com aaugusto@reedsmith.com

Special thanks for their contributions (in alphabetical order)

Boden Ladner Gervais LLP,
Hassan Mahassni Law Firm,
Namura & Partners,
S.Friedman & Co.

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