Move to put cartel kingpins in prison could punish EU plans, critics claim

Date: 04/04/02

By Peter Chapman

UK GOVERNMENT plans to put cartel ringleaders in jail could damage EU moves to boost cooperation on competition cases, business leaders are warning.

The Confederation of British Industry (CBI), which lobbies on behalf of UK businesses, argues the measure would undermine EU plans to encourage national competition agencies to swap information on cartels. CBI legal expert Jonathan Dykes, however, insisted the group has no problem with tough punishment for offenders.

'The need for everyone to be singing from the same hymn sheet is absolutely paramount given that de-centralisation is a very risky road,' he said. 'If you have got a very large member state going down a different path then there is a sense of concern that it might encourage others to do likewise.'

Dykes said most member states do not have criminal sanctions for competition offences - meaning firms face fines or other punishments but have fewer rights of defence.

The draft bill discussed by the British Parliament this week could lead to UK-based directors being imprisoned on the basis of evidence collected abroad. This, critics say, could lead countries to refuse to share findings with the UK - thus undermining the Commission's reforms.

Competition chief Mario Monti had no ready answer to the conundrum when he was challenged on the issue at a UK conference in February.

His spokesman Michael Tscherny responded to questions last week by insisting that Brussels had no problems with the UK law, although he said it was important that the interface between EU rules and procedures and national ones are 'carefully worked out'.

The UK row is the latest challenge to the Commission's planned reform of its old competition rulebook. Progress on the dossier in discussions between EU diplomats has been painfully slow due to serious concerns over the re-division of powers.

Brussels wants to get rid of the notification system under which firms send in details of their business agreements to the Commission for clearance.

The change would give Monti and his team more time to police large EU-wide cartels.

But industry fears the Commission's proposals to decentralise the running of many day-to-day cases would produce legal uncertainty. They worry that national authorities, unschooled in EU issues, may not apply the rules in a uniform way.

Meanwhile member states, such as Germany, are voicing serious concerns over the Commission's plan to impose EU and not national law over competition cases involving some trade between member states.

The Confederation of British industry has criticised UK government plans to put cartel leaders in jail, claiming it could hamper EU efforts to increase co-operation on competition cases.