Cartel offence: penalty and prosecution
Mr. Waterson: I beg to move amendment No. 36, in page 132, line 11, leave out
'to imprisonment for a term not exceeding 5 years or'.
The Chairman: With this it will be convenient to take the following amendments: No. 90, in page 132, line 12, leave out 'five' and insert 'three'.
No. 37, in page 132, line 12, leave out 'or to both'.
No. 39, in page 132, line 12, leave out
'to imprisonment for a term not exceeding six months or'.
No. 40, in page 132, line 14, leave out 'or to both'.
Mr. Waterson: I can deal with this amendment fairly briefly, as we have dealt fairly exhaustively with some of the relevant issues in the previous debate. These amendments add up to two different approaches. The first is to remove the possibility of imprisonment altogether as a sanction but leaving the prospect of a fine. That seems a reasonable compromise. I merely pray in aid the arguments that we used in the previous debate. As we voted against clause 179 it is clear that we are still not happy with the Government's approach. They have not made their case for criminal sanctions. We will return to that at much greater length on Report.
Amendment No. 90 has a slightly different effect. If the Government insist on having the threat of imprisonment, it should be reduced to three years, rather than five, which is the sentence available in the
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US. A five-year sentence is extremely serious. Even the hapless Mr. Taubman got only a year and a day—I am sure that he does not regard that as particularly lenient—for what was a pretty egregious, to use a lawyer's word, price-fixing offence. Given the deterrent effect that the Under-Secretary claims for the measure, it seems to have had remarkably little effect on Mr. Taubman and his associates.
Mr. Djanogly: My first point concerns fines. I note that reference is made to a statutory maximum for a summary conviction. What is the amount? There is no reference to a maximum sentence for indictable offences. Why is that? Does it come into the Bill in another place or is there an automatic amount of which I am not aware? Finally, in what circumstances would a summary conviction, which presumably involves the case going through the magistrates court, be appropriate? I have visions of cartel offences being dealt with before drink-driving offences and after the parking ticket offence. It seems rather incongruous, given our previous discussion, that such a case could go to a magistrates court.
Mr. Carmichael: As I said at the start of my contribution to the clause 179 stand part debate, I am minded to support the Conservative amendments. I am not opposed to the criminalisation of cartels in principle, but I have substantial reservations about the Government's proposals and doubt that they are workable. I am worried about someone going to jail for the commission of anti-cartel activity and I see many problems with the practicalities. As to fines, I presume that they will be unlimited on indictment. I share the sentiments of the hon. Member for Huntingdon about summary prosecutions. If we are serious about sending the right messages, it is appropriate to say that prosecutions in respect of cartel offences should be on indictment only.
Miss Johnson: It would be helpful to run through the amendments quickly, but in view of the remarks of the hon. Member for Orkney and Shetland, I should certainly go through them in more detail.
The Bill provides for the SFO and OFT to prosecute the new offence in England, Wales and Northern Ireland. It is the Government's expectation—and that of the OFT and the SFO—that the SFO will carry out all the prosecutions initially. In Scotland, the OFT will investigate. As the hon. Gentleman said, there is no Scottish OFT, but the Crown Office is training OFT officers, so his point is being met in that way.
Mr. Carmichael: The Under-Secretary may not know the answer to this immediately, but she may be able to find out; how many lawyers qualified in Scots law are employed by the OFT?
Miss Johnson: The hon. Gentleman is right that I cannot answer that at the moment, but we can return to it.
The arrangements for prosecution will be properly resourced. The SFO already has experience of criminal
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prosecutions, having prosecuted other white-collar crimes such as insider dealing for many years. It may, however, be appropriate at some future time for the OFT, whose initial role will be investigatory, to take on a prosecutorial role. That might arise if the number of cartel prosecutions created a conflict with other SFO priorities.
Mr. Waterson: The Under-Secretary may be getting ahead of herself; she appears to be dealing with the next group of amendments.
Miss Johnson: That is helpful. I shall return to some earlier points made by the hon. Member for Huntingdon about summary conviction. At the moment, magistrates courts can provide for summary convictions, and they cover prison sentences of up to six months or a fine up to the statutory maximum of £5,000. The hon. Gentleman may be right that it would be inappropriate to deal with many cartel offences in magistrates courts, but that is a matter for them. Magistrates are able to refer up to the High Court and are usually likely to do so. The system allows magistrates courts to refer certain more serious offences to higher jurisdictions, even though the process starts with the magistrates.
The amendments would seriously undermine the intended deterrent effect, which is a key objective of the new offence. The maximum prison term in the Bill has been set to create the appropriate level of deterrence for serious and damaging anti-competitive behaviour. The maximum five-year prison term in the Bill is appropriate for a serious financial crime and is in line with existing precedents. It is also in line with international precedents: Canada has a five-year term for hard-core cartels, as does Germany for bid-rigging cartels; Norway has a six-year maximum and France four years. As hon. Members have remarked, the US has a three-year maximum, as does Japan.
Providing solely fines as a sanction for cartels would in no way reflect the seriousness of the offence. The Government accept that fines may be appropriate in less serious cases with mitigating circumstances, but fines do not have the same deterrent effect as imprisonment. It is a question of the punishment fitting the crime, which is right and appropriate.
Dishonest companies might find ways of reimbursing employees who were fined or of indemnifying them against a potential fine. If fines were the only sanctions, dishonest companies would take a commercial decision to engage in a cartel. They would weigh the risk of being caught and the size of the fine against the likely gain to be derived from the cartel, which would be no deterrent at all. Honest companies tell the OFT that the threat of imprisonment will help to impress on their employees the need not to become involved in cartels. In addition—
It being One o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.
Adjourned till this day at half-past Four o'clock.
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The following Members attended the Committee:
Conway, Mr. Derek (Chairman)
Brown, Mr. Russell
Campbell, Mrs. Anne
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Field, Mr. Mark
Thomas, Mr. Gareth R.