Feeds

OFT to disqualify unwitting directors to deter competition abuses

Innocence won't make you innocent now

New hybrid storage solutions

Directors who should have known that their companies were breaking competition laws will be just as likely to be pursued for disqualification as those who actively committed offences, the Office of Fair Trading (OFT) has said.

The OFT has published new guidance on when it will disqualify directors because of competition law breaches. It said that it wanted to clarify exactly what directors' responsibilities are in relation to competition law.

"The OFT will be just as concerned with directors who ought to have known of competition law breaches at a company as those who were personally involved in an infringement," said an OFT statement. "Cases will be chosen based on the evidence available and seriousness of the conduct."

The Company Directors Disqualification Act allows for the disqualification of a director for 15 years if a court rules that they are unfit to be involved in the management of a company following a competition law breach, the OFT said.

"The prospect of being disqualified as a director is one of the most powerful deterrents to anti-competitive behaviour across boardrooms and companies of all sizes. Today's guidance should be taken as a clear message that we will actively seek disqualification of directors found to have engaged in anti-competitive behaviour or who ought have known it was going on," said OFT senior director of policy Cavendish Elithorn.

The OFT said that companies and directors that co-operate with its competition investigations will still qualify from immunity from disqualification and leniency.

"Any director who suspects their company has been involved in cartel activities should take urgent steps to ensure their company approaches the OFT or European Commission for leniency at the earliest opportunity," said Elithorn.

Competition law expert Guy Lougher of Pinsent Masons, the law firm behind OUT-LAW.COM, said that the OFT decided to act after commissioning a report that found that just fining companies was not enough to make directors become actively involved in competition law compliance.

"A report by Deloitte into what the sanctions are and what motivates a company to comply with competition rules identified prosecutions and the disqualification of directors would be effective," said Lougher. "It found that fines are not sufficient to encourage compliance."

"The OFT is trying to change the thought processes and behaviour of individuals, and is being more transparent and precise about the circumstances in which it would consider director disqualification, and is lowering the threshold at which it would consider it," said Lougher.

The OFT's new guidelines indicate that it will act on disqualifications as a matter of course, which it hopes will change director behaviour, he said.

"This is moving towards a situation where as a matter of routine as investigations are opened, the OFT looks to identify whether a director is susceptible to disqualification," said Lougher. "The idea is that if individuals are concerned about what will happen to them and their ability to earn a living they will be much more cautions about engaging in behaviour that is or might be anti-competitive than they would be if the only sanction was that the company was fined."

Lougher said that the indication that directors who should have known about infringements will be pursued as well as those actively involved is also seeking to change director behaviour.

"They are trying to ensure directors are actively involved and not taking a purely passive role," he said. "The OFT wants to ensure that directors are asking the right questions and acting in a diligent way, asking does the company have the correct compliance training and procedures in place, and if not why not?"

"If the directors haven't asked those questions they might be found not to have met the relevant standard," said Lougher.

See: The guidance (18-page / 898KB PDF)

Copyright © 2010, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

New hybrid storage solutions

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.