Director disqualified for breach of competition law

Gavin Costelloe considers the CMA’s first disqualification order against a director of a company for a breach of competition law.

 

On 1 December 2016 the Competition and Markets Authority (CMA) secured its first disqualification of a director of a company for a breach of competition law.

The CMA has the power, under the Company Directors Disqualification Act 1986 as amended by the Enterprise Act 2002 (in force since 20 June 2003), to apply to the court for a disqualification order where an individual director has been found to be in breach of competition law.

In August 2016, the CMA found that the company, an online poster supplier, colluded with a competitor not to undercut their respective prices and imposed a fine of £163,371. The former managing director of the company was found to have personally contributed to the breach and was disqualified from holding company directorships, or performing certain roles, for a period of five years.

It is worth noting that this disqualification period was achieved via a “disqualification undertaking”, voluntarily entered into by the former director. Bearing in mind the maximum disqualification period the CMA can apply for is 15 years, such an undertaking was presumably offered to avoid a more severe term, as well as liability for costs should the CMA have gone to court.

The other company involved in the breach of competition law reported it to the CMA and was subsequently granted immunity under the CMA leniency procedure.

This development indicates that the CMA is willing to impose significant personal sanctions upon individuals who are found to have contributed to breaches of competition law, even if those individuals are not subject to criminal process under the Enterprise Act 2002.

 

Gavin Costelloe

BCL