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Competition Appeal Tribunal upholds OFT decision in price fixing case

153/06    1 November 2006

The Competition Appeal Tribunal (CAT) yesterday found in favour of the OFT in a case relating to price fixing and market sharing in the market for the supply of stock check pads in the UK.

The CAT unanimously dismissed the appeal by Achilles Paper Group Limited (Achilles) and found that the penalty of £127,848.75 that the OFT had imposed on Achilles was appropriate. The CAT also clarified the OFT's margin of appreciation in setting financial penalties at a level that will operate as an effective deterrent.

The appeal concerned the OFT's infringement Decision of March 2006 which found that two businesses, Bemrose Group Limited and its subsidiary BemroseBooth Limited together with Achilles, had colluded to fix prices and share the market for the supply of stock check pads in the UK.

Financial penalties were imposed on all of the parties involved in the infringement. However, Bemrose Group Limited and BemroseBooth Limited had their penalty reduced by 100 per cent for providing the OFT with information which uncovered the cartel and led to a successful finding of an infringement. The penalty imposed on Achilles was reduced by 50 per cent as a result of providing the OFT with evidence of the cartel.

In June 2006, Achilles appealed to the CAT in regard to the amount of the penalty and argued that the company's financial position should have led to the imposition of a lower penalty by the OFT. The CAT rejected this argument and dismissed the appeal.

Vincent Smith, Senior Director for Competition at the OFT, said:

'The OFT welcomes the CAT's judgment. Price fixing and market sharing cartels are among the most serious breaches of competition law and substantially harm customers and consumers. This judgment confirms the need for penalties to operate as an effective deterrent and underlines the OFT's determination to punish and deter cartel behaviour.'

NOTES

1. Stock check pads are paper note pads with tear-off sheets that are used by staff in restaurants and similar establishments to record customers' orders.

2. The infringement involved the stock check pads businesses owned by BemroseBooth Limited and its parent company Bemrose Group Limited and by Achilles Paper Group Limited. The first stock check pads business was owned for a short period at the beginning of the infringement by Broadway Incentives and its parent company 4imprint Group PLC before being sold to BemroseBooth Limited and its parent company Bemrose Group Limited. The other stock check pads business was owned throughout the period of the infringement by Achilles Paper Group Limited.

3. The Competition Act 1998 prohibits agreements, practices and conduct that have a damaging effect on competition in the UK or an anti-competitive purpose. The Chapter I prohibition covers agreements and concerted practices that have the object or effect of preventing, restricting or distorting competition in the UK or a part thereof.

4. Cartels are a particularly damaging form of anti-competitive behaviour. Their purpose is to increase prices and as a result when implemented they cause harm to the consumers of the goods or services concerned. Any undertaking found to have engaged in cartel activity is likely to face a severe financial penalty.

5. Penalties for breaching the Competition Act can amount to up to 10 per cent of an undertaking's worldwide turnover in its last business year.

6. The OFT can offer leniency to undertakings that come forward with information about a cartel in which they are involved and cooperate fully with the OFT's investigation. Total immunity from financial penalty is available to the first member of the cartel to come forward with relevant information before the OFT has commenced an investigation. Significant reductions in penalty of up to 100 per cent are available where the undertaking is the first to come forward with information but does so after the OFT has commenced an investigation. Reductions of up to 50 per cent are available where the undertaking (a) is not the first to come forward with information but does so before the OFT has given written notice of its proposal to make a decision that the Chapter I prohibition has been infringed or (b) would have qualified for total immunity or a reduction in penalty of up to 100 per cent had it not taken steps to coerce another undertaking to take part in the cartel activity.

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