Newsroom

Three imprisoned in first OFT criminal prosecution for bid rigging

72/08    11 June 2008

Three UK businessmen were today sentenced to imprisonment for between two and a half to three years for cartel offences. All three were also disqualified from acting as company directors for periods of between five and seven years. These are the first ever convictions for a cartel offence since criminal prosecution powers were given to the OFT under the Enterprise Act.
 
Peter Whittle, David Brammar and Bryan Allison pleaded guilty at Southwark Crown Court to dishonestly participating in a cartel to allocate markets and customers, restrict supplies, fix prices and rig bids for the supply of marine hose and ancillary equipment in the UK. Marine hose is used by the oil and defence industries for transporting oil between tankers and storage facilities.

Allison and Brammar were respectively the Managing Director and Sales Director of Dunlop Oil and Marine Limited, a manufacturer of marine hose based in Grimsby. Whittle traded as an independent consultant but in practice was employed full-time by the parties to the cartel to co-ordinate their activities around the world.

Officers of the OFT executed search warrants at Dunlop's offices and Whittle's home in May 2007 and seized extensive and compelling evidence of the cartel arrangements. At the same time, in an operation coordinated between the OFT and the US Department of Justice, the defendants were arrested in Houston, Texas, where a cartel meeting had taken place the previous day and was covertly recorded by the US authorities. A number of other suspects were also arrested by US authorities.

Whittle, Brammar and Allison were allowed to return to the UK and face charges as part of a plea agreement with the US DoJ. They returned to the UK in December 2007 and were arrested at Heathrow Airport by the Metropolitan Police.

The charges relate to the period between 20 June 2003, when the cartel offence came into force under the Enterprise Act, and 2 May 2007 when the men were arrested in the United States and the cartel arrangements brought to an end. The cartel was global in its scope and involved all the major manufacturers of marine hose worldwide.

John Fingleton, OFT Chief Executive, said :

'This was a highly sophisticated and well-organised cartel, involving all the major manufacturers of marine hose worldwide over many years, where the cartel members secretly employed a full-time coordinator to allocate contracts and fix prices.

This first criminal prosecution sends a clear message to individuals and companies about the seriousness with which UK law views cartel behaviour. The OFT will continue to investigate and prosecute cartels vigorously, with the aim of ensuring strong competition within the UK economy.'

NOTES

1. The defendants were each convicted of an offence under the Enterprise Act 2002. Under section 188 of the Act it is an offence for individuals dishonestly to agree that businesses will engage in certain types of cartel activity, namely price-fixing, limiting supply or production, market-sharing and bid-rigging. The businesses involved were Dunlop Oil and Marine Ltd, Bridgestone Corporation, Yokohama Rubber Company Limited, Parker ITR S.r.l., Manuli Rubber Industries SPA and Trelleborg Industrie S.A.

2. This cartel behaviour almost certainly resulted in higher prices for customers in the UK. These included the Ministry of Defence.

3.The sentences imposed on each defendant were:
Peter Whittle – three years imprisonment and seven years director disqualification,
David Brammar – two and a half years imprisonment and five years director disqualification, and
Bryan Allison – three years imprisonment, seven years director disqualification and £25,000 costs.

Confiscation proceedings and costs for David Brammar and Peter Whittle will be heard on 1 July 2008.

4. The search warrants were granted by the High Court under s.194 of the Enterprise Act 2002 and were executed on 2 May 2007 (see press release 70/07). The subsequent investigation involved the gathering of evidence from a large number of sources and interviews of the defendants both in the US and in the UK.

5. The defendants were arrested by officers of the Metropolitan Police at Heathrow on 18 December 2007 and were charged later that day (see press release 177/07).

6. Under the terms of the US plea agreement, the defendants have pleaded guilty to violations of US antitrust law. The US plea agreement applies only to the proceedings in the US and does not affect the rights of the defendants under UK law.

7. A separate investigation is being carried out by the European Commission under Article 81 of the EC Treaty, which is directed at the companies concerned. The European Commission announced on 5 May 2008 that it had issued a Statement of Objections to a number of companies.

8. Anyone who has information about cartels is asked to call the cartels hotline on 0800 085 1664 or email cartelshotline@oft.gsi.gov.uk. The OFT has a policy under which it will pay financial incentives of up to £100,000 in return for information which helps it to identify and take action against illegal cartels. Rewards will be paid only where information is accurate, verifiable and proves to be useful in the OFT's anti-cartel enforcement work, and will be calculated according to a set formula and not subject to negotiation. For further information please see the Rewards for information about cartels page on this website.

9. The OFT also operates a leniency programme for companies and other individuals who wish to confess to cartel conduct. For further information please see the Confess your cartel to the OFT page on this website.

Back to:2008