First disqualification for breaching competition law

What happened?

Daniel Aston, formerly a Director of Trod Limited, has agreed to not act as a director of a company or in any way be concerned in the promotion, formation or management of a company for five years.

Mr Ashton gave his undertaking to the Competition and Markets Authority (CMA) after it was found that he caused Trod to enter into a price fixing agreement relating to the sale of posters and frames sold by Trod and a competitor on the Amazon Marketplace.

What did the case involve?

Trod was a wholesaler and retailer of licensed sport and entertainment posters and frames, as was GB Eye Limited (GBE), trading as GB Posters.

Trod and GBE resold the posters and frames through the Amazon Marketplace online retail platform. In March 2011, Mr Aston caused Trod to agree with GBE that Trod and GBE would not undercut each other’s prices on the Amazon Marketplace in circumstances where either Trod or GBE was the lowest price seller.

Trod and GBE implemented the agreement through the use of automated repricing software which was configured to give effect to the agreement.

Daniel Aston caused Trod to implement the agreement between March 2011 and July 2015 and took steps to ensure that GBE implemented the agreement.

GBE reported the cartel to the CMA who then investigated the matter. The CMA decided in August 2016 that Trod had breached competition law by entering into and giving effect to the price-fixing arrangement and fined Trod £163,371 (including a 20% discount for an admission of breach of competition law and co-operation with the CMA’s investigation).

GBE did not receive a fine for breaching competition law as it reported the cartel to the CMA and co-operated with the CMA’s investigation.

What did the CMA do?

The CMA proposed to apply to the Court for a Company Disqualification Order (CDO). The Court will make a CDO if it is satisfied that the director’s company has breached United Kingdom or EU competition law and the director’s behaviour in connection with the breach makes him unfit to be concerned in the management of a company.

In this case, the CMA accepted a disqualification undertaking from Mr Aston.

The undertaking has the same legal effect as a CDO, thus making the disqualification of Mr Aston the first use by the CMA of the CDO in the United Kingdom.

What does this mean for me?

The CMA has undertaken a programme of “awareness raising” to ensure that small and medium-sized enterprises are properly advised on competition law.

The CMA Strategic Assessment of November 2014 identified online markets and the digital economy as an area of activity that presented risks to free and fair competition and challenges to competition law enforcement.

Delivering effective enforcement of competition law is the first of the CMA’s five strategic goals. The CMA’s ambition to deliver a visibly higher level of robust enforcement cases will lead the CMA to concentrate on cases that resonate with the most number of businesses – typically small and medium-sized enterprises.

The decision of the CMA to pursue a CDO against a director of a company infringing competition law gives notice that sanctions will be imposed by the CMA not only on the company but also on the directors concerned.

Companies, particularly SMEs, must ensure that they operate robust competition compliance policies to maximise the opportunity for the company to identify cartel activity and take advantage of the CMA’s leniency policy, which can protect both the company and its directors from civil and criminal sanctions for breaches of competition law.

How can Ward Hadaway help?

Our lawyers have wide-ranging experience and expertise in assisting clients in competition law matters. We support our clients in taking pro-active compliance measures as well as managing the impact of either the subject of investigations by competition authorities or recovering having suffered loss and damage arising as a result of anti-competitive activity.

For more details on how we can help, please get in touch.