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OFT puts the competition squeeze on directors

29 June 2010

In its latest push to make individuals more accountable for anti-competitive behaviour, the OFT has published its revised guidance on director disqualification orders in competition law cases, as well as signalling its intent to use these sanctions as a deterrent.

Following a lengthy consultation process, the guidance sets out how and when the OFT, as well as certain sectoral regulators, will take action where they uncover evidence that a director was responsible for, or ought to have known of, competition law breaches at a company.

The Company Directors Disqualification Act allows for directors of companies involved in a breach of competition law to be disqualified for up to 15 years, if the court considers them unfit to be concerned in the management of a company.

The final revised guidance clarifies a number of details of the policy, including:

  • 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. Cases will be chosen based on the evidence available and seriousness of the conduct.
  • The OFT will continue to offer immunity from disqualification orders for any director who co-operates with the OFT's investigation and whose company benefited from leniency in respect of the same activities.
  • There may be exceptional cases where the OFT believes it is appropriate to apply for a disqualification order where there is no prior decision or judgment on the infringement. However, as with all cases, the OFT would still have to satisfy the court that there had been an infringement of competition law.

Following feedback received during the consultation, the OFT also intends to develop guidelines for directors on their responsibilities under competition law.

Cavendish Elithorn, OFT's senior director of policy, 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.”

Click here to access the guidance document.