Chapter 7Introduction to the law of contract5 Criminalisation of cartels. Part 6 of the EA 2002
introduced a new offence for individuals who dishon-
estly engage in cartel agreements. The cartel offence
operates alongside the provision of the CA 1998 which
provides civil sanctions for undertakings that engage in
anti-competitive agreements. A person will be guilty of
an offence if he dishonestly agrees with another that
undertakings will engage in one or more of the follow-
ing cartel activities:
■price fixing;
■limitation of supply or production;
■market-sharing;
■bid-rigging.
The offence can only be committed in respect of
horizontal agreements, i.e. between undertakings at
the same level of the supply chain. It does not apply to
vertical agreements. The offence will be committed
irrespective of whether an agreement is reached or
implemented. The offence is triable either in the magis-
trates’ court or by the Crown Court. If convicted by
magistrates, the offender may be sentenced to a max-
imum of six months’ imprisonment or a fine up to the
statutory maximum. If convicted by the Crown Court,
an offender may be sentenced to a maximum of five
years’ imprisonment or an unlimited fine. Prosecutions
will normally be brought by the Serious Fraud Office,
although the OFT may also undertake prosecutions. If
an individual provides information to investigatory
authorities and co-operates with any investigation, the
OFT may issue a ‘no-action letter’ confirming that an
individual will not be prosecuted. The EA 2002 gives the
OFT a range of powers to investigate cartel offences
including the power to compel individuals to answer
questions or provide documents, to enter premises and
carry out surveillance.
6 Super-complaints. The EA 2002 introduced a new
procedure to allow certain designated consumer bodies
to make super-complaints to the OFT and other
specified regulators where ‘any feature or combination
of features of a market in the UK for goods or services is
or appears to be significantly harming the interests of
consumers’. The OFT and other regulators have up to
90 days to respond to a super-complaint. The response
must state whether action is to be taken and, if so, what
is proposed. Any of the powers of the OFT or regulators
may be used. In the case of the OFT, actions could
include an enforcement action under either competition
or consumer regulation powers, launching a market
study, market investigation reference to the CC for fur-
ther investigation or recommendations for changes in
legislation. Super-complaints will be considered in more
detail in Chapter 14.7 Disqualification of directors. The EA 2002 amended
the Company Directors Disqualification Act 1986 to
allow the OFT (and specified regulators) to apply to the
High Court for an order to disqualify directors of com-
panies which have committed breaches of the following
competition law provisions:■Chapter I prohibition of the CA 1998;
■Art 81 of the EC Treaty;
■Chapter II prohibition of the CA 1998;
■Art 82 of the EC Treaty.The maximum period of disqualification is 15 years.8 Changes to the CA 1998. The following changes took
effect from 1 April 2003:■The exclusion of designated professional rules from
the Chapter 1 prohibition of anti-competitive pro-
visions is repealed.
■Where the OFT obtains a warrant to enter premises
to undertake a CA 1998 investigation, the warrant
may authorise certain individuals, e.g. IT experts, to
accompany the OFT official. (A similar provision is
enacted in relation to the power to enter premises to
investigate the new cartel offence introduced by the
EA 2002.)Discharge of contracts
The contract may come to an end and the parties dis-
charged from their contractual obligations in four ways:
by performance, agreement, frustration and breach.PerformanceThe general rule is that the parties must carry out pre-
cisely what they agreed under their contract. If one of
the parties does something less than or different from
that which he agreed to do, he is not discharged from the
contract and, moreover, cannot sue on the contract.249