Office of Fair Trading sets tougher fines

Marion Dakers
THE OFFICE of Fair Trading has tripled the amount it can fine businesses found breaching competition law, the watchdog said yesterday.

The OFT can now impose a penalty of up to 30 per cent of a firm’s relevant turnover in standard cases, up from 10 per cent, as it tries to move on from a string of climbdowns over fine amounts.

In April, the OFT cut in half British Airways’ penalty for coordinating fuel surcharges from a record £121.5m, citing the airline’s cooperation and subsequent changes to competition law.

Criminal proceedings against BA executives were dropped in May 2010.

And last December, tobacco sellers including Imperial won a court battle to overturn charges totalling £225m.

OFT is currently probing competition within the UK petrol market and private healthcare.

Under the new rules, severe fines will be slapped on firms that commit “the most serious infringements of competition law, including hardcore cartel activity and the most serious abuses of a dominant position”.

OFT fines will remain below 10 per cent of a firm’s global turnover. The watchdog will also for the first time look at whether a fine is proportionate to the competition violation, and formally set out how discounts for early settlements and mitigating circumstances are applied.

Lawyers said the rule changes give welcome clarity to business, but warned that some areas remain uncertain.

“Guidance on the OFT’s approach to early resolution and settlements is overdue, and the lack of guidance should be addressed at the earliest opportunity,” said Hogan Lovells competition lawyer Christopher Hutton.