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OFT SENDING OUT MESSAGE TO BUSINESS

MICHAEL GRENFELL<br /><strong>COMPETITION LAW PARTNER AT NORTON ROSE LLP</strong><br /><br />THE huge fines imposed yesterday by the Office of Fair Trading (OFT) on UK construction companies for cartel activity send a strong signal to British business generally: the authorities will penalise anti-competitive behaviour, even in a recession. <br /><br />The fines totalling &pound;129.5m on 103 construction firms for bid rigging: pretending to submit competing bids in competitive tenders while secretly colluding among themselves. <br /><br />In recent years, fines imposed by the OFT and by the European Commission for breaches have risen sharply: last year the Commission fined building materials manufacturer Saint-Gobain &euro;896m for its part in a car glass cartel, and this year it fined chipmaker Intel a record &euro;1.06bn for abuses of dominance. Companies can also face damages claims brought by cartel victims in the courts.<br /><br />Individuals are in the frame too. The OFT is this autumn consulting on proposals to make it easier to impose disqualification orders on directors of companies which have breached competition law. <br /><br />And directors or employees who are directly involved in the most serious cartel behaviour risk personal criminal penalties, including fines and/or prison. Four British Airways executives and ex-executives are currently being prosecuted for alleged fixing of fuel surcharges.<br /><br />The authorities see no reason to let up in a recession. John Fingleton, OFT chief executive, said in January: &ldquo;When it comes to market failure, two wrongs do not make a right: creating a second market failure by restricting competition is not a sound policy response&rdquo;. Businesses are left with no choice but to comply with competition law &ndash; or face the consequences.<br />