Neutral Citation Number: [2008] EWCA Crim 2560
Case No: 200803810 A2
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CRIMINAL DIVISION)
ON APPEAL FROM SOUTHWARK CROWN COURT
HIS HONOUR JUDGE RIVLIN
T20080220
Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 14/11/2008
Before :

LADY JUSTICE HALLETT
MR JUSTICE FOSKETT
and
HIS HONOUR JUDGE MORRIS QC
(Sitting as a Judge of the CACD)
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Between :

	Regina		
	- and -		
	(1) Peter Whittle		
	(2) Bryan Allison		
	(3) David Brammar		

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A Kane appeared on behalf of the Offender Whittle instructed by Hallinan, Blackburn, Gittings & Nott
A Cameron QC and A Darbishire on behalf of the Offender Brammer instructed by Peters & Peters
Mr Ellison QC and J Ledward on behalf of the Offender Allison instructed by Peters & Peters
M Lucraft QC appeared for the Prosecution

Hearing date: Wednesday 29th October 2008
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Judgment

Lady Justice Hallett : 
This is the judgment of the court. 

Introduction
1.	Section 188 of the Enterprise Act 2002 came into force on 20 June 2003 and made it a criminal offence for an individual dishonestly to agree with one or more other persons to make or implement, or to cause to be made or implemented, arrangements between at least two undertakings that are anti-competitive within the UK in one of a number of ways.  The arrangement can relate to price-fixing of a product or service, limiting or preventing the supply of a product or service, limiting or preventing the production of a product, dividing between two undertakings the supply of a product or service to a customer or customers, dividing between two undertakings customers for the supply of a product or service, or it may constitute bid-rigging.  An offence of this nature is termed a “cartel offence” and the activities set out in the statute are, we understand, frequently called “hard core activities.”
2.	The essence of the offence is the personal responsibility of an individual in arrangements that have been part of the national and international commercial framework for many years: see, eg., Ramage, The Criminal Lawyer, 2008, 5-6.  See also Norris v. United States [2008] 2 WLR 673, HL.
3.	The prosecution in this case was the first prosecution to be brought under the 2002 Act.  Against that background and given the nature of the issue that we have been required to address, we invited the Crown to assist us with some background to the legislation and certain wider issues.  We are grateful to Mr Mark Lucraft QC for producing a note about this at short notice.  We have drawn on it for the purposes of some parts of this judgment.
Background to the Enterprise Act
4.	The Enterprise Act was the result of a consultative White Paper, published in July 2001, entitled “A World Class Competition Regime”. The White Paper followed on from a joint Treasury and Department of Trade and Industry investigation into the effectiveness of existing competition legislation.  It acknowledged that the Competition Act 1998 had made changes that deterred anti-competitive behaviour, but argued that there was a strong case for the introduction of criminal penalties.
5.	The ‘executive summary’ of the White Paper highlighted a number of features of the proposed criminal sanctions:
•	the new criminal offence would need to catch price-fixing, market-sharing, and bid-rigging cartels;
•	it should target individuals who set up and maintained cartels and senior executives or directors who either condoned or encouraged the arrangement;
•	the Government intended that the Office of Fair Trading (‘OFT’) should be able to pursue a criminal case against an individual whenever a cartel is implemented or intended to be implemented in the UK and this would include cases where a case against the undertaking with which the individual is associated is pursued by the European Commission.

6.	A formal review of the proposed criminalisation of cartel activity was initiated by the Director General of Fair Trading.   The review was undertaken by Sir Anthony Hammond QC and Roy Penrose OBE QPM.   Their report was published in November 2001 and recommended that the maximum penalty for individuals convicted of a cartel offence should be five years’ imprisonment and/or unlimited fines.  They considered a number of factors to be of relevance to this recommendation:
•	The level of maximum sentences for comparable offences, for example ‘insider dealing’ and ‘obtaining property by deception’;
•	Comparable offences in Canada and Japan carry a maximum sentence of five years and the Republic of Ireland [was] proposing to increase the maximum for its cartel offence from two to five years;
•	The need to have available the powers associated with an arrestable offence as defined in PACE, which requires a maximum sentence of at least five years; and 
•	The desirability of sending a strong signal to the courts that hard core cartels are very serious offences, which can have important and deleterious economic consequences.
7.	An expression that occurs frequently in this context is ‘bid-rigging’.  Bid-rigging is, in a nutshell, an agreement or arrangement between two or more undertakings that would generally be seen to be in competition with each other as to which of their number bidding for a contract will win the bid. This will be done by fixing between them the prices to be quoted in the bidding process.  It is not difficult to see the anti-competitive nature of such an agreement or arrangement.
The penalty provided for by the Enterprise Act and elsewhere
8.	Parliament implemented the recommendation of the Hammond/Penrose report and section 190(1) of the Act provides that a person guilty of an offence under section 188 is liable— 
a)	on conviction on indictment, to imprisonment for a term not exceeding five years or to a fine, or to both; 
b)	on summary conviction, to imprisonment for a term not exceeding six months or to a fine not exceeding the statutory maximum, or to both.
9.	We have been told that number of European states also provide for individual criminal liability for cartel behaviour with potential penalties of between 3 and 6 years imprisonment and/or financial penalties.
10.	It is also of relevance to note the penalty for such an offence in the USA.  The US Sherman Antitrust Act offence carries a maximum penalty of ten years’ imprisonment and certain financial penalties.
This case and its context
11.	The three applicants in this case were the first three individuals to be convicted of offences under the Act and in respect of whom the UK Courts have been required to pass sentence.  Each was of previous good character and each pleaded guilty at the first opportunity.  Indeed their co-operation with the authorities, particularly in Whittle’s case, has gone much further than a mere acknowledgement of guilt.
12.	It is against that background that the Registrar has referred their applications for leave to appeal against sentence direct to the Full Court.
13.	In certain of the Skeleton Arguments submitted in support of these applications, it was suggested that the Court might take the opportunity to offer some general guidance on sentencing levels in cases of this nature.  That would have been difficult in any event because the Court would have had little, if any, knowledge of where to place this case in the scale of seriousness: no sufficient body of cases exists as yet to be able to make that assessment.  However, there is another significant factor in this case that prevents us from doing so to which we will refer later.
The facts
14.	On 10 June 2008 at Southwark Crown Court the applicants pleaded guilty to a cartel offence under section 188 and the following day were sentenced by His Honour Judge Geoffrey Rivlin QC, Honorary Recorder of Westminster, to terms of imprisonment of, in the cases of Whittle and Allison, 3 years and, in the case of Brammar, 30 months.  Whittle and Allison were each disqualified under s.2 Company Directors Disqualification Act 1986 from acting as a director of a limited company for 7 years and Brammar was similarly disqualified for 5 years.  They each seek to challenge the terms of imprisonment, though not the periods of disqualification.
15.	The relevant particulars of the count to which they each pleaded guilty were as follows:
Between 20 June 2003 and 2 May 2007 they dishonestly agreed together and with others to implement arrangements relating to at least two undertakings, including Dunlop (Oil and Marine) Limited and other named companies worldwide, which:
i)	directly or indirectly fixed the price for the supply by Dunlop (Oil and Marine) Limited in the United Kingdom of marine hose and ancillary equipment to others including the Ministry of Defence and the Azzawiya Oil Refining Company; and
ii)	were bid-rigging arrangements.
16.	There were four other counts on the indictment relating to particular agreements embraced within that overall allegation and they have remained on the file on the usual terms.
17.	It is necessary to say a little more about the background to the offence of which the three applicants have been convicted.  It will be appreciated from the particulars to which we have referred that the industry that lies behind the cartel in this case is the industry that manufactures and supplies marine hose and ancillary equipment. Marine hose is a rubber-based product used in the oil industry to facilitate the movement of oil between various offshore and onshore installations and, of course, is used in connection with the movement of oil to and from oil tankers.  It is a commodity that is used worldwide.
18.	Dunlop (Oil and Marine) is a company based in Grimsby and a specialist manufacturer of marine hose.  Each applicant has had a close association with that company.  Whittle joined the company in 1976 and was employed by it until in 1998 he established his own consultancy.  The consultancy effectively involved his being the co-ordinator of the cartel for which he was paid an annual fee of $50,000 by each participating company.  Brammar joined Dunlop in 1987 and in July 1993 he was promoted to sales and marketing manager.  He held that position until his employment was terminated as a result of the matters that underlie this case.  He was Whittle’s main point of contact within the company.  Allison joined Dunlop in 1977 and moved through various positions until in February 2001 he became Managing Director.  He was Brammar’s supervisor at material times.
19.	The company for very many years prior to the implementation of the Enterprise Act had been part of an international cartel that operated within that specialised marine hose market. The cartel consisted of all the principal manufacturers of marine hose worldwide which, in addition to the company, consisted of two Japanese companies, two Italian companies and a French company each of which were party to a long-standing agreement or understanding to share the market for marine hose supply between them. This involved price-fixing and bid-rigging. The cartel members met from time to time and communicated regularly by telephone, fax and e-mail, doubtless in as secretive a fashion as the circumstances demanded. By its very nature the objective of the cartel was to ensure that market shares and prices were maintained. Bids for contracts were co-ordinated in order to ensure that the available business was distributed according to the agreed market share and at prices acceptable to the cartel. 
20.	Whatever position may have obtained prior to the coming in to force of section 188, the position thereafter for any individual engaged in activities encompassed by that section, on behalf of the companies for whom they acted, would require such activities to be carried out clandestinely.  The cartel continued to operate until 1 May 2007, when United States authorities covertly recorded a meeting of members of the cartel during the annual Offshore Technology Conference in Houston, Texas and arrested those present. The applicants were included amongst those who were present and arrested.  That the meeting was intended to be clandestine is evidenced by the comment of one of those present just before the meeting commenced when he asked whether anyone had checked for listening devices.  The covert recording indicated that there was agreement that the cartel should continue so that prices were maintained internationally.  The participants left the meeting in ones and twos so as not to draw attention to the meeting.
21.	It is said that the worldwide market in marine hose and ancillary equipment is worth in the region of £60 million.  In order to put the criminal activities of the three applicants into its proper context it should be noted that the total value of UK contracts affected during the period from June 2003 to May 2007 was in the order of £17.5 million.  It should further be noted that over that period the activities of the cartel caused an uplift of about 15% over what would otherwise have been the market price under fair and open competition – in other words, an additional profit of up to £2.5 million was made for the company over that period.  That money did not, of course, go directly into the pockets of any of the applicants.  Their involvement meant that the viability of the company was sustained and as a result those who were working for it benefited indirectly and Whittle, who received fees as a consultant, also benefited indirectly. 
22.	As we have indicated, the applicants were arrested in the USA.  What they did was an offence against the US anti-competition laws and they faced prosecution there.  They made full and detailed admissions on their arrest and agreed to give full co-operation to the US Department of Justice from shortly after their arrests. They volunteered the full detail of their confessions to the OFT before an investigation began and indicated that they would, if prosecuted, plead guilty to a UK cartel offence. In July 2007, representatives of the OFT travelled to the United States and confirmed with the applicants their detailed admissions in formal interviews. 
23.	Each applicant entered into a formal plea agreement with the US authorities, which included their agreement to plead guilty in the US and to a cartel offence in the UK in the event that they were prosecuted here.  We will return to those agreements below.
24.	Having spent short periods in custody in Texas, the applicants were then required to remain in the United States for seven and a half months under strict curfew conditions (including tagging) until they entered guilty pleas.  They were then allowed to return to the UK to face prosecution here.  On their return they were seen immediately by OFT officials, charged and in due course brought before the Southwark Crown Court.
The plea agreements
25.	We have referred to the plea agreements entered into by each applicant with the US authorities.  Each was a detailed document running to many pages and, as we understand it, approved by the relevant District Court.  In essence what each applicant did, doubtless on the advice of his legal advisers, was to agree jointly with the US authorities to recommend to the US court a disposition of the case against him which included a term of imprisonment.  That term would be reduced “by one day for each day of the total term of the sentence of imprisonment imposed upon [him] following his conviction for the UK cartel offence”.  Part of the agreement was that each applicant would plead guilty to such an offence and further that he would not “seek from the UK court a sentence of imprisonment less than that” provided for in the agreement.  The agreements, it should be noted, incorporated a concession by each applicant that the relevant course of criminal conduct in the USA was “from at least as early as 1999 and continuing until as late as May 2007”.  In the UK, of course, the criminal behaviour could only begin after 20 June 2003.
26.	The sentences provided for in the respective agreements were 2½ years for Whittle, 2 years for Allison and 20 months for Brammar.  
27.	The net effect of these agreements was that provided each was sentenced in the UK to not less than the terms we have indicated, they would not be expected to return to the USA to serve any period in custody there.  (For the avoidance of doubt, the early release provisions of the UK are disregarded: the periods referred to in the agreements are the periods actually imposed by the UK court.) As UK nationals with families here, the incentive not to be returned for any period of incarceration in the USA can be well understood.  This has resulted in the submissions to us in these applications being constrained by the terms of the agreements reached.  Whilst each applicant through Counsel has invited us to reduce the terms imposed by the judge, none has invited us to reduce the terms below the period specified in the agreement into which he entered.
28.	It follows that this court has not had the benefit of the kind of argument from counsel to which it is accustomed; we emphasise this is through no fault of theirs. They were acting upon their instructions and their instructions were imposed upon them by the terms of the plea agreements. We have our doubts as to the propriety of a US prosecutor seeking to inhibit the way in which counsel represent their clients in a UK court, but having heard no argument on the subject we shall express no concluded view.
The mitigation for each applicant
29.	Because of the way we feel obliged to dispose of the applications, we do not think that there is much purpose to be served by detailing the personal mitigation of each applicant other than in a fairly general way.  As we have already indicated, each was of good character, each admitted his involvement readily, each has offered to assist the authorities further (and in Whittle’s case he has gone to the USA to give evidence in proceedings arising from these matters), each has pleaded guilty at the first opportunity, each has lost a livelihood and there will be significant financial consequences for him and his family.  On any view, whatever starting point was adopted had there been a trial, there would have been significant discounts from that sentence to reflect the matters to which we have referred.
30.	We were much pressed with the argument that this case could not conceivably be one of the worst cases of its kind. Yet, in Whittle and Allison’s cases (where each was sentenced to 3 years imprisonment), the judge must have taken the starting point as at or near the statutory maximum given the significant discounts that ought to have been applied.  Brammar’s case was not far behind on this analysis.  Given the normal and well-established principle that the maximum sentence for an offence is to be reserved for the most serious offence of that kind to come before the courts, it was submitted that the judge adopted too high a starting point. 
31.	As we have already indicated, we are not in a position to judge the full strength of that argument and its consequences in this case because of the way the submissions have been constrained by the considerations to which we have referred.  All we can say is that had the submissions not been so constrained, we may well have been persuaded to reduce the sentences further than we have been invited to do. 
32.	We have considerable misgivings about disposing of these applications in the way we intend, but, if we are to avoid injustice, we feel we have no alternative.  We consider it appropriate, on the facts of this case, to give leave to appeal in each case and substitute for the sentences imposed by the judge sentences equivalent to those reflected in each agreement namely 2½ years for Whittle, 2 years for Allison and 20 months for Brammar.  
Guidance for the future
33.	As we have already made clear, we do not intend to lay down any guidance in this case for the disposal of other cases because of the way we have felt obliged to deal with the case.  The sentences passed by the judge and those substituted by us are not to be treated as guideline sentences.
34.	By way of general guidance, we have noted the terms of the Hammond/Penrose report which suggested the following factors as being relevant to any sentence passed:
•	the gravity and nature of the offence;
•	the duration of the offence;
•	the degree of culpability of the defendant in implementing the cartel agreement;
•	the degree of culpability of the defendant in enforcing the cartel agreement;
•	whether the defendant’s conduct was contrary to guidelines laid down in a company compliance manual;
•	mitigating factors e.g. any co-operation the defendant may have provided in respect of the enquiry; whether or not the defendant was compelled to participate in the cartel under duress; whether the offence was a first offence; and any personal circumstances of the defendant which the courts may regard as a factor suggesting leniency.
35.	Whilst we would not suggest that those factors are exhaustive, they are each plainly relevant.