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					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)
                            ---------------------
                                       Between :

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

                             ---------------------
                             ---------------------

   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
                             ---------------------
                                   Judgment
Judgment Approved by the court for handing down.                     Regina –v- Whittle, Allison & Brammar




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
Judgment Approved by the court for handing down.                       Regina –v- Whittle, Allison & Brammar




              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.
Judgment Approved by the court for handing down.                       Regina –v- Whittle, Allison & Brammar




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.
Judgment Approved by the court for handing down.                       Regina –v- Whittle, Allison & Brammar




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
Judgment Approved by the court for handing down.                     Regina –v- Whittle, Allison & Brammar




         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,
Judgment Approved by the court for handing down.                      Regina –v- Whittle, Allison & Brammar




         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 2_ 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.
Judgment Approved by the court for handing down.                       Regina –v- Whittle, Allison & Brammar




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 2_ 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.

				
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