Lawyers predict boom as OFT cracks down on cartels

ENTERPRISE ACT: legislation threatens criminal sanctions

City lawyers this week hailed imminent changes to the competition law regime, claiming they will be kept busy by rules which threaten company directors found in breach with criminal sanctions.

Next month - under the Enterprise Act 2002 - a ream of penalties will become effective, threatening company directors with criminal sanctions if they breach new anti-cartel rules.

At the same time, the Office of Fair Trading (OFT) will replace the Secretary of State for Trade and Industry as the arbiter of whether mergers should be referred to the Competition Commission because they might be anti-competitive.

Michael Grenfell, a partner at Norton Rose, said: 'The impact of the changes will be huge.

The combination of criminal penalties and the threat of disqualification for directors who are found to have breached the rules will make British business far more conscious than ever before of the need to know that they are complying with law.'

Dorothy Livingston, a partner at Herbert Smith, said the new criminal sanctions would cause complications with the order and timing of existing civil sanctions.

She added: 'The OFT is taking more people on; the busier it is - the busier we will be.'

Allen & Overy partner Mark Friend added: 'These criminal sanctions will make businesses much more cautious.

It's a fine line splitting a joint venture from a cartel.

There are lots of grey areas, and companies and their advisers will need to tread carefully.'

Mr Grenfell said the change in the decision-making process over referring mergers to the commission took politics out of the process and 'should make it more predictable for business and more law-based'.

Jeremy Fleming