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In the first contested case of its kind, the High Court has today made a competition disqualification order in respect of a director of whose estate agency breached competition law. Following a four day trial, the court disqualified the director for a period of 7 years.
The case followed an investigation by the Competition and Markets Authority which found in 2017 that 6 estate agents in the Burnham-on-Sea area in Somerset had formed an illegal cartel by agreeing to fix a minimum commission rate of 1.5% for residential estate agency services.
Although the director was not concerned with day-to-day sales, nor attended any of the meetings with the other estate agents at which the fee fixing agreement was made, the Court held that he had been made aware of the cartel agreement and took no steps to prevent or end the estate agency’s participation, so contributing to the breach of competition law. As a result, the court concluded that his conduct fell below the standards of probity and competence appropriate for persons fit to be directors of companies, making him unfit to be involved in the management of a company.
The CMA obtained the power to disqualify directors for anti-competitive conduct in 2003 when the Enterprise Act 2002 came into force, but the first director disqualification was not secured until December 2016 by way of a consensual undertaking. There have now been 17 disqualification undertakings given. The High Court’s first ruling has been much anticipated, and confirms that the Court is likely to treat such cases as serious, with the result that directors may be disqualified for longer periods than the CMA has so far accepted by way of undertaking.
The Court’s decision is also notable for its finding that although Article 8 ECHR is engaged by the making of such an order, there is no obligation on the Court to consider the proportionality of making an order in the individual case, once it has concluded that the conduct of the director makes him unfit. That issue may be the subject of further argument in future cases, but the Court held that on its factual findings in the present case, the making of an order was nonetheless proportionate.
The full decision is available here.
Robert Palmer QC appeared for the director.