Irish executives involved in cartel activity not only face prosecution in Ireland, but also abroad, warns Claire Kellyof McCann FitzGerald
Irish executives involved in any form of cartel activity should be starting to feel distinctly uncomfortable. Last year a custodial sentence, thought to be the first in Europe for cartel activity, was imposed on an individual involved in a price-fixing cartel in the home heating oil sector in the west of Ireland.
In February a Cork businessman was given a 12-month suspended sentence and fined €30,000 for his part in a price- fixing cartel between Irish Ford motor dealers.
And it is not just the Irish courts they have to be afraid of. The increasingly global nature of business means that Irish companies and individuals could run the risk of being exposed to civil and criminal actions in a number of foreign jurisdictions, not least the US. Two recent high-profile cases against British businessmen demonstrate the determination of the US Department of Justice to crack international cartels having an affect in the US.
In January the English high court dismissed an appeal by Ian Norris, the former chief executive of Morgan Crucible plc, against a decision to extradite him to the US. It is alleged that Norris was involved in price-fixing conduct relating to carbon products produced by his company between 1989 and 2000.
Although price fixing was not criminalised in the UK until 2002, the English courts held that the alleged price-fixing conspiracy would have amounted to the common law conspiracy to defraud, thus satisfying the dual criminality rule as set out in the UK extradition legislation.
This decision follows the extradition of the so called "NatWest Three" in July of 2006. Giles Darby, David Bermingham and Gary Mulgrew were extradited to the US on charges relating to a transaction with Enron in 2000 when they were working for NatWest. The three appealed their extradition to the European Court of Human Rights but were unsuccessful. Their trial has been fixed for September.
The US places huge emphasis on cracking international cartels targeting US markets. The jurisdiction of US competition legislation captures activities which take place outside the US where activities have an "intended and substantial effect in the United States". Roughly a quarter of individual defendants in cartel cases taken by the US Department of Justice are foreign nationals.
Extradition between Ireland and the US is governed by a bilateral treaty between the two countries. Under the treaty, an extraditable offence is one that is punishable under the law of both Ireland and the US by imprisonment for a period of more than one year or by a more severe penalty.
The US has not had a high success rate extraditing suspects from Ireland. This is partly because the Irish Constitution and some of the extradition provisions provide some protections, for example human rights protections, to Irish citizens.
This does not mean that Irish business executives can be confident they will never face incarceration in a US jail. An Irish citizen, who, for whatever reason, might escape extradition from Ireland for a cartel offence, could be detained and extradited to the US, if they travelled to a third country where they were on a "Red Notice" list (an international "wanted" list maintained by Interpol). Given the UK's willingness to extradite individuals for cartel-type offences this could be an especially worrying prospect for an Irish executive landing at a UK airport.
The option of applying to the Competition Authority for immunity should not be forgotten. Similar programmes in other jurisdictions have been hugely successful in fighting cartels.
In 2005 the US deputy assistant attorney general Scott Hammond said the US Department of Justice was "turning up the heat on foreign nationals". The recent actions of the US authorities will have left executives worldwide, including here, in no doubt about the seriousness of that intent.
• Claire Kelly is a solicitor in McCann FitzGerald's Competition, Regulated Markets & EU Law Group.
