On 29 February 2008, the Office of Fair Trading (OFT) upped the stakes further in its fight against cartels with the launch of its new policy of offering financial incentives of up to £100,000 for the provision  of 'inside information' which helps it take enforcement action against cartels.

Simon Williams, OFT Senior Director of Cartels and Criminal Enforcement commented: "We believe that it is in the public interest to offer financial incentives in the hope that it will encourage more people who have good information about the existence of hard core cartel activity to come forward, and in exceptional circumstances these incentives may be as high as £100,000."

This financial incentives policy is intended to elicit inside information rather than information from competitors or customers who suspect cartels may be operating (even if backed up by some evidence).  The policy will be trialled for an initial 18 month period, after which the OFT will decide whether it should become a permanent arrangement.  Financial payments or rewards will be granted at the discretion of the OFT.  In addition, it will only be paid where the information is accurate, verifiable and proves to be useful in enforcement work of the OFT.

The amount of reward will not be subject to negotiation.  Instead, it will be calculated using a set formula and the amount will depend on a number of factors including:

• The value of the information to the OFT – that is, what can it achieve from having the information;
• The amount of harm to the economy and consumers which the OFT believes the information will help put a stop to and/or has helped to disclose;
• The effort invested to give the information to the OFT; and
• The risk taken in order to give the information. 

The payment will only be made at the end of an investigation. The OFT will, however, reimburse expenses as they are incurred and attempt to give a non-binding indication of the broad range of the possible financial reward. 

The OFT is encouraging people to make an early approach. In particular, highlighting information about ongoing or recently ended cartels will be of most interest, whilst noting that it is still worth contacting the OFT about significant cartels which ended some time ago.

This new policy is an innovative development in the OFT's fight against cartel.  Only time will tell, however, whether many individuals will be enticed to come forward with inside information (for example, against their own employers) in return for discretionary financial payments. 

27 March 2008

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