Office of Fair Trading
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OFT considers wider use of director disqualification powers

The OFT today published proposed changes to its guidance on director disqualification orders in competition law cases.

Download 
Competition disqualification orders consultation (pdf 173 kb).

A company director can be disqualified from acting as a director for up to 15 years if his or her company is involved in a breach of competition law and the court considers he/ she is unfit to be involved in the management of a company as a result.

The OFT's guidance currently indicates that the OFT or a regulator would focus on cases where a director was directly involved in a breach of competition law, such as cartel activity. Under the proposed changes, the guidance would indicate that the OFT or a regulator would also focus on cases where a director should have taken steps to prevent a breach or where a director ought to have known of a breach but did not.

Today's consultation also considers a number of other changes to the detail of the OFT's guidance. The consultation period will end on 20 November 2009.

Ali Nikpay, OFT Senior Director of Policy, said:

'We know that the prospect of being disqualified as a director is one of the most powerful deterrents to anti-competitive behaviour. Our proposals aim to increase the incentives on company directors to take responsibility for competition law compliance and tackle behaviour that harms competition.'

NOTES

1. Under the Directors Disqualification Act 1986 the OFT and certain sectoral regulators have the power to apply for Competition Disqualification Orders in cases involving an infringement of the Chapter I or Chapter II prohibition of the Competition Act 1998, or Article 81 or Article 82 of the EC Treaty.

2. The court must award a Competition Disqualification Order against a person who was a director of a company which has infringed competition law if it considers his/ her conduct makes him/ her unfit to be involved in the management of a company.

3. Competition Disqualification Orders can be made only against a director of a company. A director for these purposes includes any person occupying the position of director, regardless of his or her title.

4. During the period for which a person is disqualified, it is a criminal offence for him/ her to be a director of a company, act as a receiver of a company's property, be concerned in any way, directly or indirectly, in the promotion, formation or management of a company, or act as an insolvency practitioner.

5. The OFT may accept a Competition Disqualification Undertaking from a person instead of applying for a Competition Disqualification Order. The breach of a Competition Disqualification Undertaking has the same consequences as the breach of a Competition Disqualification Order.