GG Plc, R v (No.2)

A price-fixing cartel does not become an indictable conspiracy to defraud merely because it is secret or its participants take steps to preserve the deception inherent in the cartel. A proposed indictment must identify sufficiently distinct aggravating conduct, such as lies or positive deception, which elevates the arrangement into criminal fraud.

Under Indictments Act 1915, a judge may refuse an amendment where the proposed particulars leave an impermissibly obscure line for the jury between cartel activity and a separate fraudulent agreement, or where the evidence does not support the alleged aggravating conduct. A ruling on such an amendment is appealable under Criminal Justice Act 1987 where it raises a question of law relating to the case.

The prosecution sought leave to appeal against Pitchford J’s refusal, on 11 July 2008, to permit amendment of an indictment alleging conspiracies to defraud arising from price-fixing in the markets for penicillin-based antibiotics and for Warfarin and Marevan.

The original indictment alleged dishonest price-fixing and manipulation of supply. The House of Lords had held in R v GG plc and others [2008] UKHL 17 that it did not isolate and charge specific aggravating elements capable of elevating price-fixing into an indictable conspiracy to defraud, and remitted the matter for any amendment application.

The proposed amended counts pleaded concealment, alleged false explanations, and misrepresentations connected with the drug-tariff system. The central issues were whether the Court of Appeal had jurisdiction and whether the judge had misdirected himself in refusing amendment.

1. The prosecution’s application for leave to appeal was refused. The ruling on the proposed amendment was capable of appeal under section 9(11) of the Criminal Justice Act 1987. Following R v H [2007] 2 AC 270, a matter dealt with at a preparatory hearing is appealable if it involves a question of law relating to the case. The amendment ruling fell within that category to the extent that it raised such a question.

2. Pitchford J had not misdirected himself about the distinction between cartel price-fixing and conspiracy to defraud. The House of Lords had made clear that price-fixing, even when accompanied by secretive and deceptive conduct, was not by itself sufficient. There had to be pleaded aggravating elements, consisting of lies or positive deception, that formed a criminally fraudulent agreement.

3. The judge was entitled to conclude that the proposed allegation of disseminating slightly varied prices did not supply a sufficiently distinct positive deception. The difficulty of separating such conduct from the secrecy and deception inherent in cartel activity meant that no clear boundary could properly be left to a jury.

4. He was also entitled to find insufficient evidence that alleged false reasons for shortages or price rises formed part of the conspiracy to defraud rather than being an adjunct to the cartel. That was an evidential assessment for the judge and raised no question of law.

5. The submission that the special features of the drug-tariff market created implied representations capable of supplying the necessary aggravation could not succeed. The House of Lords had not distinguished that market from the approach in Norris v The Government of the United States of America and Others [2008] UKHL 16, and had identified lies and positive deception as the basis on which the prosecution could proceed.

1. Court of Appeal (Criminal Division): Refused the prosecution leave to appeal against Pitchford J’s refusal to permit amendment of the indictment.

2. Pitchford J: On 11 July 2008, refused the prosecution leave to amend the indictment on the ground that amendment would be unjust.

3. House of Lords: In R v GG plc and others [2008] UKHL 17, allowed the respondents’ appeal, held the original indictment defective, and remitted the matter for consideration of any amendment application.

4. Court of Appeal (Criminal Division): Earlier upheld the ruling refusing to quash the original indictment; no citation is stated in the judgment.