R v GG plc and others

The House considered whether a prosecution for conspiracy to defraud could be founded on secret price‑fixing and market‑manipulating conduct alone, or whether the prosecution must identify specific aggravating dishonest or deceptive acts. The court applied the test of conspiracy to defraud as explained in Wai Yu‑Tsang and followed its recent decision in Norris v Government of the United States, holding that agreements in restraint of trade are not indictable unless accompanied by aggravating features such as misrepresentation or deception. The indictment, which alleged a conspiracy to fix prices and manipulate supply but did not particularise the specific dishonest acts relied on, was defective. The appeal was allowed and the matter remitted for the judge to consider any appropriate amendment to the indictment so as to specify the aggravating deceptive conduct alleged.

This was an appeal by defendants indicted for common law conspiracy to defraud, arising from alleged collusive arrangements between manufacturers and suppliers of generic pharmaceutical products. The prosecution alleged that between April 1998 and September 2000 the defendants dishonestly fixed and maintained prices and manipulated supply of certain penicillin‑based antibiotics and other drugs so as to induce the Department of Health (and others) to reimburse pharmacists at inflated prices under the drug tariff. The Department had brought and settled civil claims; the Serious Fraud Office brought the criminal prosecution.

The defendants applied to Pitchford J to quash the indictment on the ground that it did not disclose an offence; the judge refused. The Court of Appeal ([2007] EWCA Crim 2659) dismissed the defendants' appeal. The defendants appealed to the House of Lords.

The principal issues were (i) whether secret price‑fixing and cartel behaviour, even if dishonest by ordinary standards, is by itself sufficient for conspiracy to defraud, or whether the prosecution must rely on distinct dishonest or deceptive acts (for example, misrepresentations) to make the conduct indictable; (ii) whether the indictment and particulars gave adequate notice of the specific dishonest acts relied on.

The House held that, following the reasoning in Norris v Government of the United States, agreements in restraint of trade are not criminal unless accompanied by aggravating features such as fraud, misrepresentation, deception or other active wrongdoing. The prosecution did rely, in detailed case statements, on alleged lies, false documents and other deceptive steps, but the indictment itself did not particularise those aggravating acts and therefore was defective. The court allowed the appeal, following Norris and Wai Yu‑Tsang for the legal test, and remitted the matter to Pitchford J for any appropriate amendments to the indictment. The House noted that amendment was in principle possible and left any application to the Crown to make to the judge. The court also preserved existing reporting restrictions but directed that section 11(1) of the Criminal Justice Act 1987 should not impede the first‑named appellant from informing the stock market of the result.

Appeal allowed. The House held that secret cartel behaviour is not per se an indictable conspiracy to defraud; conspiracy to defraud requires aggravating elements such as misrepresentation or deception. Because the indictment alleged chiefly price fixing without isolating the specific deceptive acts relied on, it was defective. The matter was remitted to Pitchford J to consider any application to amend the indictment to particularise the alleged dishonest/deceptive conduct, in accordance with the Court's reasoning and the decision in Norris.

Pitchford J refused to quash the indictment (ruling dated 27 April 2007). The Court of Appeal (Moses LJ, Jack and Owen JJ) dismissed the defendants' appeal [2007] EWCA Crim 2659. The House of Lords allowed the appeal [2008] UKHL 17 and remitted the matter to Pitchford J.