R v GG plc and others (Appellants) and others and others (Appellants) (On Appeal from the Court of Appeal (Criminal Division))

A secret price-fixing agreement does not, without more, constitute a common law conspiracy to defraud. Criminal liability requires an aggravating element such as fraud, misrepresentation, violence, intimidation or inducing a breach of contract.

Where deception is alleged, the indictment must identify the specific aggravating conduct said to make the agreement criminal. Extensive allegations elsewhere in the prosecution material do not cure an indictment whose particulars charge price fixing as if secrecy and associated deception made it inherently dishonest. A defective indictment may nevertheless be amended by the trial judge where suitable particulars can properly formulate the alleged offence.

Five pharmaceutical companies and nine directors or employees were prosecuted for allegedly conspiring to defraud the Secretary of State for Health and others. They were said to have fixed drug prices, manipulated supply, concealed their collusion and induced the Department of Health to reimburse pharmacists at artificially inflated tariff prices.

Pitchford J refused to quash the indictment. The Court of Appeal, comprising Moses LJ, Jack J and Owen J, dismissed the defendants' appeal in [2007] EWCA Crim 2659. The defendants appealed to the House of Lords.

The central issue was whether secret and deceptive price fixing was itself sufficient to found a prosecution for conspiracy to defraud, or whether the indictment had to charge a specific aggravating element such as fraudulent misrepresentation or positive deception.

Appeal allowed unanimously; matter remitted to Pitchford J. The Appellate Committee comprised Lord Bingham of Cornhill, Lord Rodger of Earlsferry, Lord Carswell, Lord Brown of Eaton-under-Heywood and Lord Neuberger of Abbotsbury. It delivered a single considered opinion.

1. Per the Committee, the common law offence requires a dishonest agreement to bring about a state of affairs which the conspirators realise will or may deceive the victim into acting, or failing to act, so that the victim suffers economic loss or places an economic interest at risk. The actus reus is the original agreement. The trial court must therefore focus on the agreement's content and what the parties contemplated when making it.

2. Per the Committee, following Norris v Government of the United States [2008] UKHL 16, an agreement in restraint of trade is not actionable or indictable merely because it is secret or contrary to the public interest. Conspiracy to defraud requires an aggravating feature such as fraud, misrepresentation, violence, intimidation or inducing a breach of contract. Deceptive practices and false representations may supply the necessary feature.

3. Per the Committee, the prosecution case statement gave ample notice of alleged lies, false documents, active misrepresentations and other positive deception. Those allegations were capable of supporting a properly framed charge of conspiracy to defraud. The indictment did not, however, isolate and charge those aggravating elements. Its thrust was that price fixing became inherently dishonest, and therefore criminal, when accompanied by secrecy and deception. That premise was legally incorrect.

4. Per the Committee, particulars must make clear the case which the defence must meet. The detailed case statement could not make satisfactory an indictment which charged the offence on the wrong legal basis. The indictment was therefore defective as drawn.

5. Per the Committee, the defect was in principle capable of amendment. Any application to amend was to be determined by Pitchford J after hearing argument. The arguments concerning section 35(2) of the Restrictive Trade Practices Act 1976, article 81 of the EC Treaty, legal certainty and self-incrimination did not require determination.

The reporting restrictions remained in force, subject to an order disapplying section 11(1) of the Criminal Justice Act 1987 so far as necessary for the first appellant to inform the stock market of the result.

1. House of Lords: The appeal was allowed unanimously. The indictment was held defective, and the matter was remitted to Pitchford J to determine any application to amend it: [2008] UKHL 17.
2. Court of Appeal (Criminal Division): Moses LJ, Jack J and Owen J dismissed the defendants' appeal from the preliminary ruling: [2007] EWCA Crim 2659.
3. Crown Court: Pitchford J refused to quash the indictment and ruled on 27 April 2007 that the prosecution should proceed.