Competition And Markets Authority v Martin

Under section 9A of the Company Directors Disqualification Act 1986, the court must make a disqualification order where the statutory competition-law conditions and unfitness are established. Unfitness is assessed cumulatively by asking whether the matters relied upon amount to misconduct, whether they justify a finding of unfitness, and, if so, what period is appropriate.

A director need not participate directly in an anti-competitive agreement. Knowledge of the proposed or existing conduct, coupled with a failure to take reasonable steps to prevent or end it, may amount to misconduct and contribute to the company’s breach. Article 8 does not require a proportionality assessment before the mandatory order: proportionality is addressed through the length of disqualification and the statutory power to grant leave to act.

The Competition and Markets Authority sought the disqualification of Michael Christopher Martin under section 9A of the Company Directors Disqualification Act 1986. The claim followed the CMA’s finding that companies of which Mr Martin was a director had participated in a cartel fixing minimum estate-agency commissions.

Mr Martin accepted the underlying competition-law infringement but denied knowledge or involvement. The central issues were whether his conduct as a director contributed to the breach or otherwise established unfitness, whether section 9A had to be read as containing an additional Article 8 proportionality test, and, if disqualification followed, the appropriate period.

1. Statutory conditions and misconduct. The court found that the First Condition was satisfied because companies of which Mr Martin was a director had breached competition law. The Second Condition was also satisfied. Mr Martin knew, or had sufficient information to know, that local agents were seeking an agreement to fix minimum fees. He failed to inform the board, prevent attendance at the relevant meeting, or stop the agreement’s implementation. His conduct therefore contributed to the breach and fell below the standards of probity and competence expected of fit directors. [2020] EWHC 1751 (Ch) [96]-[100].
2. Assessment of unfitness. The court applied the cumulative approach in Re Grayan Building Services Ltd and the three-stage process identified in Re Structured Concrete Ltd: whether the matters amounted to misconduct, whether they justified unfitness, and what period of disqualification should result. The absence of direct participation in the cartel did not prevent a finding of responsibility.
3. Article 8 and proportionality. A disqualification order interferes with business and professional life and reputation, so Article 8 was engaged. The statutory purposes—public protection, deterrence, and maintaining or improving corporate-management standards—were legitimate aims. The proportionality principles in Bank Mellat v HM Treasury (No. 2) applied.
4. Mandatory effect of section 9A. The word “must” retained its mandatory meaning when read with sections 1(1) and 17 of the CDDA. It was unnecessary and impractical to insert a further proportionality test before the order. Proportionality was secured through the court’s discretion over the period of disqualification and the power to grant leave to act under section 17. The Article 8 argument therefore failed. [2020] EWHC 1751 (Ch) [102]-[110].
5. Outcome. Mr Martin was disqualified for seven years. The case was treated as a serious middle-bracket case. Costs followed the event, with an interim payment of £100,000 ordered on account. [2020] EWHC 1751 (Ch) [116]-[123].