tag:blogger.com,1999:blog-14508701097014826482024-03-08T17:59:25.841+00:00Business Behaving BadlyA blog about corporate and white collar crime and other corporate wrongdoing. Within that sphere, this blog features competition law, jurisprudence, penology, tort, and IP; as well as culture, news and more. Legal views on business behaving badly.Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.comBlogger36125tag:blogger.com,1999:blog-1450870109701482648.post-44961201912178177002014-03-22T13:26:00.001+00:002014-03-22T13:26:19.651+00:00Deferred Prosecution Agreements<div class="MsoNormal" style="background-color: white; background-position: initial initial; background-repeat: initial initial; margin-bottom: 0.0001pt;">
<span style="color: #222222; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">Deferred
Prosecution Agreements have been covered by a sizeable number of firms for
example <a href="http://www.slaughterandmay.com/media/2081756/swapping-the-courtroom-for-the-boardroom-the-introduction-of-deferred-prosecution-agreements-in-the-uk.pdf">all</a>
<a href="http://www.eversheds.com/global/en/what/articles/index.page?ArticleID=en/Financial_institutions/FI_Definitive_Guidelines_and_code_of_conduct_Deferred_Prosecution_Agreements">of</a>
<a href="http://www.cliffordchance.com/briefings/2014/02/light_at_the_endofthetunnelukprosecutor.html">these</a>
<a href="http://www.freshfields.com/uploadedFiles/SiteWide/Knowledge/00337_%20PG_DR_INT_ARB_Overveiw%20of%20DPA%20Process%20Briefing_V1.pdf">hyperlinks</a>
<a href="http://corkerbinning.com/blog/when-will-the-courts-approve-a-deferred-prosecution-agreement-with-no-admissions-of-guilt/#.Uy2OI_l_tIE">link</a>
<a href="http://www.wilmerhale.com/pages/publicationsandnewsdetail.aspx?NewsPubId=10737423449">to</a>
<a href="http://www.sjberwin.com/insights/2014/03/04/us-style-deferred-prosecution-agreements-arrive-in-the-uk">some</a>
<a href="http://www.nortonrosefulbright.com/knowledge/publications/113060/the-sfo-response-to-consultation-on-dpas-key-features">summary</a>
<a href="http://www.skadden.com/insights/uk-issues-guidelines-deferred-prosecution-agreements">or</a>
<a href="http://www.whitecase.com/alerts/022014/leap-of-faith-deferred-prosecution-agreements-corporate-sentencing-guidelines-uk/#.Uy2O7Pl_tIE">another</a>.
The scheme itself is relatively straightforward. A DPA is a negotiated
agreement whereby a company agrees to abide by punitive terms in return for the
suspension (and ultimate termination) of criminal proceedings. There is no
criminal conviction. The terms will generally include a fine, set at a level “broadly
comparable” to that on a guilty plea. They are now available to prosecutors,
and there is Code of guidance for them. <o:p></o:p></span></div>
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<br /></div>
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<span style="color: #222222; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">There are
two things that I am interested in. One is a practitioner’s concern, the other
very much an academic one.<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background-color: white; background-position: initial initial; background-repeat: initial initial; margin-bottom: 0.0001pt;">
<span style="color: #222222; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">Practically
speaking, the issue of “privilege” is not well dealt with in the Code.
(Privilege is the (fundamental) right, in the legal proceedings, not to
divulge certain information, usually and especially communications with
lawyers.) The Code only says that the law on privilege is unchanged. However,
the Director of the Serious Fraud Office has <a href="http://www.sfo.gov.uk/about-us/our-views/director's-speeches/speeches-2014/ethical-business-conduct-an-enforcement-perspective.aspx">said
publically</a> (and erroneously) that “The Code… lists factors which militate…
towards a DPA. These include… a waiver of privilege”. Such a factor is
decidedly not listed in the Code, and it is worrying to <i>expect</i> corporates
to waive privilege. Particularly as corporates will be worried about what
happens to the privileged material if and when DPA negotiations break down.<o:p></o:p></span></div>
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<br /></div>
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<span style="color: #222222; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">But my
real interest is how DPAs play into the differential treatment of corporates
and individuals. DPAs are a negotiable way out of criminal proceedings. If
companies are allowed them, why not individuals? In fact, why are corporates
allowed them at all? Is it a good thing that companies can get them, or are the
authorities, as the esteemed <a href="http://www.fcpaprofessor.com/the-u-k-enters-the-facade-era">FCPA
professor blog puts it</a>, really just saying that it is too hard to prove
criminal conduct, they cannot be bothered, and they’ll satisfy themselves with
a quasi-criminal compromise?<o:p></o:p></span></div>
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<br /></div>
<div class="MsoNormal" style="background-color: white; background-position: initial initial; background-repeat: initial initial; margin-bottom: 0.0001pt;">
<span style="color: #222222; mso-bidi-font-family: Arial; mso-fareast-font-family: "Times New Roman"; mso-fareast-language: EN-GB;">Moreover,
the DPA scheme looks to use corporate DPAs as a tool to secure individuals’
convictions. Once a DPA is agreed with a corporate, the prosecutor can merrily
prosecute the executives involved. There may be a moral basis for this, but it
is not explained or codified. The best explanation, I think, would be the idea
that criminal bad behaviour really only makes sense from an individualistic
point of view. People do bad things; companies only do bad things when their
people do bad things. Those people are the correct objects of scorn. But that
can only take us so far, because if it is true, why bother with DPAs at all? Ought
we then just have the companies cooperate with the punishment of the
individuals?<o:p></o:p></span></div>
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Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-90105685641635726202014-03-22T13:02:00.000+00:002014-03-22T13:02:01.256+00:00Complex Cases<div class="MsoNormal">
The press, in recent years, has made much of the unfairness
of HMRC pursuing small companies for small tax bills, whilst cutting deals with
large avoiders. A similar complaint may
be made about criminal prosecution. I
have seen, in a magistrates court, a case brought against a man carrying a
novelty-belt-buckle-cum-knuckleduster on the Eurostar, at a time when criminal
prosecutions for large scale financial misconduct seem scarce and unsuccessful.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The problem on both counts is two-fold; complexity and
(relatedly) outside option. A large scale tax avoider, or long running fraud,
are doing <i>clever</i> and <i>complicated </i>things. In any case, they
are <i>vast</i>. A fraud running for 6 years
will necessarily involve more documentation, money movements and
representations than a mugging or a bank heist. To decide whether the actions
were illegal is more difficult, and involves more work – for an investigator or
a prosecutor. All the while, its subject
will be taking legal advice from top end lawyers with a long billing leash. (A
big corporate would, in all likelihood, outspend the Serious Fraud Office in
any given proceedings.)<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
An investigator, then, has to decide whether to take that gamble.
If he is wrong, he has spent a large amount of money and time achieving
nothing. The knuckleduster chap got off
– at a small cost to the taxpayer. The
Tchenguiz litigation, a failed SFO case relating to the Icelandic banking
crisis, is a serious loss to the public purse. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
Outside options are the state’s way of bypassing this
risk. Cutting a deal with Fyodor plc
saves litigation costs and risks; even if the recovery isn’t as good as it may
be. In a simpler case, there is no reason to cut a deal – a hairdresser who
doesn’t pay VAT is a stonewall court win, why negotiate? Deferred Prosecution
Agreements look to be a way to bring an element of that negotiation to the
criminal table. But, as we will see, there are problems with those too. <o:p></o:p></div>
Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-53599832885671088232013-12-01T14:46:00.000+00:002013-12-01T14:46:20.575+00:00Of Gingerbread Lattes<div class="MsoNormal">
Picking your battles is a very good idea. Which arguments do
you need to have, which points are worth dropping, and what is the ultimate
outcome that you need to achieve?<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
This is what I was thinking about after I had a stand up
argument with a Starbucks barista. (Barista has always struck me as a very
impressive sounding name for someone who foams milk.) I had ordered a latte
with gingerbread syrup and whipped cream (I know, not exactly a cutting edge
hipster coffee choice). He put it through his till as a gingerbread latte, and
tried to charge me accordingly.<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
Now, the problem is that a gingerbread latte costs more than
the sum of its parts. If you take an ordinary latte and add supplements for
syrup and cream it costs 20p less (for a tall latte) than a “gingerbread latte”.
I pointed this out to barista-man. He told me I was trying to be clever. I would like to think that when I try and be
clever, gingerbread lattes are not key players.
We had an argument and eventually, reluctantly, he worked some magic
such that a till, that hitherto was completely incapable of putting through my
order as I’d ordered it, was finally able to deal with the complex concept that
I had shared with its operator.<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
I don’t think I was being clever; I think Starbucks was
being cheeky. There is a good rule of thumb in business ethics that your
<a href="http://businessethicsblog.com/2012/01/13/consumer-savvy-must-consumers-understand-your-business-model/">customer should understand</a> what’s going on – that you, as a business, can
explain frankly and openly how you operate and make money. To have a surcharge attached
to a <i>name</i> is pretty hard to explain. <br /><br /><o:p></o:p></div>
<br />
<div class="MsoNormal">
I know Starbucks have a pretty poor corporate governance
profile, and the Battle of the Gingerbread Latte is probably not the key one.
But it really does not help Starbucks’ image. <o:p></o:p></div>
Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-1944381978204141692013-09-13T16:45:00.000+01:002013-09-13T16:45:00.860+01:00Being a City lawyer: Jurisprudence<div class="MsoNormal">
Recently, I was having lunch with some other trainees. Something came up in the course of a pretty normal, non-legal
conversation which reminded me of something vaguely jurisprudential – Hart’s
primary and secondary laws, Finnis’ central case of law, or something. And so I
said as much. And one fellow said <i>“Oh,
don’t bring jurisprudence into it”. <br /></i><o:p></o:p></div>
<div class="MsoNormal">
<i><br /></i></div>
<div class="MsoNormal">
Now, I can see that lunch breaks are not always the time to
delve too deeply into tricky philosophical riddles. I can see that no one likes
to have Rawls quoted at them when they were just trying to decide whether to
have a pudding or not. But I was a little worried that just the very mention of
legal philosophy was enough to exasperate a colleague.<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
Is jurisprudence relevant to my day job? Not immediately. Proof
reading contracts doesn't need Dworkin (thank goodness), research memos don’t
need me to identify rules of recognition. But I like to think that
jurisprudence is part of the fundamental grounding of legal practice. To be au
fait with some of the theory of the common law, or how and why principles of
certainty and fairness should be balanced, or what judges do when they
interpret contracts are relevant in a high-level way. <br /><br /><o:p></o:p></div>
<div class="MsoNormal">
*metaphor alert*<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
You can probably build an engine with some basic mechanical
knowledge. You can understand (and build) it better by knowing more of the
physics and chemistry behind it. Equally, any lawyer will know what a contract
does, but ought he not think about why they matter, how they’re justified, and
what role a court has in them?<br />
<br />
Given that jurisprudence might be a ‘silent prologue’<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>
to aspects of legal practice, maybe a
lunch break is a good time to give it some air time. <o:p></o:p></div>
<br />
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<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>
Ronald Dworkin, in "Law's Empire"<o:p></o:p></div>
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Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-45331442998552828112013-06-15T18:13:00.002+01:002013-06-15T18:13:41.626+01:00Parent Company Liability (nothing to do with vicarious liability)<div class="MsoNormal">
<span style="font-family: inherit;">Dear old Mr. Droog works for Fyodor Ltd in the 1960s. Fyodor
Ltd was a bit bad, and exposed Mr. Droog to batemanium, a chemical that caused
Mr. Droog to go blind in his later life. By the time Mr. Droog suffers his
loss, realises the cause, and wants to sue, Fyodor Ltd is history. It was wound
up. Can Mr. Droog sue the extant parent company, Dostoevsky Plc? <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">By Chandler v Cape [<span style="background-color: white; color: #444444; line-height: 17.77777862548828px;">2012] EWCA Civ 525</span>, he can. The Court of Appeal agreed
with the judge at first instance, and upheld the imposition of parent company
liability. This was because the parent had assumed responsibility for the
safety of its subsidiary’s employees.</span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">What I find interesting about this case is the fact that it
has <i>no relation whatsoever</i> with
vicarious liability. Arden LJ made passing reference to the fact that the first
instance judge had not found liability on “any form of vicarious liability”.
That’s the only mention it gets, and no vicarious liability cases were cited in
argument. Google “chandler cape vicarious”, and you get the square root of
hee-haw.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">Given that it was accepted by the parent in Chandler v Cape
that the subsidiary would have been liable, it seems surprising that there was
no argument at all regarding whether the parent ought to be liable vicariously.
If vicarious liability were to apply to parents and subsidiaries, the parental
liability would be a slam-dunk success.
Instead, counsel for the claimant argued for the direct liability of the
parent. It is worth noting that counsel’s approach was breaking new legal
ground, in that the idea of ‘parent company liability’ is new. Although the
approach taken is a far less iconoclastic approach than arguing for vicarious
liability. All the court had to do was accept that the normal rules of
assumption of responsibility in the tort of negligence could apply to the parent company, and did indeed apply on the facts of the case. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">I think the reason why vicarious liability was left to one
side can be explained in this quote: <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">“69 I would
emphatically reject any suggestion that this court is in any way concerned with
what is usually referred to as piercing the corporate veil. A subsidiary and
its company are separate entities. There is no imposition or assumption of
responsibility [read, liability] by reason only that a company is the parent
company of another company.”<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">This concern is fair enough. If we are to have “limited
liability” companies, and the bundles of legal risk are supposed to be capable of being parcelled up and
apportioned amongst a corporate group, vicarious liability might be the wrong
approach. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">But let's apply this logic to
natural beings. Why should it be that we (as individuals or companies) be
liable on one set of terms for the acts of natural persons we <i>employ </i>(v</span>icarious liability is expressly fault free)<span style="font-family: inherit;"> but a different set for the
actions of legal persons we </span><i style="font-family: inherit;">own </i><span style="font-family: inherit;">(where normal tort rules apply)</span><span style="font-family: inherit;">? </span><span style="font-family: inherit;"> </span><span style="font-family: inherit;">Is the commercial uncertainty caused by a
raggedy corporate veil a better reason to keep liability separate than the
moral oddness of being responsible for the vulgar, deliberate and secret acts
of your employees?</span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<br />
<div class="MsoNormal">
<span style="font-family: inherit;">Put another way, if the correct way to decide if a parent is liable to its
subsidiaries employees, or Borstal guards are liable to terrorised </span><span style="font-family: inherit; font-size: 11pt; line-height: 115%;">residents<span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-size: 11pt; line-height: 115%;"><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title="">[1]</a></span></span><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><!--[endif]--></a></span></span><span style="font-family: inherit;"> is through the application of a general tortious test that incorporates an element of fairness, why is that different for companies and employees? Given that vicarious liability is dogged by uncertain theoretical foundations, ought it ignore the more stable reasoning afforded by the general law of negligence? Abandoning vicarious liability in favour of the general test would replace strict liability with fault based liability, and import a measure of fairness. Vicarious liability cases could be </span>re-theorised to fit that model. The role of control would be more central. And in those cases where the employer is truly blame free, they would not be saddled with a tort liability they could have done nothing to avoid. </div>
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<div id="ftn1">
<div class="MsoFootnoteText">
<o:p></o:p></div>
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<div class="MsoNormal">
<span style="font-size: x-small;"><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;">[1]</span></span></span></a> I’m
referring to the Dorset Yacht Co Ltd v Home Office [1970] AC 1004 </span><o:p></o:p></div>
Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-57239714840983917252013-06-04T16:15:00.000+01:002013-06-04T16:15:06.897+01:00Minimum Alcohol Pricing in Scotland 3: A Decision<div class="MsoNormal">
I have blogged about minimum pricing before; both on its
possible illegality, and on the SWA’s approach. Now a <a href="http://www.scotcourts.gov.uk/opinions/2013CSOH70.html">Scottish court has heldthat there is no problem in law with the proposals</a>, and so it would appear
minimum pricing will become a reality. (Except that other EU states are
challenging the measure at a higher level, as<a href="http://www.guardian.co.uk/society/2013/may/03/scottish-court-battle-minimum-alcohol-pricing"> reported here</a>).<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I don’t propose to go through all the aspects of the
judgment, which is here, at any length. I am more interested in the free
movement of goods (FMG) issue, which I discussed before. This was, as I
understand, the main argument of the SWA. Other arguments, including ones based
on the Scotland/England Acts of Union hardly passed a smell-test. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
On the FMG point, it was held that the Scottish measure did
impinge on free movement, but was justified on the basis of t<span style="background: white;">he protection of the life and
health of humans (Art 36 TFEU). This is a treaty-enshrined basis that allows
derogation from strict free movement of goods. Lord Doherty held that there was a
legitimate aim, and that the measure was proportionate to that aim.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
[55] There is overwhelming
evidence of grave health, social, economic and public order consequences caused
in Scotland as a result of excessive alcohol consumption. Such consumption by
harmful and hazardous drinkers is particularly concerning, and is harmful to
those drinkers and to others. On the basis of the material placed before me I
am in no doubt that reduction of alcohol consumption generally, and reduction
of consumption by hazardous and harmful drinkers in particular, are both
legitimate aims in terms of Article 36.<o:p></o:p></div>
<div class="MsoNormal">
…<o:p></o:p></div>
<div class="MsoNormal">
[64] If … alternative measures
would be just as effective as minimum pricing in achieving the legitimate aims
being pursued, the contention that they would be less of an obstacle to freedom
of movement of goods would appear, at least<span class="apple-converted-space"> </span><i>prima
facie,</i><span class="apple-converted-space"> </span>to be logical and have
force… <o:p></o:p></div>
<div class="MsoNormal">
…<o:p></o:p></div>
<div class="MsoNormal">
[73] The petitioners [argue] that
excise duty on alcohol can be increased as much as is necessary to raise the
prices of cheaper products to desired levels. Such an approach would not
affect, or target, drinkers of cheaper products only: but it could subject them
to price increases of at least the same order as under minimum pricing. … In
those circumstances [an excise duty] would be no less effective in reducing the
consumption of cheap alcohol or the consumption of alcohol by hazardous and
harmful drinkers.<o:p></o:p></div>
<div class="MsoNormal">
…<o:p></o:p></div>
<div class="MsoNormal">
[77] <b>That argument would have been more persuasive if the legitimate aims of
the measures had been to reduce consumption, including consumption by hazardous
and harmful drinkers, to the maximum extent possible regardless of possible
economic or social consequences</b>. However, those are not the aims of the
measures. Rather, the relevant aims are [ [54][<b>striking] a reasonable balance</b> between, on the one hand, public
he<span style="font-family: inherit;">alth and social benefits, and, on the other, intervention in the market … The
Parliament and the Ministers recognised that many people have "a balanced,
positive and enjoyable relationship with alcohol": such drinkers are not
the target of the measures. The major problem is excessive consumption of cheap
alcohol. The measures seek to address this by increasing the price of such
alcohol.]<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">This is proportionality doing what proportionality does
worst. Proportionality, as a concept, is primarily found in EU law. If measure
is tied to a legitimate aim, and goes no further than necessary to achieve that
aim, it is proportionate. On this occasion, that has the net result of blowing
an FMG argument out the water.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<span style="line-height: 115%;"><span style="font-family: inherit;">But note the judicial sleight of hand. We have <i>defined </i>the aim of the measure such that
there is much less scope for an alternative, less-FMG-infringing measure. An
excise duty would raise all prices, and that is <i>not the aim</i>. The <i>aim</i> is
to increase prices of cheaper products only. But it is precisely the increase
at the lower end that means there is an FMG issue – a foreign drinks company
now can’t compete on pricing. By defining the aim of the measure with such
tight reference to the measure made the proportionality hurdle a much lower one
for the Scottish Ministers to clear. </span>
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--></span>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-61579903326617789622013-05-27T22:04:00.001+01:002013-05-27T22:04:17.728+01:00Being a City lawyer: Pro Bono<div class="MsoNormal">
<span style="font-family: inherit;">Here’s the thing, kid. Corporate
lawyers aren’t into charity work. Or at least, they aren’t as part of their
day-to-day. Some of them are excellent people who do marvellous charitable
things, but it can’t be allowed to get in the way of the job. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">I’ve been to a couple of graduate
recruitment events, and students ask about the extent of pro bono work at my
firm. Truthfully, if you want to be helping people with landlord disputes,
benefits and immigration issues, don’t come to the City. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;">City firms often have a pro bono
commitment. You can do a set number of hours on business time of pro bono work,
take days off to do charitable things, give ad hoc advice at drop-in legal
clinics. The theory behind this is a bit odd, I think. It is supposed to show
clients that the firm is committed to doing good deeds, and this is supposed to
make clients want to use the firm. Frankly, everyone knows that both the firm
and the client exist to make money, and therefore, to my mind, the idea of
impressing clients with these efforts is backward. If a firm spends firm time
on charity, it basically needs to charge more to cover those costs (or, certainly,
it will make sure any pro bono work achieves a net positive financial result).
The client is then (in theory) paying more so that the firm can spend it (given
time = money) on someone else. Cut out the middleman, chaps. Let the clients
give direct.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: inherit;"><br /></span></div>
<span style="font-size: 11pt; line-height: 115%;"><span style="font-family: inherit;">The problem too is that City firms aren’t really
cut out to give the pro bono advice that is most needed. Commercial property
lawyers don’t know about residential tenancy rules. Those who advise on complex
international construction disputes aren’t really your first choice consumer
litigation advisers. Maybe they’d be better providing services (books,
facilities, trainee resource) to those lawyers who can do those things.</span></span>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-14130984412786243202013-02-26T00:37:00.000+00:002013-02-26T00:37:35.267+00:00Ronald Dworkin, Tom Bingham and the Rule of Law<br />
<div class="MsoNormal">
Modern jurisprudence has lost one of its <a href="http://www.guardian.co.uk/law/2013/feb/14/ronald-dworkin">most renowned intellectual heavyweights</a>. Ronald Dworkin was the legal philosopher who really challenged
HLA Hart’s “Concept of Law”, and in so doing, shaped many theoretical debates
from the 1970s onwards. <o:p></o:p></div>
<div class="MsoNormal">
As an undergraduate, I did not subscribe to Dworkin’s
beliefs. I must confess that it may well have been largely due to my inability
to really grasp his arguments, and nail down how his views changed over the
years. This is not a flaw in his writing; I am not sure I could promise I read
his books with anything like the requisite diligence. As a full time working
chap, I was delighted to come across <a href="http://www.law.yale.edu/documents/pdf/Faculty/Shapiro_Hart_Dworkin_Debate.pdf">this piece</a>, which outlines the Hart v
Dworkin debate; although I would caution that I think Shapiro’s proselytising
at the end may go so far as to his view <i>on
</i>what<i> </i>the debate is, not just his
view <i>in </i>the debate.<o:p></o:p></div>
<div class="MsoNormal">
Dworkin believed moral principles were part of the law and
any theory of law had to account for them. Sometimes law runs out, and morality
plugs the gaps. I hope I’ve not simplified too brutally.<o:p></o:p></div>
<div class="MsoNormal">
I prefer, where possible, to keep law and morals separate
(not in my day job, of course). As I’ve discussed before, what is legal and
what is good form are not one and the same. I do not know how helpful it is to
get bogged down in typographical issues of what can therefore be ‘law’ or (as
Finnis would have it) the central case of law. I prefer to identify law, and
then decide if it’s any good.<o:p></o:p></div>
<div class="MsoNormal">
Which reminds me of a book by another legal superstar, Lord
Bingham. In The Rule of Law, Bingham argues for a ‘thick’ ‘Rule of Law’. The
rule of law, or the principle of legality, is a nebulous concept that many different
authors have ascribed many different meanings. At its core, it’s about all
people being subject to clear rules, applied by an independent judiciary. In
this thin meaning, it is a sword that can cut both ways. It is feasible to have
malicious, discriminatory laws that conform to the definition<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>.
Bingham argues for a ‘thick’ definition, that includes the substantive protection
of Human Rights. <o:p></o:p></div>
<div class="MsoNormal">
For all that I disagree, I have sympathy with his view.
Bingham had such an enormous impact on human rights protection in the UK, and
if I were him, I’d include ‘human rights protection’ as part of my definition
of ‘breakfast cereal’, never mind ‘the rule of law’. My point remains, however,
that as the bare legality principle can be conceptually distinguished from the
substantive protection of human rights, it should be. In legal theory, I don’t
want catch-all handles. The more elements to a definition, the more utopian and
inapplicable the definition becomes. <o:p></o:p></div>
<div>
<!--[if !supportFootnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="ftn1">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>
And this is what Joseph Raz would tell you the Rule of Law is. <o:p></o:p></div>
</div>
</div>
Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-55091955891240862212012-12-02T23:13:00.001+00:002012-12-02T23:13:42.507+00:00My Reaction to Starbucks' Reaction to the Public Reaction to Starbucks not paying tax.<br />
<div class="MsoNormal">
It is a hard thing to live a moral life. I have vegan
friends, who would insist that the delight I take in [eating] a melting slab of
pork belly is depraved. There are difficulties in both utilitarianism and
deontology, the two major competing schools of moral philosophy. And what
happens when morals run out, and you have to choose between ‘fighting the
Nazis’ and ‘saving your grandmother’<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>?
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
And there’s always the temptation of a gingerbread latte in
a red cup, a sweet elixir that the fourth wise man brought Jesus 2000 years
ago. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The Starbucks story is well known. Through internal
corporate group transfers and payments, Starbucks can manipulate where profits
end up. Usually, they end up in countries with lower rates of corporation tax,
so that the Starbucks family can cream off the biggest chunk of money that it
can. This is a standard sort of ‘tax avoidance’, a perfectly legal way of
arranging your finances. But as we know, what <a href="http://businessbehavingbadly.blogspot.co.uk/2012/01/crime-and-punishment-1-crime.html">is
legal is not always what is moral</a>.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Another time, I will look at two ways a state can deal with
tax avoidance in law - retrospective law
making and a ‘general anti-avoidance rule’ (or GAAR). <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
For present purposes, I am more interested in the corporate
communications of Starbucks. To me, they look stupendously ill advised.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The <a href="http://starbucks.co.uk/blog/setting-the-record-straight-on-starbucks-uk-taxes-and-profitability/1241">initial
Starbucks reaction</a> was hilarious. In it, Starbucks claimed to be acting not
only to the letter of the law, but in its spirit as well. The ‘spirit’ of
taxation, in my view, is that those who benefit from society contribute to it.
Not that you move your money away to low tax jurisdictions which are not realistically your key business centres so you can benefit handsomely Starbucks also
claimed to pay £160m in the UK in tax, including in National Insurance,
business rates and VAT. Forgive me, but isn’t VAT a consumer tax, paid at the
very end of the supply chain? I paid some VAT for Starbucks; give <i>me</i> a medal.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
A month or so on, and it’s <a href="http://www.guardian.co.uk/business/2012/dec/02/starbucks-review-uk-tax-arrangement">now</a>
<a href="http://www.bbc.co.uk/news/business-20573208">reported</a> that Starbucks
has acknowledged <span style="background: white; mso-bidi-font-family: Arial;">the ”feedback
from our customers and employees, and understand that to maintain and further
build public trust we need to do more</span>”.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="background: white; mso-bidi-font-family: Arial;">I
like many things about this statement. One, that it’s taken a month or so, and
public feedback, for Starbucks to see that their approach sticks in the craw of
your average UK taxpayer. Jimmy Carr could have told them tax avoidance isn’t
popular. Second, is that it reeks of the corporate sentiment of maintaining
customer loyalty, when really what is needed is an appreciation that paying tax
is a good thing for society. Capitalism does not necessitate that you forget
the world outside your direct business chain. Finally, the ‘need to do more’.
No, the need to do the right thing. It’s not more. It’s standard. <o:p></o:p></span></div>
<div>
<!--[if !supportFootnotes]--><br clear="all" />
<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="ftn1">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a> I
have no idea if this is a common example. I’ve lovingly borrowed it from John
Finnis. <o:p></o:p></div>
</div>
</div>
Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-5160820575531168482012-11-19T00:09:00.001+00:002012-11-19T00:09:22.817+00:00Phone Hacking Charges: What do we need to prove?<br />
<div class="MsoNormal">
It’s been widely reported that
eight people related to News International are facing charges relating to the
phone hacking scandal. This post details what the prosecution will have to
prove to secure a conviction. The charges are for conspiracy to commit an
offence under section one of the <a href="http://www.legislation.gov.uk/ukpga/2000/23/section/1">Regulation of Investigatory Powers Act 2000</a>,
regarding ‘unlawful interception of communications’. <br /><br /><o:p></o:p></div>
<div class="MsoNormal">
For a defendant to be convicted,
they will need to be:<o:p></o:p></div>
<div class="MsoListParagraphCxSpFirst" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->1.<span style="font-size: 7pt;">
</span><!--[endif]-->A <i>person</i><o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->2.<span style="font-size: 7pt;">
</span><!--[endif]-->Who <i>agreed</i><o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->3.<span style="font-size: 7pt;">
</span><!--[endif]-->With <i>another
person </i>to<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->4.<span style="font-size: 7pt;">
</span><!--[endif]--><i>Intentionally</i>
and <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]--><i>5.<span style="font-size: 7pt; font-style: normal;"> </span></i><!--[endif]--><i>Without lawful authority<o:p></o:p></i></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->6.<span style="font-size: 7pt;">
</span><!--[endif]--><i>Intercept</i><o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->7.<span style="font-size: 7pt;">
</span><!--[endif]-->,In the <i>UK</i>,<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->8.<span style="font-size: 7pt;">
</span><!--[endif]-->A <i>communication</i>
<o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->9.<span style="font-size: 7pt;">
</span><!--[endif]-->Made by a <i>private
telecommunication system</i><o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->10.<span style="font-size: 7pt;">
</span><!--[endif]-->In the <i>course
of its transmission</i> <o:p></o:p></div>
<div class="MsoListParagraphCxSpMiddle" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->11.<span style="font-size: 7pt;">
</span><!--[endif]--><i>Without
having the right</i> to control the operation or the use of the system; and<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<!--[if !supportLists]-->12.<span style="font-size: 7pt;">
</span><!--[endif]--><i>Without</i>
<i>consent</i> to make the interception<o:p></o:p></div>
<div class="MsoListParagraphCxSpLast" style="margin-left: 39.3pt; mso-add-space: auto; mso-list: l0 level1 lfo1; tab-stops: 264.75pt; text-indent: -18.0pt;">
<br /></div>
<div class="legclearfix" style="background: white; line-height: 13.5pt; margin-bottom: 6.0pt; margin-left: 0cm; margin-right: 0cm; margin-top: 0cm;">
<span class="legaddition"><span style="font-family: inherit;">The first three tests are the
‘conspiracy’ requirements. By the <a href="http://www.legislation.gov.uk/ukpga/1977/45">Criminal Law Act 1977</a>, a person guilty of
conspiracy to commit crime X is liable to be punished as harshly as a person
who actually committed crime X. A conviction here could result in a prison
sentence of up to two years. </span></span><span style="font-family: Calibri, sans-serif; font-size: 11pt;"><o:p></o:p></span></div>
<div class="MsoNormal">
Crib sheets like these are useful things. They let you see
where argument in court really happens. No one will argue in this case that
they aren’t a person, aren’t in the UK, or that a victim asked them to tap
phones. I imagine some or all of the defendants will argue that they had nothing to do with
phone tapping, that it happened where they were working but they didn’t know about it and weren’t involved. <br /><br /><o:p></o:p></div>
<div class="MsoNormal">
It’s interesting that the prosecutors have gone for the
‘inchoate’ offence of conspiracy. Inchoate offences are the step behind the
actual commission of an offence. <i>Attempted</i>
murder or <i>conspiracy </i>to defraud. The
attraction for a prosecutor is that you don’t need to show that the thing
happened. Here, the actual phone tapping will be excellent evidence that the
defendants conspired to do it, but prosecutors don’t need to show that Rebekah
Brooks sat down one day and hacked phones. <br /><br /><o:p></o:p></div>
<div class="MsoNormal">
Inchoate offences are interesting because it makes us wonder
about why things are bad. Attempted murder can result in the same sentence as
murder, because why should an incompetent or unlucky assailant get off lightly?
But, the reality is, a conspirator need not necessarily have caused any harm. When we decide what crimes are, should we be more concerned with harm caused or the intrinsic naughtiness of an action? If one pushes the boundaries of conspiracy too far, you can end in the
realms of fantasists. Which is exactly what <a href="http://www.bbc.co.uk/news/world-us-canada-20087742">this policeman is
arguing</a> – he says he never actually intended to do the thing (my step 2). <o:p></o:p></div>
Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-54486300363362889012012-11-10T13:12:00.000+00:002012-11-10T13:12:05.307+00:00Unfair or Unread Standard Terms<br />
<div class="MsoNormal">
I’ve not long moved into a flat. To get to stay in the flat,
I signed a lease agreement. Because I’m a man who likes some law, I read my
lease. One of the terms was that I have to regularly iron my net curtains for
the duration of my stay. <br /><br /><o:p></o:p></div>
<div class="MsoNormal">
I doubt very much that anyone will notice if I do, or do
not, iron the net curtains. In fact, there are no net curtains. Or indeed
curtains. So I’m almost certain no one will mind that I don’t iron the non-net not-curtains.
The terms in the lease were standard terms, used by our estate agent, and
likely others, when they rent out residential property for short periods to
normal, average people.<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
These standard term agreements abound. You buy a plane
ticket, update iTunes, sign up to phone contracts, change bank accounts, and
all the time you’re ticking boxes or signing forms saying you agree to terms
and conditions. And you’ve not read them. Easyjet have tickets, I have money,
and I can’t negotiate with them. Their terms will have to do, and so I’ll tick
the box.<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
There is statutory protection for us little Droogs when
dealing with Fyodor Ltd’s standard terms. Landlord and tenant law is a peculiar
area that I won’t delve into here. But the main protection for consumers
dealing on standard terms with companies come from two pieces of legislation. <br /><br /><o:p></o:p></div>
<div class="MsoNormal">
The Unfair Contract Terms Act deals with clauses that <i>exclude</i> or <i>restrict</i> liability under the contract, but applies to all
contracts. The Unfair Terms in Consumer Contracts Regulation deals only with
standard form consumer contracts, but with all types of clauses in them. If a
clause is unfair, then it doesn't bind the consumer. The UTCCR can’t be used to
challenge clauses dealing with the price in the contract, or the key subject
matter. That why the (<a href="http://news.bbc.co.uk/1/hi/business/8376906.stm">controversial</a>)
banks charges case in failed<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;"><span style="font-size: xx-small;">[1]</span></span></span><!--[endif]--></span></a>.
The charges on letters sent by banks form part of the price you pay for their
services. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
But I’d like to think that another bit of law could apply.
When you sign a contract it is immaterial if you’ve read it<span style="font-size: xx-small;"><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn2" name="_ftnref2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;">[2]</span></span><!--[endif]--></span></a>.</span>
In cases where there is no signature, then terms must be reasonably brought to
the attention of the party accepting those terms<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn3" name="_ftnref3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;"><span style="font-size: xx-small;">[3]</span></span></span><!--[endif]--></span></a>.
But there is doctrine of ‘non est factum’. It allows those who are faultlessly
unable to read a document from being bound to its terms by their signature.
Traditionally, that’s blindness and illness. Further, the key case of <i>Saunders</i><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn4" name="_ftnref4" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;"><span style="font-size: xx-small;">[4]</span></span></span><!--[endif]--></span></a>
says that the doctrine would only be available to such a person when they were
held to a contract <i>radically different</i>
from that which they thought they were entering into, and would not be
available to a <i>careless</i> person. So
the capable but lazy man who misses the small point in the standard terms but
signs anyway decidedly cannot plea non est factum<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn5" name="_ftnref5" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;"><span style="font-size: xx-small;">[5]</span></span></span><!--[endif]--></span></a>.
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
I can’t help but think that the old cases lay down
principles that apply at a very different time. Now, it is simply not plausible
that anyone (including the Supreme Court Justices) read standard terms every
time they book a flight. Are terms buried in reams of small print reasonably
brought to our attention before we tick the box? Should the principle behind
non est factum apply? I think there is, therefore, an argument to say you should
only be taken to agree to standard terms that you could have realistically
actually read. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
It’s hard to say how big an issue this is. It’s not like Dostoevsky
Ltd.’s terms give them an interest in your house, or permission to enslave your
first-born. And unfair terms law prevents them introducing too onerous charges
and exclusions. But no obligations should be imposed on anyone lightly. And
contract law is generally about the agreement of intentions. So why should Mr
Droog be bound by stuff he could not reasonably be expected to put his mind to?
<o:p></o:p></div>
<div>
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<hr align="left" size="1" width="33%" />
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<div id="ftn1">
<div class="MsoFootnoteText">
<span style="font-size: x-small;"><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;">[1]</span></span><!--[endif]--></span></a> [2010]
1 A.C. 696<o:p></o:p></span></div>
</div>
<div id="ftn2">
<div class="MsoFootnoteText">
<span style="font-size: x-small;"><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;">[2]</span></span><!--[endif]--></span></a> L'Estrange
v F Graucob Ltd [1934] 2 KB 394<o:p></o:p></span></div>
</div>
<div id="ftn3">
<div class="MsoFootnoteText">
<span style="font-size: x-small;"><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref3" name="_ftn3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;">[3]</span></span><!--[endif]--></span></a> Parker
v South Eastern Railway Company [1877] 2 CPD 416<o:p></o:p></span></div>
</div>
<div id="ftn4">
<div class="MsoFootnoteText">
<span style="font-size: x-small;"><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref4" name="_ftn4" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;">[4]</span></span><!--[endif]--></span></a> [1971]
A.C. 1004<o:p></o:p></span></div>
</div>
<div id="ftn5">
<div class="MsoFootnoteText">
<span style="font-size: x-small;"><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref5" name="_ftn5" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 115%;">[5]</span></span><!--[endif]--></span></a>
Non est factum means not my deed. </span><o:p></o:p></div>
</div>
</div>
Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-22304343231934822832012-10-06T18:15:00.001+01:002012-10-06T18:15:22.507+01:00What is Insider Trading?<br />
<div class="MsoNormal">
<a href="http://www.guardian.co.uk/business/2012/oct/01/four-charged-insider-dealing-operation-tabernula">This
story</a> broke on Monday 1<sup>st</sup> October 2012. The linked article talks
of intrigue involving senior bankers, stock brokers, foreign businessmen and an
investigative operation codenamed ‘Tabernula’. A <a href="http://latinlexicon.org/definition.php?p1=2058409&p2=t&p3=2">tabernula</a>,
apparently, is a small booth. Welcome to the small booth, in the back of a City
tavern, wreathed in cigar smoke, and to the murky world of insider dealing.<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
Insider dealing is bad. But what is it? Quintessentially, it
is the trading of shares based on secret ‘inside’ information. If I work for
Fyodor plc, and I know that Fyodor is about to announce huge profits, or a
potential acquisition, or the resignation of its charismatic chairperson, and I
trade my shares on the basis of that knowledge, I am guilty of insider dealing.
The regime exists to create parity in share trading – how can Mr Droog hope to
compete in the stock markets with me (and others like me) when we know so much
more than he does?<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
Interestingly, insider dealing is subject to two parallel
sets of rules. One is criminal (and is in <a href="http://www.legislation.gov.uk/ukpga/1993/36/section/52">s52 of the
Criminal Justice Act 1993</a>), and one is civil (set out in <a href="http://www.legislation.gov.uk/ukpga/2000/8/section/118">s118 FSMA</a>).<o:p></o:p></div>
<div class="MsoNormal">
This is a curious situation. The rules that these contain
are, whilst not identical, substantially similar. Yet, a breach of s52 is a
criminal offence, punishable by up to 7 years in jail; whereas a breach of s118
is only punishable by a fine. <br /><br /><o:p></o:p></div>
<div class="MsoNormal">
So why the difference? As I’ve <a href="http://businessbehavingbadly.blogspot.co.uk/2012/01/crime-and-punishment-1-crime.html">mentioned before</a>, it is up to
us as a society what we consider ‘criminal’, and what we regulate in other
ways. Here, we have a rather pragmatic fudge. Insider dealing is a dishonest
way of me taking money out of Mr Droog’s pockets. It is pretty much the same
sort of thing as theft, and should be criminal. But, as the linked article
implies, catching and prosecuting insiders who deal is hard. Shares are traded
often, and their price necessarily fluctuates. How to spot the insider needle in
the haystack of trades? And, critically, how to prove that to the criminal
‘beyond reasonable doubt’ standard? <br /><br />This gets to a point key to ‘white collar crime’. It is often hard to spot, hard to investigate and hard to prove. To do so costs money. The resulting rarity of enforcement means the <i><a href="http://businessbehavingbadly.blogspot.co.uk/2012/06/maths-of-deterrence.html">deterrent</a></i> effect of punishment is unlikely to be high. High-rollers don’t think they’ll get caught. That’s where the civil regime comes in. A lower standard
(‘on balance of probabilities’) allows for more successful enforcement, but the
trade-off (‘scuse the pun) is that we can’t punish the insiders so harshly.</div>
<div class="MsoNormal">
<o:p></o:p></div>
<br />Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-68734376458263178252012-09-25T23:59:00.000+01:002012-09-25T23:59:27.299+01:00Vicarious Liability 1: What it is.<div class="MsoNormal">
People prefer to sue companies over individuals if they can.
Companies generally have more money – Tesco has more cash kicking around than
its staff on the shop floor. Sometimes, Mr Droog can sue Fyodor Plc because
Fyodor Plc did something wrong in its corporate capacity. It has breached some
obligation that it had.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
An alternative route that might be available is opened up by
the concept of ‘vicarious liability’. This is where an employee<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>
(Alex) does something that causes loss
to Mr Droog. If Alex is an employee of Fyodor, and does the act that causes
loss in the scope of his employment, then Fyodor is ‘vicariously’ liable. Mr
Droog can sue Fyodor, even though Fyodor has itself done nothing wrong. This is
no-fault, ‘strict’ liability. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The above paragraph raises a lot of questions.Who counts as
an employee for the purposes of vicarious liability? What if someone is an
employee of more than one employer? What on earth is the ‘scope of employment’<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn2" name="_ftnref2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[2]</span></span><!--[endif]--></span></a>?
What link between the work and the act is required? Lawyers would reckon that a
London law firm wouldn’t be liable for one of its trainees negligently damaging a
fence in Banff on a stag do, but a dry-cleaners will be liable for one of its
staff nicking a mink stole at work<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn3" name="_ftnref3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[3]</span></span><!--[endif]--></span></a>.
<br />
<br />
Critically, I wonder about the justification of vicarious liability at all.
Generally, it is seen as a way of putting economic risk on those who can afford
(through insurance) to bear it; and allow tort victims a claim against a
defendant who can pay out<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn4" name="_ftnref4" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[4]</span></span><!--[endif]--></span></a>.
<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
However, that rationale is far from satisfactory. Tort comes
from the Latin 'tortum' meaning wrong. It is about the claims of a wronged
party against a wrongdoer. In vicarious liability, we have claims between the
wronged and an innocent party who can afford to pay. But only sometimes.
Vicarious liability transforms tort into a most imperfect system of insurance. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This legal imperfection leads to real life moral issues.
Currently, vicarious liability is being considered by the Supreme Court in a
case relating to child abuse by a Catholic organisation<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn5" name="_ftnref5" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[5]</span></span><!--[endif]--></span></a>.
There have been quite a few such cases in recent years. These cases lead to
discussions of whether priests are employees and whether child abuse can be in
the course of being a priest. Which is all horrible in itself.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Recent decisions seem to favour Diocesan liability. That may
be welcomed – we might think that <i>someone</i>
should pay. But what of cases where Mr Droog was molested by his uncle in his
own home, not a priest in a church (or, a house master in a boarding school)?
In the former case, Mr Droog has no claim against any rich organisation. He
will unlikely recover any damages. In the latter cases, he will (remember, the
church or the school has done <i>nothing
wrong)</i>. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Which makes it appear that it is better to be molested by a
priest than your uncle. Our law should not let me type that. <o:p></o:p></div>
<div>
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<div id="ftn1">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a> I
use this term loosely here – it is not
synonymous with employee in an employment law sense.<o:p></o:p></div>
</div>
<div id="ftn2">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[2]</span></span><!--[endif]--></span></a>
Another time, I’ll look at these two (linked) issues of employee and scope of
employment. <o:p></o:p></div>
</div>
<div id="ftn3">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref3" name="_ftn3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[3]</span></span><!--[endif]--></span></a> Morris
v C W Martin & Sons Ltd [1966] 1 QB 716<o:p></o:p></div>
</div>
<div id="ftn4">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref4" name="_ftn4" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[4]</span></span><!--[endif]--></span></a>
Another time, I’ll run through the different grounds considered as
justifications. <o:p></o:p></div>
</div>
<div id="ftn5">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref5" name="_ftn5" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[5]</span></span><!--[endif]--></span></a>
The Institute of Christian Brothers case. <o:p></o:p></div>
</div>
</div>
<br />Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-3141830869215654802012-09-14T01:00:00.001+01:002012-09-14T01:00:57.861+01:00Letter of Complaint: Thames Water<span style="font-family: Arial, Helvetica, sans-serif;">Below is a slightly redacted version of a letter I emailed to the Chief Exec of Thames Water. It worked: I got an apology, a partial refund (for my wasted time), and a contact at Thames Water I can call directly about any future account.<br /><br />Lesson: normal customer complaint procedures are too slow and frustrating. The head honchos of big organisations often have staff to deal with emails like these.</span><br />
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span>
<br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;"><span style="background-color: white; background-position: initial initial; background-repeat: initial initial; line-height: 115%;">Dear Sir,</span><o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;"><span style="background-color: white; background-position: initial initial; background-repeat: initial initial; line-height: 115%;"><br /></span></span></div>
<div class="MsoNormal" style="background: white;">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">My name is
[Alex]. My customer reference number is [6655321]. I pay my water bill at
a fixed rate. </span></span><span style="background-color: white; font-family: Arial, Helvetica, sans-serif; line-height: 115%;">Critically, I
pay my water bill. I have done so in strictest accordance with the advice I've
been given by your employees, whom I've had cause to deal with on your premium
rate phone services.</span></div>
<div class="MsoNormal" style="background: white;">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">
<br />
My tenancy expires in the middle of the year for which your company tried to
charge me (Date 2012; the bill running between Month 2012 and 2013). As such,
the bills I got were for amounts that I was never going to pay (anything post
Date was irrelevant). I explained that to every single advisor I spoke to at
every time I called to deal with Thames Water.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="background: white;">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></span></div>
<div class="MsoNormal" style="background: white;">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">I paid for
three months’ worth of water on A Day. I had agreed with the advisor on the
phone that that would not quite cover me to the move out date, but as that date
had not yet been fixed (although certainly 'in the month of Date'), paying for
three months would be fine. I checked that paying the rest later (at Date)
would have no ill-effects. I was told that it wouldn't. I asked, again, for a note
of the situation to be put on whatever records your company holds about me. I
was told that they would. <o:p></o:p></span></span></div>
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<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></span></div>
<div class="MsoNormal" style="background: white;">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">On A Later Day
I received a red letter from Thames Water. It was quite scary, for someone who
had tried very hard to do as he needed to do, and who had made it easy for you
to know what the situation was.<br />
<br />
Thankfully, it said "If you have paid your bill in the last seven days,
please ignore [this letter]". As I had paid my bill in the past 12 days,
and had been so assured by the advisor on the phone that I had behaved properly
and didn't need to get worried again until I moved out, I ignored the letter.<br />
<br />
Today I got a very scary letter from a debt collection agency. I had to call
another premium rate number. I was, now that the move out date is certain, able
to pay off the £xx.xx I owed (not the £xxx.xx requested alongside threats of
legal action and depleted credit ratings).<br />
<br />
Clearly, at some point your systems have not worked. They have not worked
because your advisors gave incorrect advice about when I had to pay, or because
they didn't make the right notes on my file, or because those notes did not
stop threatening letters being sent or my details being passed to a debt
collection agency.<br />
<br />
It wasn't nice to get a scary letter in the post. I don't much care for paying
premium rate numbers to deal with scary letters that are not correct (or if
they were correct, I don't much care for being told incorrect things by your
employees).<br />
<br />
I suppose you'll regard the whole operation as a success. I've paid.<br />
<br />
You would be wrong though. Because I'm your customer and I am very angry at the
way I've been treated, and that your flawed systems have put me at discomfort.
And all at my cost.<o:p></o:p></span></span></div>
<div class="MsoNormal" style="background: white;">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></span></div>
<div class="MsoNormal" style="background: white;">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">You might not
care. Who else can I get water from? But when Tube adverts tell me to be
scrupulous about how long I shower for, it is galling that your company has not
been scrupulous with the way it deals with its customers/income streams.<br />
<br />
I would very much like you to consider what action by Thames Water would be
appropriate to let me know that you do, in fact, care about how customers are
treated; and I look forward to your response detailing those actions.<br />
<br />
Regards,<br />
<br />
Alex</span><span style="color: #222222; font-family: Arial, sans-serif; font-size: 10pt;"><o:p></o:p></span></span></div>
Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-65657861316552568842012-07-29T02:14:00.000+01:002012-07-29T02:14:55.215+01:00Visiting Court and Watching Cases<br />
<div class="MsoNoSpacing">
I went to the
Supreme Court to watch a very interesting case on vicarious liability.
Vicarious liability is a doctrine that I studied at Uni, and was one of my very
favourite undergraduate topics. I think I read more on that topic than I did
for almost anything else. Of course, when I opened my Tort Final paper, there
wasn’t a single question on it. Typical.<b><o:p></o:p></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
You might be
like me, and find vicarious liability fascinating. But most people are either
not fascinated by it, or don’t really know what it is. Which is fine.<b><o:p></o:p></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
What gets me is
that some of those people visited the UKSC on the day in question, popped into
Court 2, sat for about 5 minutes, and then ran off again.<b><o:p></o:p></b></div>
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<br /></div>
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I’m not
surprised they found it boring. Counsel quoting from cases they’ve never heard of
on a principle they don’t care about in the middle of a legal hearing based on
facts they don’t know is not a rough-and-tumble Garrow’s Law spectacle.<b><o:p></o:p></b></div>
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<br /></div>
<div class="MsoNoSpacing">
What I am
surprised by is that they thought the Supreme Court would be engrossing
theatre. It is usually Counsel quoting from cases you’ve never heard of on a
principle you don’t care about in the middle of a legal hearing based on facts
you don’t know. If you didn’t know that, now you do. If you didn’t know it, and
visited the UKSC, the TV screens showing the happenings of the court rooms
should let you know.<b><o:p></o:p></b></div>
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<br /></div>
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The idea of
seeing justice being done is a great one. But, unless you’re a person
interested by any particular legal idea, my advice is this. Go to a criminal
court. The stories will (generally) be better. The questions more factual and
more tangible. You’ll find it hard to not form a view. When you go, ask to see
the <i>start</i> of something, because that way you’ll hear the facts<a href="http://www.blogger.com/blogger.g?blogID=1450870109701482648" name="_ftnref1"></a><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" title=""><span style="color: blue;">[1]</span></a>. If you go to a magistrates
court, you may well see a full trial, because they are shorter. (I saw a man
defend himself by saying he had no intention of going to Disneyland Paris to
hurt Donald Duck). <b><o:p></o:p></b></div>
<div class="MsoNoSpacing">
<br /></div>
<div class="MsoNoSpacing">
I’m not trying
to put you off going to court. Going to the wrong court will put you off going
to court. Leave the dry stuff to those who know why it’s not dry.<b><o:p></o:p></b></div>
<div class="MsoNoSpacing">
<br clear="all" />
<b><o:p></o:p></b></div>
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</div>
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<a href="http://www.blogger.com/blogger.g?blogID=1450870109701482648" name="_ftn1"></a><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" title=""><span style="color: blue;">[1]</span></a> You really can, and
should, ask any member of court staff “What’s on that’s good?” and they’ll let
you know. <b><o:p></o:p></b></div>
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<h1>
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</h1>
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</div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-80633068470918045242012-07-22T01:26:00.000+01:002012-07-22T01:26:25.106+01:00Plain Vanilla<br />
<div class="MsoNormal">
I’m not hugely against legalese
or industry jargon. Lawyers have words and phrases that we use because they are
handy, descriptive shorthand. Lawyers say rights <i>in rem</i> rather than rights <i>in
a thing</i>, because we use the Latin to get round our English ambiguities.
It’s also shorter. We say judges’ comments were made <i>obiter</i> because the Latin means we can avoid saying ‘the judges were
just giving their opinion on something they didn’t really have to deal with’,
which would sound a bit rude, and a bit long. In competition law, we say ‘hard
core’ when talking about a certain set of actions that are particularly bad.
It’s just a useful handle (if a bit vulgar sounding).<o:p></o:p><br />
<br /></div>
<div class="MsoNormal">
But I am against jargon that is
contrary to good sense or cookery. ‘Plain vanilla’ is one such term. It’s used
in finance to mean ‘straightforward’, ‘simple’ or ‘without finials’, as in a
‘plain vanilla bond issue’. Now, I know bankers are not renowned for their
soft, homely skills. But surely we all now know that vanilla is an interesting,
complex flavour and so should never be described as plain? And certainly should
not be tarnished by its association with bond issues. I don’t want to be
thinking of the Eurobond market when I’m having my crème brulee. Hence forth,
I’m replacing plain vanilla with <a href="http://www.youtube.com/watch?v=JOQcCviNi5Q">John Smith</a>. <o:p></o:p></div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-57581552769061281932012-07-16T19:18:00.001+01:002012-07-22T01:23:59.044+01:00What is IP?<br />
<div class="MsoNormal">
I think young lawyers-to-be quite like IP. IP stands for
Intellectual Property, so it reassures you that you have to be intellectual to
understand it. But the concept is pretty easy to grasp. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Think back to the Vodkat case described in a <a href="http://businessbehavingbadly.blogspot.co.uk/2012/03/vodkat.html">previous post</a>.
There, Diageo were concerned that some other company was getting the benefit of
the goodwill built up in ‘vodka’. Someone else was piggybacking on the hard
work of the vodka industry to sell their own lower-strength spirit. Or think of
rip-off football shirts. No one buys a knock off football shirt because they
think it’s a pretty tee-shirt – they buy it because it associates them with the
club and their brand. The rip-off shirt manufacturer has piggybacked on the reputation
of the club. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
The same applies to <i>trademarks</i>. If I mixed sugar, ink and
fizzy water and sold it in a bottle labelled ‘Coca-Cola’ then I am using the trademark’
of Coca Cola to sell my concoction. Another aspect of IP is <i>patents</i>. If you
work for ten years developing a wonder
drug and then I just make cheap copies (because I’m not trying to pay back ten
years’ worth of research), then I am piggybacking on your efforts.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Intellectual Property, then, is the fruit of one’s labours
that is not tangible. You can’t steal the money I earned, or live in the house
I built, so you can’t just ‘steal’ the value in a brand, a reputation, a
trademark, an artistic creation, a formula or a code.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Of course, a company needs to try and protect its IP. That’s
why they get copyrights and patents and trademarks. Disputes get costly when no
one knows what brand belongs to who. For example, you may have come across
Budweiser, in both American and Czech forms. They are beers brewed by different
companies, and they have argued over who owns the name for ages. In one of the judgements, an English Court of Appeal judge suggested they should maybe just chill out and stop
arguing about it (my words, not his)<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" style="background-color: white;" title=""><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 115%;"><span class="MsoFootnoteReference"><span style="font-size: 11pt; line-height: 115%;">[1]</span></span></span></span></a></div>
<div>
<br /></div>
<div class="MsoNormal">
One question must be relate to whether and when any IP should be freely available, or what should be freely available to some.
For example, should academics be allowed freer access to certain material
than commercial organisations?<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Another problem is where there are so many patents that it
is hard for companies to know what they can do – a ‘patent thicket’. As the
<a href="http://www.ipo.gov.uk/ipreview">2011 Hargreaves Report</a> said:<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
“businesses working at the leading edge of a particular
technology may find it difficult or even impossible to know with whom they are
in conflict, or whom they should approach for a licence. A current generation
smartphone, for example, may well be covered by hundreds of patents owned by
tens of rights holders.”<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
And you might have spotted a legal/policy tension. IP lets
companies make money. You can’t just sell my new wonder drug at cheaper prices.
Usually we like companies undercutting each other on price – that’s why we have
competition law. So where competition law promotes competition, IP seems to set restrictions on it. That’s so that companies have an incentive to innovate. Why
put in the hard yards if someone else takes the money in the end? The interface
between IP and competition is a tough one to negotiate. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-size: x-small;"><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" style="background-color: white;" title=""><span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; line-height: 14px;">[1]</span></span></span></a><span style="background-color: white;"> Ward LJ, para 65 of [2009] EWCA Civ 1022 I would like to say the dispute is all over; a CA judgement of July 2012 [2012] EWCA Civ 880seems to put paid to it all (and both get to carry on as they were). But given that between them, the parties have let the whole thing rumble on for so long, I’m not entirely sure!</span></span></div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-74353855676881838412012-07-07T01:29:00.000+01:002012-07-07T01:29:06.656+01:00Are Contracts About Morality?<br />
<div class="MsoNormal">
Law and morality can be an
unhappy <a href="http://www.youtube.com/watch?v=m_sJmIQrH54">double act</a>; as if Ant had slept with Dec’s mother. Legal theorists have
a great time deciding if law
in its central case is moral, or if legal validity depends on morality, or <span style="background-color: white;">if there is de facto moral good in having law, </span><span style="background-color: white;">or if a judge should think in moral terms when deciding hard cases, or
if they are entirely unconnected. And many other links, non-links and
permutations.</span><span class="MsoFootnoteReference" style="background-color: white;"><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;"><a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title="">[1]</a></span></span></span></div>
<div class="MsoNormal">
<o:p></o:p></div>
<div class="MsoNormal">
<span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><br /></span></span></div>
<div class="MsoNormal">
One area that has also received a
lot of attention is the basis of contract law: why do we have legally binding
contracts that can be enforced? Is there a moral reason for it? <o:p></o:p></div>
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<br /></div>
<div class="MsoNormal">
The argument (in simple form)
runs that breaking a promise is morally bad. Therefore when you make a promise
that you intend to be bound by, the law of contract creates a legal obligation
to match the moral compulsion. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
This is not a standard and
accepted reason for why contracts are enforced. A diametrically opposite view
would be one like that of Oliver Wendell-Holmes, who said “<span style="background: white;"><a href="http://constitution.org/lrev/owh/path_law.htm">the duty to keep a contract at common law means aprediction that you must pay damages if you do not keep it, and nothing else</a>”.
This view is predicated on the idea that contracts are a matter of economic
usefulness. When a breach is more efficient (i.e. I break my contract with you
because I can make a better deal elsewhere that covers the cost of my breach
and makes me money too) then breach is A-OK. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="background: white;"><br /></span></div>
<div class="MsoNormal">
Other views include a great
emphasis on notions of reliance, or take
alternative and composite views.<o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
But the point here is that
contract law is often (and not improperly) thought of as a dry topic, where dull
men of business make boring things happen. To think of a breach as an immoral
act, and damages for breach as in some way the penalty and the compensation for
that immoral act, stands at odds with aspects of contract law that treat
contracts simply as hardnosed, arms-length agreement. <o:p></o:p></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
Finally, the theory of contract
law is a tangly mess. There is no one accepted theory. One reason is that
theories match up with different parts of legal realities. How, for example,
does the morality of promising as a basis for contract law fit with the need
for ‘consideration’ (i.e. both parties need to give the other party something
for a contract to be valid)? If promises are morally important, is it right
that you can’t make punitive provisions in a contract for breach? If promises
are important, why is specific performance not a normal remedy? Equally and oppositely, if contracts are just
about economic efficiency, why do we have doctrines to protect weak and
vulnerable contractors? Why do we abhor misrepresentation? <o:p></o:p></div>
<div>
<br /></div>
<div>
This sort of stuff keeps academics awake at night. Commercial solicitors don't normally worry about it too much!<br clear="all" />
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<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>
Anybody doing any legal theory could do worse than having a play around on <a href="http://users.ox.ac.uk/~univ1907/juris/map.htm#map">this website</a>. The example theories cover (in an embarrassingly rough way) Finnis, Fuller, [many theories in many ways], Legal Positivism and Dworkin. <o:p></o:p></div>
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</div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-65476730285446816272012-06-21T23:23:00.000+01:002012-06-21T23:23:02.957+01:00The Maths of Deterrence<br />
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One reason we punish is to deter the offender and others
from doing naughty things. But how does deterrence work? <br /><br /><o:p></o:p></div>
<div class="MsoNormal">
The simple idea is that if the punishment (pain) is worse
than the gain achieved by doing a naughty thing (pleasure), than we, as
rational people, won’t do that bad thing. I won’t steal a loaf of bread if my
hand would get chopped off. Deterrence works where Pain > Pleasure.<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
Add a complication. What if we don’t expect to be punished? Fines
for smoking inside in public places are relatively high to mitigate against the
fact that it might not be applied in all cases. This is the maths of
probability. A fine of £50 that is applied in (say) 25% of cases creates a
probable pain of £12.50<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>.
Deterrence works where Probable Pain > Pleasure.<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
Add another complication. What if I don’t know smoking in a
museum is wrong, or if I think the punishment for stealing bread is community
service, or if I wrongly guess that only 2% of offenders get caught? My
calculation is skewed by my misinformation. So, Deterrence works where Expectation
of Probable Pain > Pleasure.<br /><br /><o:p></o:p></div>
<div class="MsoNormal">
My last complication. Humans aren’t rational. I’ve been reading
a <a href="http://www.amazon.co.uk/Thinking-Fast-Slow-Daniel-Kahneman/dp/1846140552">book</a> by Daniel Kahneman, the psychologist who has made behavioural economics
a thing. He writes about (among other things) how humans assign weights to
probabilities incorrectly (overplaying small chances, or negating them
entirely), about how they are risk averse when it comes to losses, and how
people have optimistic views about how their own plans will work out. Apply
that to our formula, and we can see that our irrationality mucks up our
calculation<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn2" name="_ftnref2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[2]</span></span><!--[endif]--></span></a>. A
5% of apprehension might loom larger, and <i>feel</i>
like 10%. I might be really worried about the cost of the fine. I might think
that I am such a good loaf stealer that <i>I
</i>won’t get caught. Therefore, Deterrence works where (Expectation of
Probable Pain > Pleasure) (as affected by Human Irrationality). <br /><br /><o:p></o:p></div>
<div class="MsoNormal">
And this is all unapplied theory. Criminologists don’t know
how well punishments deter, because it’s very hard to do controlled
experiments. Further, Pain and Pleasure might be felt differently by different people. Finally (for now), a lack of other options (the hungry loaf-stealer) must have effects. With calculations
this hard, who’s to say whether punishment X will deter Mr Droog or Fyodor Plc
from offending or reoffending? <o:p></o:p></div>
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<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>
Which is more than you’d pay for a license to smoke one cigarette inside. <o:p></o:p></div>
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<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[2]</span></span><!--[endif]--></span></a>
Kahneman doesn’t like to say humans are irrational. But he does say they aren’t
rational in the sense economists use it. So I’m going to be all blasé, use
words normally, and call humans irrational. <o:p></o:p></div>
</div>
</div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-21314102497821093022012-05-22T22:27:00.002+01:002012-06-15T02:43:15.693+01:00Freeganism, Crime and Supermarkets 1: Are freegans criminals?<br />
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Freeganism <a href="http://www.independent.co.uk/environment/freegans-the-bin-scavengers-467108.html">is this</a>. What’s the
law’s view on it? That was my question, and I found a very good article on the
topic by <a href="http://www2.le.ac.uk/departments/law/people/sean-thomas">Dr Sean Thomas</a> in Legal Studies<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 115%;">[1]</span></span></span></a>.
He suggested that a freegan accused of theft (Mr Droog) could argue that you
cannot steal abandoned goods, but noted that in some theft cases rubbish has
not been treated as abandoned. He therefore suggested a more fruitful defence
would be to say that Mr Droog has not been dishonest under the <i>Ghosh </i>test<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn2" name="_ftnref2" title=""><span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 115%;">[2]</span></span></span></a>,
because there is no requisite ‘moral obloquy’ attached to freeganism. He
suggested these things in a very full and nuanced way.<o:p></o:p></div>
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Dr Thomas is obviously
sympathetic to freegans, and I must say that I am too. But I’m not sure his
article which answers “Do freegans commit theft?” with “No” is all that beneficial
to freegans. One, he argues that the ‘crux’ of the matter is that ‘freegans
cannot be understood to be harming anyone’. This isn’t as obvious as Thomas seems
to suggest. If I own a shop, I want you to buy from me. When you take things
from my bin, you don’t buy them from my shelf. My economic interests are
harmed. And also, harm is not the crux of the matter. No harm is a good reason
not to criminalise an act, but is not correct to say that "no harm" means
that a crime cannot have been committed, even when the conditions for criminality are
fulfilled. <o:p></o:p></div>
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<br /></div>
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His analysis of the relationship
between abandonment and honesty is more important. The person who openly takes
the car that he honestly thinks is abandoned and the scuba-diving,
dead-of-night golf ball taker look very different. But if the balls were
abandoned, there can be no theft. Thomas points out how honesty and abandonment
have been (wrongly) conflated by the courts to just be about naughtiness. <o:p></o:p></div>
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<br /></div>
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But herein lies the problem. Thomas makes it easier for Fyodor Plc to
argue theft. They just need to put signs over there bins saying “this is not
abandoned”. This would seal the deal on the abandonment point, and would make
it harder for Mr Droog to argue that he was acting honestly. Freegans would be left only with a “we’re good
people doing no harm” 'defence', which I reckon is shoogly at best.<o:p></o:p></div>
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This is an issue of real
interest. Freegans probably do a good thing. It would be a shame if they were
thieves (and <a href="http://www.dailymail.co.uk/news/article-1392951/Tesco-bin-food-raid-woman-admits-handling-stolen-goods.html">a recent case suggests they are</a>). It’s also a shame that
interfering with bins <a href="http://www.legislation.gov.uk/ukpga/1990/43/section/60">is an offence</a>, as Thomas puts in a footnote. It must be
true that in reality, prosecutions aren’t brought very often (it’s not great PR
for Fyodor Plc to report freegans to the police). But, in my opinion, what
we’re left with are policy questions, because the legal situation does not
favour dear old Mr Droog. <o:p></o:p></div>
<div>
<br />
<hr align="left" size="1" width="33%" />
<div id="ftn1">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; font-size: 10pt; line-height: 115%;">[1]</span></span></span></a> Legal
Studies, Vol. 30 No. 1, March 2010, pp. 98–125<o:p></o:p></div>
</div>
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<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; font-size: 10pt; line-height: 115%;">[2]</span></span></span></a>
Which I’ve discussed before, at: <a href="http://businessbehavingbadly.blogspot.co.uk/2012/04/scrapping-dishonesty-from-cartel.html">http://businessbehavingbadly.blogspot.co.uk/2012/04/scrapping-dishonesty-from-cartel.html</a><o:p></o:p></div>
</div>
</div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-36253991962702281082012-05-16T20:34:00.000+01:002012-05-16T20:35:23.970+01:00Executives in Prison<br />
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Some Bad Businessmen<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; font-size: 11pt; line-height: 115%;">[1]</span></span></span></a>
do go to jail. But what’s that like? I am yet to find an academic paper, or
even a decent newspaper article, that discusses actual experience of executives
in prison in an in-depth way. The Guardian makes do with <a href="http://www.guardian.co.uk/business/gallery/2007/dec/10/conradblack#/?picture=331505930&index=0">pictures</a> of business
people who are, or have been, in prison. The issue I'm interested in here is the <i>bite</i> of punishment.
Does prison hurt executives more or less than the ordinary man-of-crime? <o:p></o:p></div>
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The argument for prison hurting businessmen more is that
they had more to lose in the first place. They can be disqualified from being
the directors of companies, ruining their working life before they hear the
cell door shut. Even if they are not disqualified, one must assume it’s far
harder to get a high-powered position when you’ve done time. Further, the
typical image of a businessman conjures up family life and community respect,
both of which are liable to be broken by a stint in jail. Maybe just being
branded a criminal - and it's associated shame and career damage - is punishment enough in their sphere of existence.<o:p></o:p></div>
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The counter argument could just run the way Sir Ken <a href="http://www.matrixlaw.co.uk/Members/33/Ken%20Macdonald.aspx">Macdonald</a>
put it on a (very interesting) BBC Radio show (now offline). On it, he said it was disgusting
to argue that as richer people came from communities where family and reputation
counted more, corporate criminals should be treated more
leniently. But with respect, until studies are done, that’s not a ridiculous
starting point. If prison is part-and-parcel of your community’s life, going
inside is not the same culture shock as if it is really alien. Of course, you
can say that if you have done something really bad, you deserve it, and
elsewhere we will discuss the metrics of badness of white collar crime. But
here, assuming Mr Businessman and Mr Carjacker have done <i>equally bad</i> things, maybe prison is <i>a worse experience</i> for Mr Businessman. This of course must be caveated - this general idea has to be applied on a case-by-case basis. <o:p></o:p></div>
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Other, more nuanced, complaints about the treatment of Bad Businessmen exist. Some include the
idea that white collar criminals ‘get away’ with an easy life in open prisons,
find it easier to conform with prison rules, and get more respect from staff
than common-or-garden criminals. But then, conforming to rules should be
rewarded, should it not? And, once in prison, it’s hard to see what danger is
being posed by white collar criminals such that they should be in cells. <o:p></o:p></div>
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We come across scenarios all the time where wrongdoers’
means and backgrounds are considered in their punishments. Fines from the FA
are set very high, because fining a footballer £200 is like fining me 2p. It
might be unpalatable that to inflict equal punishment, white collar criminals
should have more lenient sentences, but that is an indictment on social
inequality, not a reason to punish in a <i>de
facto </i>harsher way. <o:p></o:p></div>
<div>
<br />
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<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><span style="font-family: Calibri, sans-serif; font-size: 10pt; line-height: 115%;">[1]</span></span></span></a> My
use of ‘executives’ and ‘businessman’ is broad and loose, as defended here. And if anyone finds an in-depth article on this idea, let me know!<o:p></o:p></div>
</div>
</div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-40255563165774407332012-05-05T17:57:00.000+01:002012-05-05T17:57:12.242+01:00Name Calling - 'White Collar Crime'<br />
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When I was checking that calling this blog ‘business
behaving badly’ wasn’t an unintentional rip-off of any other regular
blog/journal/feature, I came across this <a href="http://www.cdpp.gov.au/Director/Speeches/20081010cc.aspx">interesting and broad ranging speech</a>
by <a href="http://www.cdpp.gov.au/Director/">Christopher Craige</a>, the Director of the CDPP in Australia. It covers many
interesting ideas, and is aimed at an audience who knows a thing or two about
law and/or crime, but not a huge deal about corporate crime. It is therefore
aiming at the same market as I am, and with the same name. I’m pretty sure he
won’t mind me using the title for a blog 4 years later. <o:p></o:p></div>
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I also hope he won’t mind me disagreeing with him on one
issue. He writes:<o:p></o:p></div>
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<i>In the early 21st
century I suggest we can be far more robust in adopting a language that defends
and nurtures the free market system whilst saving it from its own excesses. The
continued currency of the term “white collar crime” is now unhelpful in this
task. Any lingering implication that there is a more benign variety of crime,
arising from genteel origins of some corporate perpetrators can surely now be
dismissed. Language of this kind is an impediment to retaining community
confidence that we have clear-eyed legislative, regulatory, prosecutorial and
judicial responses to what are in essence very serious and harmful crimes
committed by people in positions of trust and advantage. It is an aggravating
fact in a contemporary setting when such crimes are committed by people in the
course of occupying very high positions of authority in business.<o:p></o:p></i></div>
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<i><br /></i></div>
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To have a problem with the term white collar crime is not
unique. I didn’t want it in the title of my blog, but not for his reasons.<o:p></o:p></div>
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First, I would argue that the ‘lingering implications’ of
‘genteel’ or ‘benign’ crime are not all that strong. As the trend of developed
nations is to take firmer stances towards such behaviour, the umbrella name
must matter less. Relatedly, the words ‘white collar’ don’t need to mean
gentility. <o:p></o:p></div>
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In fact, the reason I disagree with Craigie is part of the
reason I didn’t want to use the term myself. It is vague and its parameters are
unclear. David Nelken<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>
devotes some time to working out what white collar crime might be. He shows
very clearly why the ‘original’ definition given in 1949 by Sutherland<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn2" name="_ftnref2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[2]</span></span><!--[endif]--></span></a>
pretty hopeless. A crime committed by a ‘person of high status in the course of
his occupation’ tells us so very little about what might be going on – it could
be financial crime, competition law offences, manslaughter, or whatever. Some
scholars have included non-criminal behaviour in ‘white collar crime’
-Sutherland among them. The definition doesn’t help us decide whether any given
practice falls within the definition. <o:p></o:p></div>
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If then, the definition is vague, and we can’t apply it
easily, because it’s so nebulous, then I find it hard to believe there can be
much in the way of lingering connotation. Because it is at once definitive
sounding and nebulous in reality, I didn’t want it in the title of my blog. I
didn’t want to try and defend whatever I discussed as falling within its
‘meaning’. Instead, I’ve used my own (and Craigie’s!) title. <o:p></o:p></div>
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We could do away with the ‘white collar’ term, if we could
convince everyone to rip up lots of textbooks. I don’t think we really need to.
In all its cloudy fug, devoid of strict academic meaning, it does at least wave
us in the general direction of a group of offences. With time, what comes under
white collar crime may well crystallise. And it is useful to have a name or
label for a set of offences. The set that Craigie wants to refer us to is not
so easily caught within a definitional parameter like, say, sexual offences or
traffic offences. If we do away with ‘white collar’ crime (or ‘corporate crime’
– which arguably isn’t a great name either) then we are just left with ‘crime’,
which is more useless; or we have to think of a new name. </div>
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Given how hard it is
to define the contents of the rather flexible title ‘white collar crime’, one
runs the risk of naming something into definition. For example, something like
‘elite crimes’ looks like it rules out any struggling businessman, where ‘white
collar’ does not. Further, terms like ours (BBB) are equally nebulous. I only
used it because it was nebulous enough that I didn’t have to compare my
definition to anyone else’s!</div>
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<br /></div>
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And whatever we call it, who’s to say that
lingering genteel and benign connotations would be banished – in talking about
competition law it was once said it’s theft by men in nice suits<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn3" name="_ftnref3" title=""><span class="MsoFootnoteReference"><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[3]</span></span></span></a>.
If there is an element of gentility in these types of behaviours, we can’t oust it simply by using a
different name!</div>
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<o:p></o:p></div>
<div>
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<hr align="left" size="1" width="33%" />
<!--[endif]-->
<div id="ftn1">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a> In
the Oxford Handbook of Criminology. His discussion is very much fuller than
mine. <o:p></o:p></div>
</div>
<div id="ftn2">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref2" name="_ftn2" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[2]</span></span><!--[endif]--></span></a> In
a book called ‘White Collar Crime’<o:p></o:p></div>
</div>
<div id="ftn3">
<div class="MsoFootnoteText">
<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref3" name="_ftn3" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[3]</span></span><!--[endif]--></span></a> I
can’t now remember by whom. <o:p></o:p></div>
</div>
</div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-29695818033182247372012-04-29T14:00:00.003+01:002012-04-29T14:00:54.371+01:00Ethical Question of Economic Competition<br />
<div class="MsoNormal">
I read an article by<a href="http://www.ucl.ac.uk/cpjh/people/JoW"> Jonathan Wolff</a> in an applied ethics
textbook. There, he tackles the 'seldom asked' question of the ethical
difficulties created by having economic competition, the hallmark of free
market capitalism. Why is it OK to intentionally inflict economic harm by
opening a shop next to your rival’s, but not OK to steal?<o:p></o:p></div>
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<br /></div>
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Wolff ponders the idea that when we act as consumers, we
might be exploiting producers. We only want them to compete to provide the side
effect of lower prices and better quality. It’s a competition we want no one to
win (as monopolies affect our own interests). <o:p></o:p></div>
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He rejects the defence that producers are voluntarily taking
part in the competition; exploitation often includes some sort of willingness.
He doesn’t think that it’s a defence to say producers also act as consumers. He
only sees a defence in the idea that we, as consumers, don’t sufficiently
disregard producer interests to make us exploiters. The welfare state and
bankruptcy laws support those producers (business owners and employees) who
fail or flounder. <o:p></o:p></div>
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He then goes on to say that we, as consumers, do exploit
those producers who, for reasons of their own domestic situation (read: live in
developing countries), don’t have sufficient safety nets. Those are the people
whose lives we sufficiently disregard as we pursue our own ends.<o:p></o:p></div>
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I hope Wolff is right when he says the questions he tackles
are usually unasked, otherwise I have a bit more reading to do before I can
comment on his article. But here are my thoughts.<o:p></o:p></div>
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<i>First</i>, is that the ethical side to capitalism is not always
ignored. Wolff recognises that socialists and Marxists do consider it, and they
consider it well – see <a href="http://www.amazon.co.uk/Why-Not-Socialism-G-Cohen/dp/0691143617">G.A. Cohen</a> for an exemplary piece about how fear and
jealousy are the driving capitalist emotions. <span style="color: red;"> </span><i>Second</i>, I don’t think he
deals well enough with the idea that the exploited employees and the exploiting
consumers are the same people. How can a society all be exploiting itself?
Maybe this criticism works less well in his true exploitation scenario. My<i>
third </i>criticism would be that Wolff starts off thinking about the ethics of
competition generally, a big and interesting topic, and moves to say that we
exploit third world producers, a point that, however well made here, has been
made many times before. My <i>fourth</i> criticism is that he’s a tiny bit wrong when
he says we don’t want anyone to win the competition. Current competition law (in theory and practice) has no problem with monopolies per se. This leads to the<i> fifth</i> problem.
Competition rules are to try to benefit society, and he doesn’t really engage on what is the better option.
Are minimum wages really enough to salve our consciences? There is still, on
his account, a degree of exploitation. My <i>sixth</i> (and a very minor) issue is
that he never makes explicit why stealing is worse than competition (there are
no or few beneficial side effects of letting people steal). <o:p></o:p></div>
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<br /></div>
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<i>But more importantly</i>, I think, is where he places the blame.
If me buying a shirt from Fyodor Ltd is part of a global system of capitalism
whereby Mr. Droog in another country loses out, why am I to blame? If Mr Droog
is Fyodor’s employee, then surely the primary exploiter is the one who is
paying under-the-odds for labour so as to make profit for themselves. And if
Mr. Droog works for Dostoyevsky Ltd, and they go bust in some other country
because I bought a shirt from their rivals, are there not sufficient other
actors to blame before going to consumers? Directors at Dostoyevsky for failing
to take the best decisions? Directors at Fyodor for gaining an unfair advantage
by undercutting or being anti-competitive? The civilians and politicians of the
other country for failing to provide the safety net? The international
political community for failing to find globally applicable minimum standards
that are enforced? <o:p></o:p></div>
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<br /></div>
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I think the problem is his focus on <i>exploitation. </i>He explicitly recognises that it is the competitors
who do harm to each either, and we encourage it. But it is that encouragement
that is exploitation as he defines it. The initial harm doesn’t fit the
exploitation definition that he’s discussing. <o:p></o:p></div>
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<br /></div>
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Business ethics are a tricky field, and it’s not a bad thing
for consumers to remember the knock-on impact of their choices. But to focus on
them, and forgetting the other actors, seems to me to be focussing on the
addicts, not the dealers. <o:p></o:p></div>
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<br /></div>
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(Discussion of 'Economic Competition: Should We Care about the Losers?', Wolff, in Hugh LaFolette (ed) Ethics in Practice, 3rd Ed.)</div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-26549380854998372432012-04-10T18:27:00.001+01:002012-04-10T18:27:42.247+01:00Scrapping 'Dishonesty' from the Cartel Offence<br />
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Section 188 <a href="http://www.legislation.gov.uk/ukpga/2002/40/contents">Enterprise Act 2002</a> provided that:<o:p></o:p></div>
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An individual is guilty of an offence if he dishonestly
agrees with one or more other persons to make or implement, or to cause to be
made or implemented, [cartel] arrangements [between at least two companies].<o:p></o:p></div>
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I wrote last time about the different situations in the US
and UK. I mentioned that the UK wasn’t a great criminal enforcer of competition
law infringements, and that this ‘cartel offence’ wasn’t doing a great job. <o:p></o:p></div>
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Well, maybe that’s about to change. The Government has
<a href="http://www.bis.gov.uk/assets/biscore/consumer-issues/docs/g/12-512-growth-and-competition-regime-government-response.pdf">decided that it wants to scrap the</a> ‘dishonesty’ element of the offence. This might be good
news in that:</div>
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</div>
<ul>
<li><span style="font-size: 7pt; text-indent: -18pt;"> </span><span style="text-indent: -18pt;">We might see more prosecutions.</span></li>
<li><span style="font-size: 7pt; text-indent: -18pt;"> </span><span style="text-indent: -18pt;">Those prosecutions are more likely to be
successful.</span></li>
<li><span style="text-indent: -18pt;"> As such, the offence will have more ‘bite’ and
thus be a better deterrent.</span></li>
</ul>
<br />
<div class="MsoListParagraphCxSpLast" style="mso-list: l0 level1 lfo1; text-indent: -18.0pt;">
<o:p></o:p></div>
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This is because the dishonesty test is one that comes from
case law (R v Ghosh<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>),
and it is arguably a bit tricky to apply to ‘complex’ commercial agreements.
Ghosh needs the defendant (D) to fall below the normal standard of honesty
(objective test) <i>and</i> to know he was
being dishonest by that standard (subjective test). A jury member knows what he thinks of theft,
he might not know how dishonest he considers cartelling. And this will affect
both whether he believes cartelling is dishonest by reasonable standards, and
also whether he thinks D would know that. <o:p></o:p></div>
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On the other hand, we could be worried, in a couple of
different ways:</div>
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</div>
<ul>
<li><span style="text-indent: -18pt;">Serious offences should always have a ‘mens rea’
element – D needs to have a sufficiently guilty mind. This isn’t a parking
ticket, this is five years in jail – D needs to be wilfully </span><i style="text-indent: -18pt;">bad.</i></li>
<li><span style="text-indent: -18pt;">The reason we weren’t prosecuting often or
successfully enough was because the body responsible (the </span><a href="http://www.oft.gov.uk/" style="text-indent: -18pt;">OFT</a><span style="text-indent: -18pt;">, soon to be merged with the </span><a href="http://www.competition-commission.org.uk/" style="text-indent: -18pt;">CC</a><span style="text-indent: -18pt;">) lacked expertise
and experience.</span></li>
</ul>
<br />
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<o:p></o:p></div>
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These skirt the fundamental issue. It is the more woolly
issue of to what extent we should criminalise anti-competitive conduct. Getting
rid of dishonesty widens the offence, both in law and in fact. Some conduct
that previously wasn’t criminal now would be. Some conduct that was criminal
but too difficult to prove will be easier to prove. I don’t know where the
limits should be. But I am a little worried that the global trend to tougher
enforcement means that we’re making tougher and tougher laws without fully
exploring how well the original law could ‘work’ at limiting anti-competitive
conduct whilst still being careful that we don't over-penalise those who engage in that conduct.<o:p></o:p></div>
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Further, in this particular
case, we’ve bypassed the need to explain to the public, or persuade a jury, that
price fixing is dishonest. As a result, the cartel offence makes scant effort
at earning its place in the public conception of what is ‘wrong’. Another time,
I’ll write a comment on public attitudes to anti-competitive practices. It will
be tightly related to this piece. <o:p></o:p></div>
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<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftnref1" name="_ftn1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 10.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a><span style="font-size: x-small;"> <span style="background: white; color: #222222; font-family: "Arial","sans-serif";">[1982]
EWCA Crim 2</span></span><o:p></o:p></div>
</div>
</div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0tag:blogger.com,1999:blog-1450870109701482648.post-25395231637497640812012-04-04T01:51:00.000+01:002012-04-04T01:51:40.581+01:00Competition Law and Criminal Enforcement (on either side of the Atlantic)<br />
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Competition law is
one of the major reasons why this blog is called Business Behaving Badly, and
why I try to focus on naughtiness, harms and wrongdoing rather than <i>corporate</i> (or white collar) <i>crime</i>. In Europe, competition law is
largely a regulatory scheme based on fines, and with a few individual
carved-out exceptions, is not ‘criminal’ law. However, in other jurisdictions,
notably the US, criminal enforcement of competition law is far more widespread.
<o:p></o:p></div>
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This reminds us that crime is ‘socially constructed’; that
we have to think very carefully about what conduct we want to consider as
criminal; and the fine distinctions between systems that can yield different
results.<o:p></o:p></div>
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Here, we’ll simply look at the competition/criminal law
interface either side of the Pond, and I’ll speculate as to why those
differences exist. <o:p></o:p></div>
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<b>The US<o:p></o:p></b></div>
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The US is the granddaddy of competition law – the law that
regulates practices contrary to the market competition that is fundamental to a
capitalist system<a href="file:///C:/Users/Jamie/Documents/Corporate%20Crime/Business%20Behaving%20Badly.docx#_ftn1" name="_ftnref1" title=""><span class="MsoFootnoteReference"><!--[if !supportFootnotes]--><span class="MsoFootnoteReference"><span style="font-family: "Calibri","sans-serif"; font-size: 11.0pt; line-height: 115%; mso-ansi-language: EN-GB; mso-ascii-theme-font: minor-latin; mso-bidi-font-family: "Times New Roman"; mso-bidi-language: AR-SA; mso-bidi-theme-font: minor-bidi; mso-fareast-font-family: Calibri; mso-fareast-language: EN-US; mso-fareast-theme-font: minor-latin; mso-hansi-theme-font: minor-latin;">[1]</span></span><!--[endif]--></span></a>. <o:p></o:p></div>
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According to the US Department of Justice (DOJ), <i>cartelists </i>are ‘generally prosecuted
criminally’, whereas those who, in EU parlance, <i>abuse a dominant position</i> are generally dealt with in civil law.
Criminal prosecutions can lead to corporate fines of up to $100million (or
twice-the-gross-gain resulting from the violation), individual fines up to
$10million, and up to 10 years in jail (I often wonder what the world would
look like with a base-12 counting system). <o:p></o:p></div>
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In the US in 2010, the average jail term for these offences
was 30months, and a total of 26,046 days were spent in federal jails for
antitrust violations, equivalent to 71 people spending their whole year in
jail. Fines reached $555million, down from $1billion the year before.<o:p></o:p></div>
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<b>The UK and the EU<o:p></o:p></b></div>
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In Europe, criminal law plays a far smaller role. The
European Commission is the major competition law enforcer, and it does not
impose criminal sanctions. Instead, it administers fines (or sometimes
behavioural and structural orders) to companies that violate the relevant
provisions. <o:p></o:p></div>
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Member states still have a role to play, and indeed, the
national competition authorities (NCAs) increasingly work better with each
other and with the Commission. And some states have criminal sanctions
available.<o:p></o:p></div>
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The UK has one – the Cartel Offence. It originally provided
that an individual who <i>dishonestly</i>
agrees to engage in hard-core cartel activity (price fixing, bid rigging, etc)
could face five years in prison, and/or an unlimited fine. So far, there has
only been one successful prosecution, in <i>R
v Whittle (Peter) </i>[2008] EWCA Crim 2560, and in that case, all three
defendants admitted guilt. In fact, the case is more interesting in looking at
difficulties where actors violate competition laws of different countries. In <i>Whittle</i>, the three defendants had been
arrested in the US, and had made <i>plea
bargains </i>there. The dishonesty element is being scrapped, which we’ll talk
about next time. <o:p></o:p></div>
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<b>Why the Differences?<o:p></o:p></b></div>
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So why are the Americans keener on criminalisation? I will
suggest four reasons, all quirks of history. No doubt other reasons could be
found. <o:p></o:p></div>
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</div>
<ol>
<li>The US got their first. The DOJ says, criminalisation is the
best <i>deterrent</i> to cartelists. The
global trend in enforcement is to states using ever tougher deterrent. It is
unsurprising that the first big economy to deal with competition law got to the
fiercer deterrents first.</li>
<li>The EU. The EU is the prime actor in European competition
law, but it doesn’t have competence to create and enforce criminal law. This
stems from the EU’s history as an economic union, and so certain issues of
political sovereignty have not been ceded. Criminal law is one of the most
sensitive. Instead, various countries have begun their own piecemeal processes;
but they have not been the prominent enforcers in the past, and there remains
concern about how varying offences can co-exist in the EU – both as to
consistency and the problem of double (or multiple) jeopardy.</li>
<li>Criminalising culture. The US is more predisposed to locking
people up. It has, by far and away, the highest rate of incarceration in the
world. Land of the Brave, maybe, but a lot of US ‘homes’ aren’t all that fussed
with ‘freedom’. That may or may not be a good thing.</li>
<li>The US has more private enforcement – my Uni notes say that
in the US, 90% of competition cases are not brought by the regulators, versus
about 15% in the EU. This must affect the balance of enforcement, and maybe
pushes the state away from adding <i>fines</i>
to <i>damages</i>, and instead encourages
penal enforcement.</li>
</ol>
<o:p></o:p><br />
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<o:p></o:p></div>
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<o:p></o:p></div>
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<o:p></o:p></div>
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That is sweeping. The economics underneath competition law is complicated, and
some argue competition law is contrary to the guiding hand of a true free
market. Less extreme positions still challenge some competition law rules,
which, it can be and is argued, actually chill or prevent competition and could
harm consumers. In a quiet moment, I'll try and summarise competition law on here. <o:p></o:p></div>
</div>
</div>Alexander Alexanderhttp://www.blogger.com/profile/02676566401581036624noreply@blogger.com0