The OFT’s plans to offer up to £100,000 for information leading to the break-up of cartels is an aggressive move from a regulator on a bit of a roll. Recent successes including the £121.5 million fine against British Airways for price-fixing on fuel surcharges with Virgin Atlantic (which was given immunity), fines totalling £120 million in the supermarkets price-fixing probe and the arrest of three British executives involved in a marine hoses cartel have given the OFT a new wave of confidence.

John Colahan, a competition partner at Latham & Watkins in London, said today’s move is part of the watchdog’s ”generally more activist approach that has seen it try to establish itself further into people’s consciousness as a serious and effective regulator”.

Other recent moves include calling on the Government to simplify the process of private enforcement in the UK, where consumers or businesses that have lost out through cartel activity can sue those responsible. The OFT believes that enhancing these rights will lead to more “private enforcement” which will act as a disincentive to businesses considering cartel activity.

But the offer of £100,000 for cartel-busting information is the regulator’s gutsiest move yet. Ros Kellaway, head of the EU and competition group at law firm Eversheds, said the move was “very aggressive” and “astonishing” given that only one other country – South Korea – has the same policy.

Ms Kellaway pointed out that the OFT has gone beyond any incentives on offer at a European Union level, even though Competition Commissioner Neelie Kroes is “highly focused on cartel busting”. She said: “Today’s announcement shows that no business executive can afford not to know about competition law whether they work at a giant supermarket or a small local building firm, tendering for roofing supplies. The OFT, whose budget has risen about tenfold in the last 20 years to £55 million, has been incredibly active. They want to be seen as a world leading competition authority.”

Nigel Parr, head of competition at Ashurst, said: “This is certainly an unusual move and is designed to create yet more uncertainty for a group of colluding businesses. Instability is one of the factors which stops cartels from being agreed in the first place, so this move has both preventative and curative aspects.”

But why is it necessary? The OFT already has a leniency regime, whereby employees involved in a cartel can confess to the regulator and be given personal immunity. Similar immunity is also available at an institutional level through which businesses such as Virgin Atlantic, can reveal the details of a cartel and avoid punishment.

Mr Parr believes that the £100,000 incentive is designed as an extra weapon to be used alongside leniency rules. He said: "The OFT has invited individuals to blow the whistle on cartels from the outset of the Competition Act regime but as far as we are aware, this has not resulted in any cases. The hook is therefore being baited with cash,” he said.

Mr Parr said the the regulator has so far been "heavily reliant on its leniency programme" to uncover cartels and obtain the evidence needed to act against them. "The new policy of rewards for individuals may well have been conceived with a view to enabling the OFT to 'crack' a major cartel, whether or not there is a leniency application.”

However, other lawyers warn that although cash offers are headline grabbing they remain unproven. One senior lawyer said: “South Korea [the only other country with a similar regime] is a smaller economy than the UK, but if you ask competition experts they will agree that offering cash incentives has hardly revolutionised the South Korean cartel busting business.”

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