Watchdog reveals its surveillance powers

"Cartels steal from consumers and fair-dealing businesses," said OFT Chairman John Vickers. "Our enhanced surveillance powers will allow us to uncover cartels more effectively. The codes of practice we are publishing today set out the careful disciplines and standards to which we will adhere when deploying those powers."

The OFT took on a stronger role in regulating competition in 2003, when the Enterprise Act gave it elevated status as an independent statutory body.

The Act transformed the UK approach to bankruptcy and corporate rescue and introduced criminal penalties for individuals who dishonestly engage in the worst types of cartels such as horizontal price fixing, limiting supply or production, market sharing or bid-rigging.

The OFT is now empowered to investigate and the Serious Fraud Office (and the Lord Advocate in Scotland) to prosecute these individuals with the possibility of five years' imprisonment and an unlimited fine on conviction.

Access to data

In order to boost its investigatory powers, in January this year the OFT, together with a number of other agencies, was given rights of access to customer data held by telcos and ISPs.

These rights of access stem from the Regulation of Investigatory Powers Act of 2000, known as RIPA, which interacts with the Anti-Terrorism, Crime & Security Act (ATCSA), enacted in 2001.

The 2001 Act required the retention of communications data by ISPs and telcos on the grounds that these were needed for the purpose of fighting terrorism. However, once retained, the RIPA provisions permit access to many other agencies for purposes unconnected with terrorism.

Communications data are those data, retained by telcos (including ISPs and interactive television service providers), which describe the caller and the means of communication (e.g. subscriber details, billing data, e-mail logs, personal details of customers, and records showing the location where mobile phone calls were made). Communications data do not include the content of the communications.

This information is valuable as it can be used to create a comprehensive dossier on the contacts, friendships, interests, transactions, and movements of an individual. Since nearly everyone in the UK uses electronic communications, the provisions of RIPA and ATCSA impacts on most adults in the UK.

The OFT has now published guidance on how it will exercise these powers.

Codes of Practice

There are two codes, one setting out how the OFT will manage covert human intelligence sources - such as whistleblowers - to help uncover cartels, and the other dealing with the covert and directed surveillance of the individuals under suspicion.

The codes, according to the OFT, closely follow best practice guidelines issued by the Home Office, and will ensure that the OFT gives proper regard to human rights in the use of these powers. In particular the code on human intelligence sources, which builds on specialist training already received by OFT investigators, also sets out stringent procedures to protect people who covertly provide information to the OFT about cartels.

Covert human intelligence sources in cartel investigations

In general terms, according to the Code of Practice:

• The Director of Cartel Investigations is responsible for authorising the use of sources.
• Each authorisation will last for a year, subject to review and renewal.
• An authorisation will always be sought where the use of a source is likely to infringe on a person's right to privacy.
• The use of a source must be necessary and proportionate, and there must be a consideration of the likely intrusion into the privacy of third parties.
• The source may be in the UK or abroad.
• Material from sources may be used as evidence.
• Surveillance on the source may be necessary to determine if he would be a good source.
• A record of all authorisations and the use made of a source will be kept.
• Evidence from a source will be kept if needed for future criminal proceedings, and may be used for further investigations. Data Protection requirements will be met.

Covert surveillance in cartel investigations

In general terms, according to the Code of Practice:

• The Chairman of the OFT is responsible for authorising the use of covert or directed surveillance.
• Authorisations will last for three months, subject to review and renewal.
• The OFT will always seek an authorisation for surveillance that is likely to infringe on a person's right to privacy.
• The surveillance must be necessary and proportionate and there must be a consideration of the likely intrusion into the privacy of third parties.
• A record of all authorisations will be kept and retained for at least three years.
• Evidence from authorised surveillance will be kept if needed for future criminal proceedings, and may be used for further investigations. Data protection requirements will be met.

There are procedures allowing the use of intrusive surveillance – on residential property or private vehicles – but these are subject to the approval of a Surveillance Commissioner.

There are also procedures allowing for entry on or interference with property or with wireless telegraphy. These are also subject to the approval of a Surveillance Commissioner.