Plenty of employees get the law wrong and the employer picks up the tab in areas as far apart as health & safety and data protection. Companies can only operate through employees and are responsible in most cases for what employees do. In a ground-breaking case, Safeway has sued former employees and directors personally for alleged breach of the competition rules. Safeway itself might be fined for breach of competition rules in the milk sector by Morrisons, a company which it acquired. It is understood that the directors may have had an insurance policy and that Safeway is therefore seeking to cover its potential fines by recouping them under the insurance which most directors do hold when sitting on boards.
Danny Hockman, a partner in Kidd Rapinet’s High Wycombe office, says “Whilst very rare, sometimes organisations have sued members of staff for provision of bad advice which led to the employer being held negligent to its customers. This case is along similar lines. The ex-employees and directors in this competition case applied to have the case thrown out of court but failed. Morrisons here disputes all allegations of breach of competition law. Safeway entered into an agreement with the OFT about liability since it took over Morrisons. The employees tried to throw the case out on the grounds that if the company were liable it could not go to court to seek recovery – a long standing legal principle that you cannot profit from your own wrong, in the same way as when someone murders their spouse to recover insurance policy monies then their claim will fail.”
It is likely that, if the case succeeds at trial, insurance for directors will become more expensive and insurers will want to check there have been no competition law breaches before offering the policy in each case. The case also illustrates the importance of having good competition law compliance policies and training in place for employees. If you would like your policy amended or updated or to receive advice on this area of the law, please call Danny Hockman on 01494 535321 for information.