Last Updated Apr 19, 2010 11:11 AM EDT
The OFT has upped its rate with the Â£225m fines imposed on tobacco groups Imperial and Gallaher plus the supermarkets selling their cigarettes. That price-fixing penalty far exceeds the Â£129m demanded last September from construction companies accused of rigging bids - a sum reduced from Â£195m because they admitted guilt.
Illegal behaviour deserves punishment but these government agencies were once content to name and shame. Now companies crossing the line must pay substantial financial penalties but still have their reputations damaged. Indeed, the bigger the fine, the greater the publicity and thus the more their corporate character is tarnished.
Fines collected by the financial watchdogs at the FSA rose 53 per cent last year but now they have produced a new tariff that trebles some of its previous penalties. The Â£500,000 fines on two former Northern Rock directors demonstrate the new regime.
But now punishments are so severe, there should be concern at their fairness. These are not fines imposed after public trials in courts of law; they are the result of private reviews in which the regulators are policemen, prosecutors, juries and judges.
The fine of almost Â£1m imposed this year by the FSA on an insider-dealer was far greater than a court would have handed down. The OFT's Â£29m fine on Royal Bank of Scotland in March 2010 - one arm of government fining another - for disclosing its pricing structures far exceeds what even a civil court would have awarded.
In a business world burdened by bureaucracy, even a company trying hard to conform with rules and regulations can lapse. But often these are technical breaches with no victims suffering loss; frequently, as with the Northern Rock directors, there is no personal gain.
And these fines can run counter to natural justice. The tobacco companies may have colluded to fix prices but they were agreeing to reduce them because of falling demand. How could that disadvantage consumers? Some of the same supermarkets fined in that case are still seething from the Â£116m they and milk suppliers were fined by the OFT when their objective was to raise prices paid to financially-troubled farmers.
But perhaps the greatest unfairness in this regulatory regime is the provision that exempts whistleblowers. So Sainsbury, despite indulging in the same price-fixing as the other cigarette sellers, escaped punishment for alerting the OFT before the OFT visited it. Similarly, Virgin avoided punishment for swapping pricing information with British Airways when the flag carrier was fined Â£122m by the OFT and another Â£150m by the Americans.
Now that corporate punishment is big business, raegulators need to show they are transparent and just. Simply because companies breach the rules is no excuse for subjecting them to a kangaroo court.