The government has warned UK businesses that its stance on anti-competitive behavior will not change once Britain leaves the European Union.
Companies that are deemed to be in breach of anti-competitive agreements (Chapter 1 / Article 101 and Chapter II Article 102) could face fines amounting to 10% of the annual global turnover.
Individuals charged with breaking the laws could also face serious punishment. Directors can be disqualified from being a director of another UK company for up to 15 years and cartel members will face criminal prosecution.
Anti-competitive enforcement laws apply to businesses of all sizes and legal status. A company is deemed to be in breach of the laws when an arrangement prevents, restricts or distorts competitor trading in any of the following ways:
directly or indirectly impact sales and purchase prices
limit or control production, markets, technical development or investment
share markets or sources of supply
- place competitors at a disadvantage by applying unfair conditions to similar transactions
- abuse a dominant position in the market
Anti-Competitive Law Enforcement in the UK
Anti-competition laws are still in their early years. Enforcement began four years ago with a view to providing a marketplace in which businesses of all statures can compete fairly in the UK and the EU.
Another reason for the laws is to protect consumers from high prices in limited markets. The Competition and Markets Authority (CMA), the agency tasked with overseeing and enforcing the laws in collaboration with Ann Pope MP, has stressed that putting downward pressure on prices helps to spur innovation and raise the standards of goods and services.
The CMA has stated that it wants to help UK businesses comply with competition laws and raise awareness of the consequences for breaking the law. One way they do that is by undertaking compliance work on the back of infringement decisions and using offenders as case studies for other businesses within the industry.
Given the consequences of a breach are severe, it’s in the best interests of directors to take relevant measures to protect your business from running foul of anti-competition laws.
An effective compliance program should be put in place to reduce the risk of breaking the law and raising awareness of best practices should be encouraged among your staff. Qualified legal specialists will be able to help you with this.
What are the consequences of breaching anti-competition laws?
With authorities in various jurisdictions stepping up enforcement against anti-competitive behaviour, captains of industry should be aware of the consequences involved in breaching the conditions.
- Firms will face fines of up to 10% of group global turnover
- The agreement may in part or in its entirety be unenforceable
- Companies can be sued for damages by consumers and competitors that have suffered a loss due to a direct breach of the rules
- Directors can be disqualified from being a company director for up to 15 years
- Cartel members deemed to be in serious breach of price-fixing will face imprisonment
The CMA has encouraged businesses to report competitors they feel have breached anti-competition laws. Directors should understand the rules to avoid the consequences and so that you know how to position yourself in the market.