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In order to reduce competition in the market and ensure that businesses of all statures can compete fairly in the United Kingdom, the government of the UK introduced anti-competitive laws in 1998. Recently, the government has warned businesses that its stance on anti-competitive behaviour will not change once Britain leaves the European nations.
Anti-competitive Law Enforcement in the UK
Currently, two sets of competitive rules apply in parallel in the United Kingdom. Anti-competitive behaviours which may affect trade within the UK are prohibited by chapter I and II of the Competition Act 1998 and the Enterprise Act 2002. If the effect of anti-competitive behaviour extends beyond the UK, it is prohibited by Articles 101 and 102 of the Treaty on the Functioning of the European Nation (TFEU).
The UK and EU competition laws prohibit two main types of anti-competitive activity:
• Anti-competitive agreements
• Abuse of a dominant market position
These laws are also intended at protecting consumers from high prices in limited markets.
Anti-competitive laws are still in their early years. The Competition and Market Authority, the agency tasked with overseeing and enforcing the laws, has stressed that putting downward pressure on prices helps to spur innovation and improve the quality of goods and services. The CMA states that it wants to help UK businesses comply with competition laws and raise awareness of the consequences of breaking the law.
As the consequences of a breach can be severe, it’s important for directors to take relevant measures to protect their businesses from running afoul of anti-competitive behaviour. The CMA suggests that an effective compliance program should be implemented in order to reduce the risk of breaking the law.
Consequences of Breach
With various authorities stepping up enforcement against anti-competitive behaviour, it’s important that directors should be aware of the consequences involved in breaching the conditions.
• Firms engaged in activities that breach the law provisions can face fines of up to 10% of group global turnover.
• The agreement may in part or in its entirety be unenforceable.
• Businesses can be sued for damages by customers and competitors that have suffered a loss due to a direct breach of the rules.
• Cartel members considered to be in serious breach of price-fixing will face imprisonment.
• Directors can be disqualified from being a company director for up to 15 years.
The CMA has encouraged UK companies to report businesses they feel have breached anti-competitive laws. Directors must know the rules to avoid the consequences so that they can position their companies in a better way in the market.