Competition law promotes or seeks to maintain market competition by regulating anti-competitive conduct
amongst companies. Any company that fails to comply with UK or EU competition
law will meet with serious consequences.
In April 2014, the UK Office of Fair
Trading and the Competition Commission merged to form the new Competition and
Markets Authority (CMA). Since then, any business operating in the UK has been
subject to a more robust level of enforcement of the rules, including increased
fines and more criminal prosecutions where relevant.
Every business, regardless of is size,
industry sector or legal status, must make itself aware of how competition law
works so that its obligations can be met and fines and prosecutions therefore
avoided, and on the other side of the coin, so that it can protect its market
position.
There are two sets of competition rules
in operation in the UK and they run concurrently. One concerns UK-wide trade
and this is covered by the Competition Act 1998 and the Enterprise Act 2002.
For anti-competitive behaviour that extends outside of the UK to other EU
Member States, this is covered by Articles 101 and 102 of the Treaty on the
Functioning of the European Union (TFEU).
What is Prohibited?
Both UK and EU competition law prohibit
two key types of anti-competitive behaviour. This includes anti-competitive
agreements, and abuse of a dominant market position.
Agreements, arrangements and business
practices which prevent, restrict or distort competition or aim to, and which
affect or may affect trade in the UK or EU will be considered a breach of the
legislation.
What are the Consequences of a Breach?
Companies in breach of anti-competition
law can face fines of up to 10 per cent of group global turnover. Companies
will also expose themselves to possible actions for damages and may also find
their agreements unenforceable. Directors could face disqualification or
criminal sanctions if the breaches are serious.
The new Consumer Rights Act 2015 provides that
businesses that find themselves at a competitive disadvantage from breaches in
competition law will be offered swift, low-cost remedies.
Suffice it to say, all businesses must
make themselves fully aware of the provisions of competition law. Your
bookkeepers will be able to explain the fundamentals, and your lawyers will
help you word your agreements in such a way that they comply with the law.
