In May 2014, the UK Competition & Markets Authority ("CMA") said it planned to take various actions to encourage a compliance culture, including more closely linking enforcement outcomes with its work on compliance.
This has already started. On 27 June 2014, the CMA published a short note on lessons learnt from a recent cartel case it handled involving the distribution of commercial vehicles. On 1 July 2014, the CMA published on its website an open letter specifically addressed to the motor industry about the lessons that can be drawn from the case.
Last year the CMA fined Mercedes-Benz and five of its commercial vehicle dealers over £2.8 million for entering into agreements involving market sharing, price coordination, and/or the exchange of commercially sensitive information. The case serves as an important reminder that cartels represent serious infringements of competition law and can have serious consequences for the companies involved.
The CMA emphasised the following points:
● It can be easy to cross the line between legitimate and illegitimate contacts
Competitors, including franchisees of the same manufacturer or supplier, must set their business strategies independently. Discussion of future pricing intentions is particularly problematic.
● You can break the law even if your involvement is relatively limited
In the commercial vehicles cartel, one company was fined mainly because an employee had attended and was involved in organising a single meeting where an anti-competitive arrangement was reached. This is consistent with the ruling of the European Court in T-Mobile v NMA where the Court confirmed that an exchange of price information between competitors at a single meeting could infringe the competition rules.
● Smaller businesses do not get a ‘free pass’ on competition law
The CMA will take firm action against cartels, irrespective of the size of the companies involved or the geographic scope of the case. This is also demonstrated by two recent decisions where the CMA found that mobility scooter manufacturers and their retailers had infringed the competition rules. This is in line with the CMA's stated intention of having a balanced portfolio of cases, involving a mix of large and small businesses.
The publication of the note and the open letter sees the CMA linking its enforcement outcomes with its work on compliance and it is likely that the CMA will issue similar briefings in the future as it seeks to raise its profile as the UK's new competition authority. This approach clearly demonstrates the CMA's continuing commitment to encouraging compliance with the UK competition rules.
What does this mean for you?
Companies of all sizes should take steps to create a culture of competition compliance within the business. It is essential that everyone in the company understands what they can and cannot do in order to stay on the right side of the law.