A recent survey commissioned by the Competition & Markets Authority has found a surprising lack of knowledge of competition law amongst businesses. Of over 1,200 surveyed:
- 55% thought it was “OK for competitors to agree prices in order to avoid losing money”. Only 18% knew it was not.
- 47% thought it was “OK to discuss prospective bids with competing bidders”. Only 23% knew it was not.
- 40% thought “Businesses can agree not to sell to the same customers as each other”. Only 31% knew they cannot.
- 20% had never heard of competition law, and a further 25% admitted to knowing it “not at all well”.
The European Commission has released “Compliance Matters”, a brochure to assist undertakings’ compliance with competition law.
Chapter 3 sets out the relevant law:
Article 101: prohibits agreements between companies which may distort the normal play of competitive forces. However, agreements of benefit to consumers may be exempt.
Article 102: outlaws abuses by dominant companies.
These Articles are only triggered if the behaviour affects interstate trade, but the Competition Act contains similar prohibitions on behaviour whose affect is confined to (some part of) the UK, so the Guidance provides incidental assistance in complying with domestic law too.
A fuller explanation of the law can be found in our Introduction to Competition Law.
Chapter 4 advises companies on what programs they can install to aid compliance. Those familiar with the Ministry of Justice Guidance to the Bribery Act will note striking similarities.
- The first step should be a risk assessment so the program can be tailored to those risks.
- Does the company's sector have a bad history of infringement?
- What is the level of interaction with competitors?
- Does the company have significant market power or does the market have significant barriers to entry?
- The program should be written, published internally, and proportionate to the company's size.
- The compliance culture should be "top down", with a senior officer responsible for the program, who can be the contact point for advice or whistle blowing.
The Guidance makes various suggestions for the content of the program, such as:
- A list of "DON'Ts" such as exchanging future price intentions or agreements about price fixing, market allocation or production quotas.
- A list of "RED FLAGs" identifying situations ripe for infringement, like preparing tender bids or entering new markets.
- A regime for monitoring or auditing such situations. Although auditing may only reveal a problem afterwards it may prevent a recurrence. It may also help the company get the best of the Commission's leniency program, where informants can receive a reduced penalty, or even immunity.
- Asking new staff for written acknowledgment of receipt of the program, to drill in its importance.
- Incentivising staff by building vigilance into appraisal criteria.
- Training - especially where the risk assessment identifies staff members particularly at risk, e.g. sales staff or anyone attending trade association events.
The Guidance warns that, in cases of infringement, the mere existence of a program will not be a mitigating factor in setting the level of fines. In this regard the UK regime may be different as, in 2012 guidance from the OFT, then the UK’s competition regulator, it confirmed that adequate programs will be taken into account per se.