Compliance Makes Good Business Sense
You will need to manage risk to comply with all the laws of competition – and it is good business practice too.
Long-term compliance makes business sense for more than one important reason, such as:
- You avoid the risk of financial penalties and being sued (or a prison sentence up to 5 years).
- You avoid risking significant damage to your company reputation.
There is one overriding objective behind UK competition law. It is to protect consumers and businesses from anti competitive behaviour. Thus, the regulation safeguards effective competition in the United Kingdom.
The aim is to allow for, and encourage, open and dynamic markets. Enhanced productivity and innovation results in value for customers.
That is why all businesses must take steps to avoid anti competitive activity. There are serious consequences for non-compliance. The penalties apply to individuals, company directors, and to businesses of all sizes.
So, what can business owners do to manage risk? Besides the owners, people who run it are also responsible. To ensure your organisation avoids breaking competition law, you should:
- Identify where your business is at risk and evaluate the seriousness of any such risks.
- Set up policies, procedures, and guidelines (e.g. staff training on communicating with competitors).
Is Your Business Compliant or at Risk?
There are ways to work out whether your business may be at risk of breaching competition laws. As a rule, you would be at risk if:
- You (or your staff) have contact with any of your competitors. Typical examples may be at conferences or trade association meetings.
- Your company holds a position of dominance in any given market where you carry out the business.
- Your staff members move to (or from) jobs with your business competitors on a regular basis.
- You have partnership agreements with your competitors (e.g. joint buying or joint selling) or long-term exclusive contracts with customers or with suppliers.
Note: Any lawsuits for damages, and the penalties for anti-competitive behavior, would still apply even if your senior managers were not aware of the illegal activity.
Setting Up Policies and Staff Training
As a rule, the responsibility for setting up guidelines would rest with a senior member of staff. So for example, a director could set up company policies and procedures. Someone must ensure that employees know how to avoid and report anti-competitive activities.
The Competition and Markets Authority (CMA) produces further guidance for businesses. You can read more about competition law risk and how to comply with fair trading regulations.
OFT Leniency and Informant Rewards
A business or an individual can come forward to report their own involvement in a cartel. Doing so may get their financial penalty reduced. In some cases, you may avoid the penalty altogether (according to the CMA leniency programme).
Even so, to qualify for any leniency, applicants must:
- Admit their involvement in anti competitive practices.
- Cooperate in full with the CMA investigation.
- Stop their involvement with immediate effect.
The CMA may offer a financial reward for information about cartel activity. They call them ‘informant rewards’. Individuals who come forward with information on an involvement in a cartel may get immunity from criminal prosecution. They call it a ‘no-action’ letter.
You can contact the CMA cartels hotline if you suspect someone is infringing the competition law:
ALSO IN THIS SECTION
List of Anti Competitive Practices | Illegal activities to avoid in business, such as ‘cartels’ and bid rigging.
Reporting Anti-competitive Activities | How to report a cartel or other anti-competitive activity to CMA.