Understanding what kinds of anti-competitive practices exist will help you avoid them. Among the most common are 'cartels' and abusing a dominant position in the market.
There are many different types of illegal anti competitive activity. As a business owner you must avoid them all.
Two of the most serious and punishable examples of business practices that break competition law include:
The definition of a cartel is a situation where two or more businesses agree not to compete with each other. As a rule, the anti competitive agreements will involve certain kinds of unethical practices.
Note: You can report anti competitive behaviour to the Competition and Markets Authority (CMA) in the United Kingdom.
The rules on cartels do not only relate to large businesses and corporations. In fact, cartel regulations also apply to organisations and companies of any size. The most common types of cartels include:
All these types of agreements are illegal - no matter whether they are verbal or made in writing. In fact, planning such an agreement - even as an informal conversation with another business - would be breaking the law. The so-called 'gentlemen's agreement' would be illegal even if it does not get carried out.
Note: There are legal ways of working with other businesses that do not breach competition law. You may need to get legal advice or contact the Competition Pro Bono Scheme for further information on managing any risks.
Bidding for contracts is a major activity for certain types of businesses. But, discussing your bid for a contract tender with any of your competitors would be an illegal activity. Common types of bid rigging include:
UK competition law does not allow you to share markets or share customers with another business as part of an agreement. Thus, you would be in breach of competition laws:
Businesses should set out their pricing structures on an individual bases. Thus, discussing the prices that you will charge with any of your competitors would be illegal. So, to avoid anti-competitive activity, you should::
You must not share information with other businesses in an attempt to reduce the competition. So, for example you cannot share information about:
Note: Similar rules on agreeing not to compete with another business also apply to sharing information through a third party, such as a trade association.
Your business may be guilty of abusing dominance of its position in the market if:
The abuse of a dominant position may also apply if you conduct unfair practices to other businesses or to your customers. Typical examples include:
Knowing how to avoid and report anti competitive activity is vital for business performance and innovation. You must take steps to avoid all other activities that fall foul of competition laws, such as:
Various Types of Unlawful Anti-competitive Activity in the United Kingdom