Supporting the Northern Powerhouse
The Competition and Markets Authority (CMA) has been enrolling the assistance of North-West based law-firms to spread the word about competition law compliance to SMEs in the area. The approach is part of the CMA’s ongoing drive to boost awareness of, and compliance with, competition law amongst businesses across the UK.
The North-West is the third region to be targeted by the CMA (after the East and West Midlands earlier this year). According to research recently commissioned by the CMA, businesses in the North West currently have a very low level of understanding of competition law:
- 45% have never heard of competition law, or know of it “not at all well”;
- 52% do not know that price-fixing could lead to imprisonment;
- 51% do not know that bid-rigging is illegal; and
- 71% do not know that setting the price at which your customers can resell your product is illegal.
The research also found that only 19% of businesses have senior level discussions about competition law and only 6% ran training sessions. Many SMEs had also actually experienced or witnessed examples of anti-competitive practices (e.g. an approach by a competitor to fix prices) in their industry.
What is perhaps more concerning for the CMA, however, is the misconception amongst some that competition law does not apply to them because of their small size.
Whilst it is true that 'small agreements' (between parties with a combined turnover of less than £20 million) can be immune from some fines, this immunity is limited. In particular, it does not apply to price-fixing agreements and the CMA has discretion to withdraw the immunity following an investigation.
In addition, small agreements that are immune from fines are still subject to other, non-financial sanctions, including civil actions for damages by third parties harmed by the breach.
The CMA has in fact only ever used the 'small agreement' exemption once, in 2013, when two manufacturers of mobility scooters and seven online retailers were found to have infringed competition law by agreeing not to sell or advertise certain scooters online.
The parties in question escaped a fine, but on the back of the infringement finding a damages claim of £7.7 million has since been brought by the National Pensioners Convention on behalf of the mobility scooter customers.
If you are a small or medium-sized UK business and would like to discuss these issues further, please do not hesitate to contact us.