What you Need to Know About Competition Law

Competition law promotes or seeks to maintain market competition by regulating anti-competitive conduct amongst companies. Any company that fails to comply with UK or EU competition law will meet with serious consequences.

In April 2014, the UK Office of Fair Trading and the Competition Commission merged to form the new Competition and Markets Authority (CMA). Since then, any business operating in the UK has been subject to a more robust level of enforcement of the rules, including increased fines and more criminal prosecutions where relevant.

Every business, regardless of is size, industry sector or legal status, must make itself aware of how competition law works so that its obligations can be met and fines and prosecutions therefore avoided, and on the other side of the coin, so that it can protect its market position.

There are two sets of competition rules in operation in the UK and they run concurrently. One concerns UK-wide trade and this is covered by the Competition Act 1998 and the Enterprise Act 2002. For anti-competitive behaviour that extends outside of the UK to other EU Member States, this is covered by Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).

What is Prohibited?

Both UK and EU competition law prohibit two key types of anti-competitive behaviour. This includes anti-competitive agreements, and abuse of a dominant market position.

Agreements, arrangements and business practices which prevent, restrict or distort competition or aim to, and which affect or may affect trade in the UK or EU will be considered a breach of the legislation.

What are the Consequences of a Breach?

Companies in breach of anti-competition law can face fines of up to 10 per cent of group global turnover. Companies will also expose themselves to possible actions for damages and may also find their agreements unenforceable. Directors could face disqualification or criminal sanctions if the breaches are serious.

The new Consumer Rights Act 2015 provides that businesses that find themselves at a competitive disadvantage from breaches in competition law will be offered swift, low-cost remedies.

Suffice it to say, all businesses must make themselves fully aware of the provisions of competition law. Your bookkeepers will be able to explain the fundamentals, and your lawyers will help you word your agreements in such a way that they comply with the law.

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