Out-Law News 2 min. read

CMA ramps up cartel awareness campaign


A significant minority of businesses are unaware that price fixing is illegal and only 18% know that admitting participation in a cartel can sometimes provide a company with immunity from prosecution, according to new research published by the UK’s Competition & Markets Authority (CMA). 

The publication of the research comes as the CMA increases its efforts to encourage whistleblowers to step forward and expose cartel activity, particularly in the construction, manufacturing, recruitment, estate agents and property management and maintenance sectors.

A survey of 1,200 businesses (61 page / PDF) found that less than a quarter of businesses claimed they were very or fairly familiar with competition law, and 16% had never heard of competition law. The proportion of companies unfamiliar with competition law had dropped 4 percentage points since a similar piece of research was carried out in 2014.

The survey found that only 57% of businesses knew it was illegal to fix prices, and 25% of respondents thought it was legal to discuss prices with competing bidders when quoting for work. Over a third incorrectly said dividing up and sharing customers with rivals was legal and 24% were not sure whether or not this was legal.

While a majority of companies said they were in contact with rivals for professional networking purposes, 10% of respondents admitted they had discussed prices with competitors.

Competition law expert Alan Davis of Pinsent Masons, the law firm behind Out-Law.com, said the survey showed “a surprising lack of understanding” amongst UK companies of competition law despite increased levels of enforcement over recent years.

“It is most likely that lower levels of knowledge about the competition rules are found in smaller businesses as larger companies are more likely to have the resources to invest in compliance programmes and legal advice on how the rules affect them,” said Davis. “Nevertheless, it is clear that the CMA is equally prepared to take action against anti-competitive conduct by smaller businesses as well as large companies.”

Davis said it was also important to note that the CMA highlighted a lack of knowledge about the rules on resale price maintenance, given the recent renewed focus by the CMA and competition authorities in other countries on enforcement in this area, especially in the context of online selling.

“Given the risks involved in breaching competition law, not just large fines but also criminal liability and director disqualification for individuals, it is important that businesses of all sizes take steps to ensure compliance and explain the rules to their staff,” Davis said.

The research revealed that there had been a marginal improvement in businesses’ awareness of what constitutes anti-competitive behaviour since 2014, but awareness in relation to cartel activity remained low.

Spontaneous awareness of the CMA was also low. Almost two-thirds of respondents said they did not know who enforces competition law in the UK. If prompted, 49% named CMA predecessor the Office of Fair Trading, and only 14% were able to identify the CMA as the UK's main competition regulator.

Almost 40% of companies surveyed had never heard of the CMA, while just 3% of respondents said they knew the CMA well.

The latest campaign to encourage whistleblowing over cartel activity continues the CMA’s fight in this area. Earlier this year it announced a sector-focused crackdown on activity, and in 2017 it launched an online advertising campaign offering rewards of up to £100,000 for whistleblowers.

The body said it had issued over £155 million in fines since April 2015 following investigations into anti-competitive practices, and it was currently investigating 15 cases across a variety of sectors.

Major fines include the £3.4m handed out to two major charcoal and coal suppliers, which were found to have been part of a market sharing cartel. Meanwhile water tank firms were fined over £2.6m after forming a cartel to divide up customers, fix minimum prices and share commercially sensitive information.

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