Out-Law / Your Daily Need-To-Know

Out-Law News 2 min. read

OFT publishes guide on how businesses can comply with competition laws


UK businesses should identify and change behaviour that may be deemed to be anti-competitive, the Office of Fair Trading (OFT) has said.

Senior management should take responsibility for ensuring that firms do not operate anti-competitive practices, the OFT said in new guidance on how businesses can comply with UK competition laws.

Work processes that managers should monitor include how employees interact with competitors, if they have access to rivals' price or business plans, and whether the company has agreements with competitors that could allow unlawful practices to develop, the OFT guidance said.

Managers should rank the seriousness of risks and consider assessing employees who operate in high-risk areas, the guide said.

"These may include employees who are likely to have contact with competitors and employees in sales and marketing roles; whilst employees in some back-office functions may be classified as low risk," the OFT competition law compliance guide http://www.oft.gov.uk/shared_oft/ca-and-cartels/competition-awareness-compliance/quick-guide.pdf (16-page / 234KB PDF) said.

Managers should introduce new policies, ways of working and training to reduce the chance of unlawful anti-competitive activity happening, the OFT said. The measures could include training employees in competition law, logging employee contact with competitors and establishing a confidential self-policing system to allow employees to flag up concerns about anti-competitive practices, the OFT said.

Businesses should review their processes for identifying and counteracting anti-competitive risks, the OFT said.  Firms should admit to any anti-competitive practices they uncover as it may reduce the level of financial penalties they would be subjected to, it said.

The OFT guidance identified examples of anti-competitive activity that breaks the law. Charging prices for products that do not cover costs, changing the price for goods to similar customers without justification and refusing to supply existing customers are all examples of businesses abusing a dominant position in a market, the OFT said.

"Anticompetitive conduct which exploits consumers or tends to have an exclusionary effect on competitors is likely to constitute an abuse," the OFT said in its guidance. "It is important to consider the likely effect of the conduct on customers and on the process of competition when determining whether it would amount to an abuse."

Businesses should withdraw from cartels and other anti-competitive agreements, such as collaborating with rivals to drive supplier prices down, or entering into contracts that give retailers the exclusive rights to sell goods or services for more than five years, the OFT said.

The OFT said it was issuing its guidance to better raise awareness of how businesses could comply with UK competition laws. A recent OFT-commissioned survey (42-page / 584KB PDF) of more than 2000 businesses found that only a quarter of the firms questioned said they knew at least a fair amount about the requirements of the laws.

"Compliance with competition law is essential to ensuring that markets work well for consumers," John Fingleton, OFT chief executive, said in a statement.

"We recognise that most businesses want to comply with the law and are keen to help them avoid breaching the law in the first place, supporting this by taking strong enforcement action against those who do not comply," Fingleton said.

"Businesses have told us that competition law is far higher up the business agenda than even five years ago, and this has been confirmed in our survey. The guidance documents published ... are intended to support businesses and company directors by providing practical guidance on the steps they can take in order to comply with competition law," Fingleton said.

The OFT enforces compliance with competition laws in the UK. Businesses can be fined up to 10% of their global turnover and individuals can be jailed for up to five years for serious anti-competitive offences.

We are processing your request. \n Thank you for your patience. An error occurred. This could be due to inactivity on the page - please try again.