14 December 2018

  |  CBI Scotland

News

Competition Law: Are you at risk of breaking it? - Competition and Markets Authority

The Competition and Markets Authority recently launched a new anti-cartel awareness campaign - an important issue that all CBI members should be aware of. 

Competition Law: Are you at risk of breaking it? - Competition and Markets Authority

In October, the CMA launched a new campaign aimed at raising awareness of cartels and to help businesses report them. According to our latest research, the majority of UK businesses don’t know much about competition law. It also highlighted that businesses in Scotland don’t understand competition law well compared to the rest of the UK. As a consequence, businesses may be unaware that they are engaging in anti-competitive behaviour. This creates the perfect storm for competition rules to be broken and for cartels to be born.

So, what is a cartel?

Business cartels occur when competitors get together and agree not to compete against each other - by fixing prices, dividing and sharing markets between them or rigging bids for contracts so they decide who wins. Cartels are a form of fraud that rip customers off and ultimately deprive them of a fair deal. They also make it extremely difficult for other competing businesses that aren’t part of the cartel to survive and grow.

When it comes to UK businesses’ understanding of cartel behaviours – our research reveals some dangerous misunderstandings:

  • 41% don’t know attending a meeting where rivals agree prices is illegal
  • Over half (59%) don’t know that agreeing to split up and share customers with competitors is illegal 
  • Just under half (48%) don’t know that bid-rigging – where competing bidders secretly agree who will win a contract and submit fake bids – is illegal.

These misconceptions should ring alarm bells because the consequences of breaking the law are serious, damaging businesses as well as an individual’s personal career.

In 2016, a number of water tank suppliers were fined over £2.6 million for breaking competition law by forming a cartel. Another business, based in Aberdeen – was fined £130,000 for sharing commercially sensitive information at a meeting even though they didn’t join the cartel. Sharing this commercially sensitive information gave the cartel an idea of competitors pricing strategy, which could have helped the other suppliers fix prices and rob customers of a fair deal.

Breaking competition law can lead to fines, director disqualification, and even prison. It’s not worth the gamble and all businesses, small or large, are equally at risk and face the same penalties.  We know that the majority of firms want to do the right thing. Most of those surveyed understand the value of fair competition, believing competition law helps to provide a level playing field for businesses, with the majority believing competing fairly is the right thing to do.

What should you do if you spot a business cartel?

If you think you may have been involved in a cartel then it’s better to report it to us first, as you may benefit from immunity from fines and prosecution if you report before others do. If you think you’ve witnessed others breaking the law and report it to us in confidence, you may benefit from a financial reward.

Go to: www.gov.uk/stopcartels