Insight
Amid growing concerns over a lack of fuel supplies and scenes of long queues at petrol stations, the Government has taken the unusual step of disapplying competition law to fuel suppliers. This was considered necessary to allow fuel suppliers to discuss among themselves how to ensure supplies reached the places where they are required.
UK competition law (and specifically the prohibition on anti-competitive agreements) prevents competitors discussing with each other terms of supply, including the identity of which customers they supply and the price and other terms on which they supply. While most businesses are aware that they cannot engage in “hard-core” cartel activities, such as price-fixing arrangements or market-sharing arrangements with each other (which are hugely detrimental to consumers), many are not aware that the prohibition on anti-competitive agreements extends much further than this and includes sharing confidential information including information relating to production levels and terms of business. Many businesses are also unaware that verbal, gentlemen’s agreements or understandings are prohibited as well as formal contracts.
The Competition and Markets Authority (CMA) has wide-ranging powers to investigate suspected breaches of competition law, including the use of “dawn raids” and the penalties for breach are severe – businesses can be fined up to 10% of global turnover, can find themselves exposed to damages claims for competitors and consumers, and individuals can be disqualified as a director and, in the most serious cases, face imprisonment.
We assist clients with competition law compliance, primarily by providing competition law audits and competition law training and materials, for both management and staff. Where a business discovers it has breached competition law, we can advise on whether to apply for “leniency” – essentially blowing the whistle in return for a reduction in penalties.