How to Identify a Competition Issue19 Dec 2019
The UK and EU competition regimes prohibit the following types of anti-competitive conduct:
1. Agreements between businesses which prevent, restrict or distort competition (“agreements” in this respect do not have to be formal or written; verbal or implied agreements to act in a particular way will also be caught);
2. Abuse of a dominant position (a company will be dominant if it is able to act independently of others in the market. As a general rule, companies with a market share of 40% or more will be dominant).
It can often be difficult to identify a situation as giving rise to a competition law issue, and we have set out below some common examples in this respect. In general, where an entity feels that it has been discriminated against or that another entity is acting unfairly, there is likely to be a competition angle.
Common scenarios which may give rise to competition issues:
- Cartels (competitors working together and co-operating over certain aspects of the market);
- Price fixing (resellers being asked to increase their prices, restrictions on discounting or steps taken to penalise those whose prices fall below a certain level);
Joint ventures between competitors;
- Tying and bundling (being forced to buy product that you do not want);
- Dominant companies selling goods at below cost price or offering rebates;
- Refusal to supply goods/services;
- Territorial restrictions;
- Customer allocation (e.g. ban on supplying certain types of customers or based on their location);
- Exchanges of commercially sensitive information, such as prices, production levels, markets;
- Non-compete provisions;
- Long-term exclusive contracts (typically in excess of 5 years);
- Selective distribution systems (whilst such distribution systems are themselves perfectly legitimate, the admission criteria and imposed restrictions have the potential to cause concern);
- Bid rigging (discussing contract tenders with competitors).
We have vast experience in working with clients involved in contentious matters, whether they are bringing a claim against a third party who has acted contrary to the competition policy or whether they are defending such a claim. This includes both private actions and those brought by regulatory authorities such as the CMA. We also provide advisory services to assist companies in ensuring they are operating within the confines of the competition regime. Getting it right is important as companies found to have breached the competition regime are liable to fines of up to 10% of their annual turnover.
Contact us or speak to partner and competition law specialist Claire Meyers on 0161 838 7816 for expert advice.