Crash course in ... competition law

Your sales manager was spotted in the bar at a conference last week in a huddle with his opposite numbers at your two main rivals. He says it was just a social chat, but how can you ensure your firm isn't engaging in anti-competitive behaviour?

by Alexander Garrett
Last Updated: 31 Aug 2010

So what's that? There are two main areas of competition law: anti-competitive agreements, including price-fixing, bid-rigging, carving up the market and other cartel-like behaviour; and abuse of a dominant position, covering anything from over-pricing to refusing to supply certain customers.

Put it on the agenda. Get top-level buy-in - penalties can be up to 10% of turnover and five years in jail. Consider putting it in your vision and values statement; spell out that knowingly participating in anti-competitive practices constitutes gross misconduct.

Comply with me. Your lawyers can help you create a compliance programme. 'It's all about education,' says Angelique Bret, a senior solicitor at Denton Wilde Sapte. 'We create a set of rules giving your employees practical guidelines on what they can and can't do, tailored to your business.' Have the rules laminated and stuck on the wall, or handed out as cards.

Stop careless talk. 'Don't talk to competitors about prices, markets and customers,' says David Marks, a partner at CMS Cameron McKenna. 'Even if you're not making agreements, any sharing of information in these areas inherently leads to less competition.' An employee caught up in an awkward conversation should withdraw - then report it to the legal department afterwards. And don't think you're immune when meeting under the auspices of a trade association.

Local is no defence. Competition law is just as relevant to a small firm operating in a local market as to a multinational. 'It's all about how the market is defined,' says Bret. 'Roofing firms have been fined a lot for collusive tendering.'

'Fess up. If you discover your company has been price-fixing or bid-rigging without your knowledge, tell the Office of Fair Trading. 'Approach the OFT as a whistleblower and seek leniency,' says Marks. 'It can give complete leniency in terms of penalties - though you could still be sued by anyone who has suffered as a result of your cartel.'

Are you a dom? If you have 50% or more of your market, you're likely to be deemed in a dominant position, and another raft of possible infringements come into play. 'But it's not just about market share,' says Marks. 'Dominance is about your ability to behave without regard to competitors or customers, and may reflect high barriers to entry.'

Beware the dawn raid. It's probably a good idea to have your receptionist armed with key numbers, including lawyers, so that if the OFT (or European Commission) investigators turn up before breakfast you can quickly get your ducks in a row.

Do say: 'Competition makes us better.'

Don't say: 'Let's not cut each other's throats here.'

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