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Articles Competition 10th Oct 2017

Five essential compliance actions for companies: Critical competition law compliance duties of In-House Lawyers, Senior Management and the Board

The UK competition law regulator, the Competition and Markets Authority (CMA), is on a mission to raise companies’ awareness and understanding of anti-competitive behaviours and to ensure complying with competition law becomes second nature for all businesses.

The CMA’s recent enforcement activities across a number of very different sectors demonstrate that, as far as competition law is concerned, ‘burying your head in the sand’, or putting compliance off ‘for a quieter month’, is never a viable option for any business.

Recently, the CMA has highlighted the severe (and potentially criminal) consequences of illegal anti-competitive agreements and other cartel arrangements, such as bid-rigging, price fixing and market sharing, in sectors as diverse as estate agents and fashion.

Then on 6 October 2017, the CMA issued a strong warning to businesses and personnel to heed a recent Competition Appeal Tribunal (CAT) judgment that upheld a fine imposed on a supplier of galvanised steel water tanks for allegedly discussing sensitive business information with competitors at a single meeting (which the CMA was secretly recording).

With this in mind, there are five crucial compliance actions to take to meet your company’s ever present obligations to ensure compliance with EU and UK competition law. These must emanate from the Board and Senior Management, via your In-House Legal function if you have one, and must flow outwards so as to pervade your entire organisation.

What is the CMA doing to spread the word?

As well as sending out general messages, such as its advertising campaign in March 2017 to crack down on cartels, the CMA has also used a couple of recent cases in two specific sectors to reach out to all businesses and to raise awareness of competition law.

The first case involved a group of Somerset estate agents alleged to be price fixing their commission rates for the sale of residential properties. Price fixing cartels are amongst the most serious kinds of anti-competitive arrangement and can be prosecuted criminally.

The second case, discussed here, involved 5 model agencies the CMA alleged had engaged in price fixing and/or exchanging confidential, commercially sensitive information. This case led the CMA to issue an open letter in early September 2017 to those working in the creative industries (but to be heeded by all businesses).

With its recent communications, the CMA is sending a strong message to all businesses and individuals that ignorance of competition law can be very costly. The CMA is also drawing attention to the fines that can be imposed: over £1.5 million in the modelling case. Such fines are ‘a drop in the ocean’ for some businesses, but the potential liability is up to 10% of global group turnover (among several other penalties), so must not be ignored.

CAT ruling in galvanised steel tanks information exchange

Following the CAT’s ruling upholding the CMA’s fine on Balmoral Tanks Ltd for illegally exchanging pricing information, on 6 October 2017 the CMA issued a strong warning to companies and individuals who are invited to take part in anti-competitive collusion:

  • Exchanging competitively sensitive, confidential information with competitors (e.g. about prices or pricing strategy), even at a single meeting, can breach competition law and have serious consequences for the businesses involved.
  • Any business that is approached to join a cartel, or become involved in anti-competitive arrangements (e.g. to coordinate pricing or share out markets between them) must immediately reject the approach, and must do so clearly and unequivocally. It is not enough to refrain from price fixing or market sharing. The business (and its representatives) must leave the meeting, and make clear and explicit its refusal to take part. In particular, have it recorded in the minutes of the meeting that you left immediately the discussion strayed from the initial agenda.
  • Your business must also decline to take part in any discussions that involve the sharing of confidential and competitively sensitive pricing information.

Five essential compliance actions for companies

It is crucial for Senior Management and In-House Legal teams to stay compliant with competition law and to be prepared in the event of a Dawn Raid.

With recent CMA blogs and press releases, the CMA is aiming to encourage businesses to make compliance with competition law a habitual business practice and is pledging to keep up its enforcement activity, carrying out investigations and punishing illegal anti-competitive conduct. It now has 13 open competition enforcement cases, including cartel investigations into roofing materials and design construction and fit-out services.

Therefore, each of the following five critical compliance actions should be considered key to your company’s ever present obligations to comply with EU and UK competition law:

  • Regularly train the Board, Senior Management and external facing Sales/Marketing teams on competition compliance, at least annually.
  • Introduce a Competition Compliance Policy, roll it out across the company and have all directors, officers and employees sign up to it.Regularly train Reception, IT, Senior Management and your internal Dawn Raid Response Team on how to survive a dawn raid, at least annually.
  • Introduce a Dawn Raid Policy and roll it out across the company.
  • Have an external law firm on call with an external Dawn Raid Response Team briefed and ready to respond in the event of a Dawn Raid on your business.

The responsibility for competition law compliance starts with the Board and Senior Management. It is the responsibility of your In-house Legal and/or Compliance teams to ensure that competition law compliance always remains near the very top of the Board’s corporate agenda.

For further information on how to stay on top of compliance with competition law, please contact Andrew Maxwell.


The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
Andrew Maxwell, Partner & Head of Competition

Author: Andrew Maxwell

Partner & Head of Competition

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