Competition Alert - 29 October 2018

 

CMA launches cartel campaign and issues ‘dos and don’ts’ guidance on land agreements

In October, the UK’s Competition and Markets Authority (CMA) has taken significant steps to raise overall awareness of the importance of competition compliance.

The CMA has now launched its new cartel campaign, calling on whistle blowers to expose cartelists and offering financial rewards of up to £100,000 for doing so.  

To accompany its cartel hotline, the CMA has set up a dedicated website which includes a number of videos, short guides and case studies to help explain what cartels are and how people can report them.

The cartel campaign is specifically targeting sectors including construction, manufacturing, recruitment, estate agents and property management and maintenance – all of which have been identified as particularly susceptible to cartels.  The campaign follows the CMA’s publication of research which shows that only 57% of the companies surveyed knew that it was illegal to fix prices.

In addition, this month the CMA has issued its decision fining Heathrow Airport £1.6 million for including a pricing restriction in a lease agreement with a hotel (which we previously discussed here).  On the same day, the CMA published ‘dos and don’ts’ guidance on land agreements. The guidance stresses the importance of having a competition law compliance programme in place and making sure all land agreements are regularly reviewed.

 In the Don’ts section, it advises against (without seeking legal advice first):

• entering into a land agreement which restricts the prices at which goods or services can be supplied from the land
• entering into a land agreement which restricts how the land can be used with the aim of sharing or dividing up territories or customers
• entering into land agreements which restrict how the land can be used to make it harder for other businesses to compete
• assuming existing land agreements are legal because they have been checked by lawyers in the past

Comment

There has been a recent step up in the CMA’s level of enforcement activity.  The CMA is currently investigating as many as 15 cases, including in construction services, roofing materials and estate agency.  Cartels are usually covert and secretive in nature, making it difficult for authorities to uncover their existence.  

However, as previous cartel awareness campaigns have driven a 30% rise in the number of tip-offs to the CMA’s cartels hotline, the trend for greater levels of CMA enforcement activity is expected to continue.

It is important that businesses take adequate steps to ensure they are fully compliant with competition law. The stakes are high, as businesses found to have been involved in illegal cartels can be fined up to 10% of their group’s annual worldwide turnover, individuals can face up to 5 years in prison and directors can be disqualified from holding director positions for up to 15 years.  

In relation to land agreements, in particular, general awareness has been relatively low as prior to 2011 such agreements were exempt from competition law.  Businesses should, therefore, review any existing and new land agreements to ensure they are fully competition law compliant.

If you would like further information or advice regarding competition law, please contact Freeths’ Head of Competition, Andrew Maxwell.

For additional information, please see the following links to the CMA’s webpages:

• Cartel campaign
• Research on UK businesses’ understanding of competition law
• Airport facilities case
• Dos and don’ts guidance for business and land agreements
• Guidance on land agreements