Just like individuals, businesses in the UK and throughout Europe must comply with a number of laws and regulations. These range from legislation designed to protect the environment to laws to protect consumers, and even other businesses. Anti-competition laws, or competition laws to be more accurate, are designed to help ensure that businesses are able to compete with one another and create a thriving, healthy marketplace.
What Are Anti-Competition Laws?
To the casual observer, competition between businesses seems to be the normal course of things. Why must there be laws to encourage it and to discourage anti-competitive behaviours? To understand that, we need only look at history. Industry control by monopolies is nothing new. Think of the East India Trading Company, or the Standard Oil Company. Anti-competition laws are designed to help prevent monopolisation and to encourage free trade.
Why Are They Important?
Anti-competition laws are important because they help ensure a healthy marketplace, which benefits both consumers and business owners. When businesses are forced to compete with one another, consumers benefit from lower pricing, wider availability, and other perks. Businesses are forced to innovate in order to set their offerings apart, which drives the entire industry forward. These laws also help to ensure that negative practices are avoided, such as bid rigging and price fixing, as well as ensuring that prominent market positions are not abused.
To Whom Do Anti-Competition Laws Apply?
Anti-competition laws apply to all businesses, large and small. No matter what your industry or niche, you are required by law to avoid anti-competitive business behaviour and even to report anti-competitive activity. From local, one-off shops to high-street chains to international conglomerates, healthy competition must be encouraged, and anti-competitive activities avoided.
What Must You Do to Ensure Compliance with Anti-Competition Laws?
Most of the activities you must avoid were first listed and explained in the Competition Act of 1998. The Act spells out what business owners must avoid doing, how to manage their risk, and even what activities to report to the government to help quash anti-competitive actions. Some examples of prohibited anti-competitive activities that a business might engage in, which are now banned by law, including the following:
- Charging different prices to different customers if there is no difference in supply or demand
- Imposing different terms on different customers when there is no difference in service or product delivery or supply
- Fixing prices with a competitor
- Fixing the terms of trade or service delivery with a competitor
- Limiting production or product availability in order to reduce competition
- Agreeing to split or carving up a market with your competitors
- Abusing a dominant market position
What Happens If Your Business Breaks Anti-Competition Laws?
If your business is found to have broken anti-competition laws, you could face severe penalties. Under the law, you and/or other business decision makers may face:
- Significant financial fines up to 10 per cent of your company’s annual income
- Face disqualification from being a director/decision maker
- Face unlimited fines of directors
- Face prison time
- Face lawsuits from your customers or competitors
How Do You Report Anti-Competitive Behaviour?
It is your responsibility not only to avoid anti-competitive behaviour on the part of your business, but to report it on the part of your competitors. To do so, you simply need to complete the form found here from the UK Government, and then email it to the address specified on the web page.
In the end, anti-competition laws are all about ensuring that consumers and businesses can both thrive in the market. Competition is good and healthy, and no business should be able to dominate a particular sector to the detriment of others.
This is content from the antitrust and competition law Compliance Training Program