How To Protect Your Business From Unfair Competition

All businesses must understand how they’re affected by competition law. Businesses must follow the rules on all types of anti-competitive activity including price fixing, bid rigging and other ways of agreeing not to compete (‘cartels’) and abuse of a dominant market position Risk management includes clear policies, guidelines and training of staff. This includes reporting suspected anti-competitive activity in another business. If you think your business may be breaking the law, seek legal advice or contact the Competition Pro Bono Scheme.

Types of anti-competitive activity

Cartels

The rules on cartels apply to businesses of any size. Rules cover price fixing, bid rigging, sharing markets or customers and sharing commercially sensitive information. An agreement doesn’t have to be in writing for it to be illegal. You can break the law if you have an informal conversation with another business, even if the agreement isn’t carried out.

Price fixing

You’ll be breaking the law if you agree with another business to charge the same prices to your customers, to offer discounts or increase your prices at the same time or to charge the same fees to intermediaries, e.g., retailers selling your products.

Bid rigging

Bid rigging includes agreeing with your competitors how much you will bid for a contract or share information about your bid, taking turns to win contracts, asking other businesses to bid when they don’t want the contract (‘cover bids’), paying other businesses not to bid or when you win a tender or agreeing with other businesses not to bid or to withdrawing your bid.

Market sharing

You break competition law if you agree with another business not to approach each other’s customers or not to compete with them for customers. Sharing information

You can’t share information with other businesses that might reduce competition between you, e.g., information about prices, production, suppliers, customers, contractors or the markets you sell or plan to sell to. This includes sharing information through a third party, eg a trade association.

Abusing a dominant position

Your business might have a ‘dominant position’ in the market if it has more than a 40% market share or it’s not affected by normal competitive restraints. You might be abusing your dominant position if you’re unfair to your customers or other businesses, e.g., you treat customers differently, for example by offering different prices or terms to similar customers; make customers buy products they don’t want, e.g., warranties for electrical products or charge low prices that don’t cover your costs so you drive out competitors.

Consequences of anti-competitive activity

The consequences of being involved in anti-competitive activity include your business being fined up to 10% of its worldwide turnover and sued for damages. If you're found guilty of being involved in cartel activity you may be fined or sent to prison for up to 5 years. Company directors can be disqualified from being a director for up to 15 years.

Further guidance is available from the Competition and Markets Authority (CMA).