Your SME may be unwittingly breaking the law when you discuss prices
Could your conversations with competitors be putting you at risk of breaking the law? New research from the Competition and Markets Authority (CMA) shows that most firms don’t know much when it comes to cartels and what is or isn’t allowed under competition law.
As the CMA launches its latest cartel awareness campaign, here are six tips to protect your business from cartels:
Recognise illegal cartel behaviours
Recent research by the CMA shows that nearly half of businesses surveyed thought they were allowed to agree prices with competitors and 48 per cent thought competitors could discuss and agree which of them would win bids for new work, or didn’t know whether this was allowed or not. Fifty-nine per cent thought market sharing – where competitors agree not to sell to the same customers – was allowed or didn’t know. Each of these behaviours is illegal. Understanding the types of behaviour that can be illegal is the first step to keep your staff and business compliant.
Beware what you share
It’s natural to meet rivals in your sector, and often a necessary part of day-to-day business, but if you find yourself talking shop, make sure you aren’t discussing sensitive information about your commercial practices. It might be tempting to discuss prices (both present and future) with rival businesses but it’s illegal to agree prices or even disclose pricing strategies, for example. Be careful also of those unofficial meetings and chats: even if a conversation has an innocent beginning, be mindful of what you can and can’t discuss.
Make decisions independently
Cartels can occur when two or more competitors make decisions together, such as about what prices to charge, or who will win a bid, rather than competing against one another to give customers the best deal. Make sure you are making decisions independently for your company, without coordinating with competitors.
Watch out for non-compliant rules from trade associations
Trade associations are useful for bringing businesses together to discuss sector wide issues. However, trade associations can also present risks where businesses come together under a common goal, which may lead to agreeing or coordinating how they go about things. At times, this may come direct from the association itself via its rules of membership. If you spot anything that doesn’t look right – such as the trade association asking you to share or discuss pricing strategies – make it clear you won’t be involved in the discussions and flag it straight away.
Identify and analyse the risks
Once you understand what the law says, look carefully at your business and identify areas where you might risk breaking competition law. For example, which of your employees have contact with your competitors at industry events or similar? Do they need training on what they can and can’t discuss? Identifying and analysing the risks your employees face will help you identify any training needs. The CMA has a handy one-page checklist you can use to see where risks may exist.
Think you might have seen evidence of a cartel – or been involved in one yourself? Under the CMA’s leniency policy, the first company to report wrongdoing to us can apply for immunity from enforcement action, including fines and director disqualification. If you think you have information, report it to the CMA using our online form or by calling our hotline. The consequences if you are found to have broken competition law are just not worth the risk.
For more information about how to protect your business from cartels and how to report, visit the CMA’s Stop Cartels homepage at gov.uk/stopcartels.