Competition law – understanding the do’s and don’ts
Businesses fined £1.7m for breaching competition law.
The Competition and Markets Authority (CMA) has highlighted a recent case which resulted in the businesses concerned being fined £1.7m. It has published Competition Law: Do’s and Don’ts to increase awareness that what may start as a joint venture or agreement between two parties could breach competition law. The two businesses broke the law by market sharing (e.g. agreeing not to compete in each other’s territory) under the umbrella of their joint venture agreement.
The CMA highlights its support for collaboration between rival firms that delivers tangible benefits for customers. It then comments broadly that firms entering into these types of arrangements need to:
check they are compliant with competition law at the outset
keep joint venture arrangements under regular review to check their compliance with the law.
Joint venture arrangements may be an area which comes under increased scrutiny and FDs, auditors and those involved in due diligence will need to consider the CMA guidance and seek legal opinion where necessary.
What is clear is that any existing arrangements should be checked against the CMA advice. One of the clear recommendations is that businesses define the true purpose of any collaboration and are precise about what it aims to achieve. They are also clear that businesses need to be clear, specific and honest about their goals and the limits of the collaboration.