Fair Competition

The Office of Fair Trading’s Annual Report, published in July, highlights the importance for local business clients of avoiding a breach of the Competition Act 1998. Fines can be heavy in this area of up to 10% of worldwide group turnover:

Andrew Bryan says “Businesses may not realise that they cannot even exchange price information with competitors, never mind fix prices and any arrangements that might amount to bid rigging or horizontal price fixing can land you in jail or even extradited to the US for prosecution there, where there is a US element to the arrangement.

The report points out that, as a result of the OFT’s investigation into collusive tendering by construction companies in England, it has uncovered evidence of bid-rigging in thousands of tenders with a combined estimated value approaching £3bn. At the end of March 2007, the OFT announced its intention to fast track the investigation by making an offer of reduced financial penalties.

Even companies acting alone can breach the UK competition rules if they enjoy a dominant market position and then engage in practices such as excessive or predatory pricing or refusal to supply customers in some cases. Many commercial agreements have to be carefully drafted to avoid infringement of the rules, even provisions such as non-competition clauses in distribution agreements. Anyone exporting or importing goods within the 27 EU States also needs to be aware of the single market rules – that once goods are put on the market by the owner of any trademark or other intellectual property right that protects the goods, they must be allowed to circulate freely.

Call Andrew on 029 9221 0170 for further information.