In these unprecedented times, businesses are currently facing many challenges, including for their survival. Compliance with competition law is important, as the consequences of breaching competition law can be severe. Here we take a look at some of the key areas to be aware of.
Cartels – co-operating with competitors
Particularly in times of economic downturn, some businesses will try to reach agreement with competitors to maintain prices at particular levels or to divide markets between them, so as to maintain or increase their profitability.
Such cartel arrangements are illegal and can result in significant fines as well as criminal penalties for the individuals involved. Businesses should ensure that staff are aware of what interaction with competitors is permitted. If a business suspects that its competitors are involved in such anti-competitive conduct, it may wish to consider sharing its concerns with the Competition and Markets Authority (CMA).
There are exceptions to the prohibition on competitors agreeing co-operation measures, for example, the UK Government recently relaxed prohibitions on supermarkets and related businesses co-ordinating their efforts in order to ensure the supply of groceries throughout the current coronavirus outbreak. But any such agreements must be notified to and approved by the CMA - businesses should not undertake co-ordinated behaviour with competitors of their own accord.
Raising prices – task force set up to tackle excessive charging
Businesses should also avoid taking advantage of the coronavirus outbreak to charge excessively high prices and, again, if they believe they are suffering because a business in their supply chain is doing this, there may be remedies available. The CMA has set up a COVID-19 task force to avoid businesses exploiting the current situation.
Another competition law issue that businesses need to be aware of is State aid. The State aid rules are EU rules but continue to apply in the UK at least until the end of the Brexit transition period. State aid rules prevent Government and other public bodies from granting assistance to businesses, subject to some exceptions.
During the coronavirus outbreak, many businesses will receive State aid and they will want to ensure that such assistance is compliant with the State aid rules as the European Commission can recover any illegal State aid from the businesses which received it, with interest.
Get in touch
We regularly advise clients on competition law, including State aid, and would be happy to discuss further any particular queries you may have.
Jill is is a recommended lawyer in Corporate and Commercial Law and EU & Competition.