A Guide To Competition Law In The UK

Introduction

UK competition law is governed by both British as well as European elements such as the Competition Act 1998 and the Enterprise Act 2002, so if a businesses conduct reaches across into Europe then EU Law would apply and they would be able to deal with the issue. However, competition law in the UK has pretty strict regulations itself on free trading and competition. Below is a guide of the three most important things to know, for businesses, regarding UK competition law as well as details on the governing bodies.

 

Competition Law in the UK 1: Free Trading

The Office of Fair Trading (OFT) says that “it makes markets well for consumers”, which is what competition law in the UK is supposed to be for; ensuring consumers get the best deal. In the UK it is prohibited to make any agreements that will put a restriction on free trading, or competition, between companies, such as cartels. Agreements between businesses that involve matters such as price fixing, bid rigging, allocation of customers or territories and so on is not allowed due to the Competition Act 1998. If any businesses are found to be disregarding the act then the Office of Fair Trading can prosecute and also levy fines of up to 10% of that company’s annual turnover. This can be a very costly law to break, so always ensure that free trade is a constant in your business.

Competition Law in the UK 2: Abusive behaviour and dominating firms

 

The second main objective of UK competition law is to ban abusive or dominating behaviour from firms. Anti-competitive practices such as predatory pricing, in which prices are set too much lower than the competition, are against the Competition Act 1998, as they could put other companies out of business. Abusive behaviour to the consumer, such as tying a customer into buying something along with something else, even if they do not want it, is another issue that is against the competition law in the UK. Similar to the free trading rules, this is to encourage healthy competition between businesses and to prevent one company ending up in a dominant position, or even a monopoly of industry occurring.

 

Competition Law in the UK 3: Mergers and Acquisitions

 

All mergers, acquisitions and even some joint ventures are supervised by the relevant governing body, so that UK competition law is adhered to. Some mergers or joint ventures may be deemed as unacceptable due to them threatening the competitive process of business in the UK. Either the mergers or acquisitions will be stopped completely, or ‘remedies’ will be offered that can ensure that free trade and market competition will still be operating. These remedies could be to offer access to their facilities so that other businesses will be able to continue competing with the new merged company.

Competition Law in the UK: Governing Bodies

As already mentioned, the Office of Fair Trading plays a large part in governing competition law in the UK, however there are other, smaller bodies that keep an eye on the way businesses are operating as well, such as:

ñ  Ofgem: Office of Gas and Electricity Markets is the government body that regulates competition between gas and electricity companies.

ñ  Ofcom: Office of Communications is one of the most well-known governing bodies. This deals with broadcasting and telecommunications, as well as postal companies.

ñ  Ofwat: Water Services Regulation Authority is the governing body that handles the water and sewage industry in the UK.

All of these ‘watchdog’ agencies will watch their industries very closely for anything which may be breaking the UK competition law.

Conclusion

When running a business it is essential to ensure that you are following the competition law in the UK. Failure to comply with the laws surrounding free trade, competitive behaviour and anti-abusive behaviour could result in a large fine and prosecution.

The Office of Fair Trading (OFT) is able to set remedies and the suchlike in order for all businesses in the UK to be operating on a competitive level; they also have the power to be able to prosecute those who are breaking the Competition Act 1998. There are other regulatory bodies, or ‘watchdog’ agencies such as Ofcom, that will be able to intervene if they believe the consumer is not being treated fairly due to lack of free trade or competition.

If you need legal advice on any aspect of Competition Law contact Birketts – Ipswich who offer a range of associated services.

Image Credits: Wikipedia 2

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