Anti-Competition Act

01 August 2003

Peter Hawkes, Senior Partner at Canterbury based solicitors, Furley Page, highlights the Government's intentions to crack down on anti-competition and the potential penalties facing both large and small companies.

Prudent businesses should now be reviewing the likely impact of the new Competition Act. Its provisions are being enforced by a strengthened team of officials at the Office of Fair Trading and there will be tough action on conduct deemed to be anti competitive.

The Act gives the Director General of Fair Trading new and wide-ranging powers. Businesses can be fined up to 10 percent of their turnover for each year of anti-competitive conduct up to a maximum of three years. Offending provisions in agreements will be void and unenforceable and conduct can also give rise to a liability in the civil courts.

On 1 March 2000 the Restrictive Trade Practices Act 1976 was repealed, and any exemptions under that Act were ended. Agreements made between 9 November 1998 (when the Act received Royal Assent) and 1 March 2000 remain subject to the Restrictive Trade Practices Act 1976.

Key provisions of the Competition Act include:

• A focus on agreements between competitors rather than between businesses at different levels in the supply chain (e.g. between manufacturers and retailers)
• Agreements will be under attack if they involve price-fixing, market sharing or discriminatory terms, particularly if the companies involved have over 25% of the market share
• The prohibition of anti-competitive agreements includes both formal and informal market co-ordination

Abuse of a dominant market position

• Determination of whether a business is in a dominant position will be decided on a case-by-case basis but if your market share is over 40 percent this may well be regarded as dominant
• Abusive conduct is likely to include unfair or discriminatory terms, imposing unrelated conditions or limiting production to the prejudice of consumers

The OFT recommends businesses should have a programme which ensures employees understand their obligations and compliance is monitored.

For more information please contact Peter Hawkes, Senior Partner & Head of Dispute Resolution.
 

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