Increased Competition Enforcement in 2016/2017

The UK’s main competition regulator, the Competition and Markets Authority (‘CMA’) has called for sector regulators to increase their use of competition law. In April, the CMA published its second annual concurrency report, which summarised the competition law activities of the sector regulators – “must do better.”

The CMA “hope[s] to see a greater number of cases opened during the year ahead.”

We can expect the sector regulators to follow the CMA’s conclusion because the government as a whole is vigorously pursuing a policy of increased competition enforcement. Also, for political reasons, it is important that the sector regulators use their competition powers as they were granted them on a ‘use it or lose it’ basis. Losing competition powers will not help anyone’s career!

A Pattern of Increased Enforcement Tools

Calling for greater use of the competition powers by regulators is just one tool by which the government wants to increase competition enforcement. Taken together, the tools paint a picture of a government that is getting very serious about increasing enforcement. Other recent developments include:

• simplifying the UK criminal cartel offence with the intention of bringing “as many new criminal cartel investigations as possible,”
  • penalties are:
    • up to 5 years imprisonment and/or an unlimited fine,
    • confiscation of assets, and/or
    • director disqualification for up to 15 years,
  • the introduction of the class-action regime in the UK,
    • this is a very powerful tool because all claimants are automatically included in a case, so there is no need for all claimants to sign-up,
  • widening the range of those that are liable for abuses:
    • parent companies are liable for subsidiaries’ abuses – fines can be 10% of the group’s worldwide turnover,
    • those that ‘facilitate’ a cartel in full knowledge are liable, along with the cartelists. Any act can facilitate,
    • principals are liable for the agent’s abuses,
    • a company that outsources a service may be liable where the service provider cartelises in the outsourced market,
  • a policy of prioritising enforcement against SMEs.

What You Can Do

With the expected increase in enforcement, which we are beginning to see, we recommend that businesses undertake a review of their practices and implement a competition compliance policy.

This will minimise the risk of being non-compliant, but if the company does breach competition law, the existence of a compliance policy can mitigate punishment.