Competition law allows for fair competition to be maintained between companies and prevents companies taking part in anti-competitive behaviour.
The UK is governed by UK and EU competition laws, and if it’s found that a company has engaged in anti-competitive behaviour, there can be serious consequences. The two common ways in which competition law can be breached is: engaging in anti-competitive agreements; abuse of a dominant market position.
Both can lead to fines for offending companies.
Anti-competitive agreements
An agreement that is made by companies that restricts or manipulates competition within the EU and UK can be classed as anti-competitive agreements that are prohibited by law.
The types of agreements can include:
- The fixing of purchase or selling prices
- The limit or control of a market through its production or technical development
- Agreeing to share market resources
- Agreements that have different conditions depending who it is
Abuse of a dominant market position
If a company holds the dominant position within a particular market, it could act against the spirit of competition to the detriment of competitors and consumers. Just because a company does hold the dominant position does not mean it is breaching competition law, but behaviour that could breach competition law can include:
- Refusing to supply a service or grant access to a service
- Imposing unfair trading terms
- Making a buyer purchase some or all of their products from a second purchase if they wish to purchase one thing
- Imposing unfair trade terms of being exclusive as to who is being sold to
Consequences
The consequences for engaging in anti-competitive behaviour like this can include:
- Fines of up to 10% of their global turnover
- Actions by third parties against them such as claiming for damages if it can be shown a loss occurred due to the anti-competitive behaviour
- Individuals being disqualified from being a company director
- An injunction can be enforced