In November 2016 the Competition and Markets Authority (CMA) launched an investigation into the supply of solid fuel products in the U.K.
The investigation relates to Chapter I of the Competition Act (CA) 1998 that bans agreements made between two or more companies that prevent, restrict or distort competition within the U.K., and as a result may affect the trade or market within the U.K.
We have blogged about anti-competitive agreements in the solid fuel industry before, and here is an update on the current situation.
In March 2017, the decision was taken to continue with the investigation. As with all investigations, the CMA gives time to for all the necessary information gathering.
There is due to be an update of the investigation by the end of July.
It’s hard to come to anything conclusive when there’s not enough evidence to base the findings, but the CMA has decided to continue the investigation, which may mean they suspect something is afoot.
Types of banned agreements
The types of agreements that are prohibited under Chapter I are quite wide and include, but aren’t limited to:
- Agreements which directly or indirectly fix purchase or selling prices, or any other trading conditions (this may include discounts)
- Agreements which limit or control production, markets, technical development or investment (this may include setting quotas)
- Agreements which share markets or sources of supply
- Agreements which apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage
If the suppliers of solid fuel and charcoal products are found to be involved in any of these agreements, it may cause higher prices and a less competitive market. If higher prices are implemented in the market, this could have a negative effect on the consumer as they may have less of a choice and may be paying more than they should be doing.
Penalties
If the CMA finds that the suppliers have breached competition laws, they can impose fines that are usually financial in nature. The CMA can impose a fine of up to a maximum of 10% of the company’s global turnover if the breach was committed internationally or negligently. It’s up to the CMA what they consider to be serious breaches, but usually market-sharing and price-fixing fall into this category.
Moreover, if the companies aren’t compliant in the investigations or provide false or misleading information, they may be subject to imprisonment.