The Competition and Markets Authority (CMA), the government body that regulates business competition in the UK, previously published an update with regards to its investigation into the financial services sector relating to alleged suspected anti-competition arrangements.
The update followed the UK government’s declaration of a post-Brexit trade deal with the European Union, with the CMA announcing that the investigation will continue beyond the conclusion of the exit transition period. Previously, the investigation was also seeking to ascertain whether an infringement of the Treaty on the Functioning of the European Union (TFEU) had occurred, but now it will proceed in respect of UK competition law, solely investigating the possibility of a breach of the Competition Act 1998 (CA98).
The investigation of the financial services sector
In November 2018, the CMA began their investigation into a suspected cartel allegedly operating within the financial services sector. The CMA was explicit in declaring that the alleged “anti-competitive arrangements” were by no means certain, stating that they had yet to obtain “sufficient evidence” that competition law had been broken.
Over two years on, the CMA has published some updates on their investigation, but the uncertainty remains in terms of a conclusion. They have scheduled a continuing investigation for between January 2021 and September 2021, which will reportedly include “further information gathering and analysis”. As the investigation will now concern UK law only, the focus looks to have changed, so this extension of the research and analysis period was perhaps to be expected.
It is understood that some types of financial products are currently under review. The alleged infringements remain unclear, but as the law contains regulations against product price fixing, it is possible that companies in the financial services sector might have been involved in this kind of practice.
Cartels and competition law
The main principles of competition law require that companies do not prevent, restrict or distort competition. Price cartels usually refer to illegal agreements whereby organisations set prices at the same level, thus increasing their own profits and denying the consumer’s right to choose a more or less expensive product. Other examples of anti-competitive behaviour include bid rigging, whereby companies agree who will win before bids are launched, and market sharing, whereby businesses split a market to protect them from competition.
Alongside the CMA, the Financial Conduct Authority (FCA) also has powers that allow it to enforce competition law regulations in the financial services sector specifically. However, in the case of this investigation, the CMA have been granted sole responsibility for scrutinising any potential infringements.
Anti-competitive behaviour and price cartels
Amassing wealth through anti-competitive behaviour is both illegal and immoral, so we are always on high alert for any potential news of competition law infringement such as that of the financial services sector. If you are an individual or an organisation affected by anti-competitive behaviour, contact The Competition Lawyers for free, no-obligation advice about your potential right to claim.
As always, we will be keeping a close eye on the developments of this key CMA investigation and will look to report updates and developments in the future.