The Competition and Markets Authority (CMA) are looking into an alleged anti-competition agreement made between companies for the supply of solid fuel products in the U.K.
There are no substantive grounds to find that there has been a breach of national and EU competition laws at present, but the CMA was notified of the suspicions, and an investigation was recently launched.
CMA investigations
Looking into the history of CMA investigations, they are usually not lengthy. The reason for this could be because the CMA would like to provide a speedy resolution to any suspected breach without it affecting the market adversely. Therefore, we should hopefully see results fairly soon.
If anti-competitive agreements are found to have been made, the CMA can impose appropriate actions, including substantial fines.
Rationale for anti-competitive agreements in the solid fuel industry
Companies that supply solid fuel products may have undertaken anti-competitive agreements due to the succession of shorter winters and short home heating season, reported Martin Daly, the head of sales and marketing at Top Oil. Studies have shown that more people are using their central heating system as a last resort, and there is a greater demand of solid fuels as people are using it more than oil. This can put pressure on solid fuel suppliers to supply a greater amount and at a more competitive price amongst other suppliers.
Investigating possible breaches of EU and national competition laws
There is a potential breach of EU and national law – in particular, Chapter I of the CA. This act provides that agreements that have the potential of preventing, restricting, or distorting competition must be prohibited. In effect, this is so that trading in the U.K. can be an ‘open’ one and smaller businesses can actually compete with the bigger organisations.
Article 101 of the TFEU also provides a similar kind of rule-enforcement as the CA. It prohibits agreements between undertakings, sharing markets, fixed prices which consequently limits market trading and gives some companies a competitive disadvantage. It states that any agreements of this nature should be void.
Many investigations undertaken by the CMA end up with conclusive findings of anti-competitive agreements. However, there are no assumptions that there is an infringement of competition laws in this case. But as the saying goes, there is sometimes no smoke without fire…
Consequences
It is in the best interests of industries and markets to comply with competition laws, as the consequences of breaching competition law can be financially disastrous as well as damaging for a company’s reputation.
The consequences can include:
- An anti-competitive agreement can be cancelled or modified it to ensure its compliance.
- Fines can be imposed (up to 10% of their worldwide turnover).
- Damages and compensation for private legal actions or even group action cases.
- Credibility and reputation of the company damaged.
- Time and resources to deal with the infringement, including ongoing observation from watchdogs like the CMA.
Importance of competition
Anti-competitive agreements are prohibited and heavily regulated. By limiting anti-competitive agreements, the CMA are interested in encouraging efficiency and the widening of choice, which can enable consumers to buy goods and services at fair prices.
It is not just important for consumers, but this can be a benefit to national competitiveness as a whole.