HR · 19 November 2015

CMA unveils a new guide to competition law for small businesses

Some of Britain's top model agencies recently hit the headlines amid concerns that they were price-fixing
Some of Britain’s top model agencies recently hit the headlines amid concerns that they were price-fixing

The Competition & Markets Authority has unveiled a new “at-a-glance” guide to competition law, after finding many small business owners were ignorant or confused about it.

Research earlier this year found that 77 per cent of UK firms didn’t understand competition law, so the CMA’s one-page information sheet aims to summarise the main types of business behaviour which are illegal under competition law, as well as how to recognise it in other firms.

While 55 per cent of business owners surveyed were aware that price-fixing was illegal, 29 per cent didn’t know if bid-rigging was, 27 per cent were unsure as to whether it was acceptable to agree prices with rivals and 23 per cent thought it was fine to discuss prospective bids with competing bidders.

Alex Chisholm, the CMA’s chief executive, said: “We have worked closely with groups representing small businesses to learn more about what they do and don’t know about competition law and they told us they need information that is short, simple and easy-to-use.”

Once you’ve swotted up on the guide and had a flick through the CMA’s case studies about companies that have broken the law, there’s also a short quiz you can take to test your knowledge of different types of anti-competitive behaviour that can be illegal.

Chisholm said the new materials – which also included eight animated films discussing these practices – explained why certain behaviours were illegal “and why they cause harm”.

“The victims of anti-competitive activity will often be other businesses, so knowing what illegal behaviour looks like and how to report it can help businesses protect themselves from others which are acting unfairly,” he added.

The FSB welcomed the guide, with its national chairman John Allan warning that “the potential fallout of getting it wrong could be severe”.

Consequences for breaking the law can be very serious. Earlier this year, Consultant Eye Surgeons Partnership was fined £500,000 for several infringements around price-fixing.

Some of Britain’s top model agencies also hit the headlines amid concerns that they were price-fixing, though they haven’t been named. The CMA started an investigation into a number of firms in March and then opened a full investigation in October to determine whether prices being charged for their models were fixed.

The CMA said the case was at an early stage and no assumption should be made that there had been an infringement of competition law. A decision is expected to be reached in March 2016.

Those firms which are found to be acting illegally can be fined up to ten per cent of global turnover, and their directors may be disqualified from managing a company for up to 15 years.

“Competition law is a crucial part of doing business in the UK and these films are a useful tool to help raise awareness of this complex topic,” Allan added.

Image: Shutterstock

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Rebecca is a reporter for Business Advice. Prior to this, she worked with a range of tech, advertising, media and digital clients at Propeller PR and did freelance work for The Telegraph.

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