Scarmans

Cartels

In the UK, anti-competitive behaviour is prohibited under Chapters I and II of the Competition Act 1998 and may be prohibited under Articles 81 and 82 of the EC Treaty.

These laws prohibit anti-competitive agreements between businesses and the abuse of a dominant position by a business. Businesses that infringe competition law may face substantial financial penalties of up to ten per cent of their worldwide turnover.

What is a cartel?

At its most simple, a cartel is an agreement between businesses not to compete with each other. The agreement is often verbal. Typically, cartel members may agree on:

• price fixing – the price they will charge or the discounts/credit terms they will offer their customers for goods or services
• bid rigging – deciding who should win a contract in a competitive tender process
• output quotas/restrictions – limiting the levels of products or services supplied to a market in order to increase the price, and
• market sharing – choosing which customers or geographic areas they will supply, or preventing competitors (eg, foreign competitors) from entering the market.

Company directors whose companies breach competition law may also be subject to competition disqualification orders, which will prevent them from being involved in the management of a company for up to 15 years.

If the Office of Fair Trading is investigating your company for anti-competitive trading then come to us for expert advice and care.

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