On 22 October 2018, the UK’s Competition and Markets Authority (CMA) announced that it had launched a new “Stop Cartels” campaign to educate businesses about anti-competitive practices and encourage people to come forward if they suspect a business has taken part in cartel behaviour, such as fixing prices or rigging contracts.
The penalties for engaging in cartel activity can be severe. Businesses found to have been involved in illegal cartels can be fined up to 10% of their annual turnover. Individuals can face up to 5 years in prison and directors can be disqualified from holding director positions for up to 15 years. These can be reduced or eliminated altogether where a business or individual report their involvement in a cartel and co-operates fully with the CMA’s investigation. Witnesses who blow the whistle can also receive a reward of up to £100,000.
This latest campaign comes hot on the heels of new research by ICM which shows that many firms still don’t know enough about how to comply with competition law.The results of the research makes depressing reading for the CMA.
Out of the 1,000 companies surveyed :-
Fixing Prices:– only 57% knew it was illegal to fix prices.
Bid Rigging:- nearly half either didn’t know or thought it was legal to discuss prices with competing bidders when quoting for new work and a quarter actually thought it was perfectly permissible.
Market sharing :- a whopping 59% either didn’t know or thought that dividing up and sharing customers with rivals was legal.
Howard Cartlidge, Senior Director of Cartels at the CMA, urged businesses to do the right thing. They should come forward and report illegal activity . He added “Businesses that fix prices or rig contracts are breaking the law and ripping people off.The victims are customers and other businesses, who are getting cheated out of a fair deal.”
The campaign is targeting industries including construction, manufacturing, recruitment, estate agents and property management and maintenance which have been found in the past to be particularly susceptible to cartels.
The CMA is hoping for a significant response from Business. Previous campaigns have driven a 30% rise in the number of tip-offs to the CMA’s cartels hotline.
Since April 2015, the CMA has issued over £155 million in fines following investigations into anti-competitive practices and it is currently investigating a further 15 cases, including in construction services, roofing materials and estate agency.Examples of previous CMA action on cartels include:
Coal Suppliers:– Two of the biggest suppliers of charcoal and coal for households in the UK were fined £3.4 million for taking part in a market sharing cartel.
Water Tanks ;- Water tank firms were fined over £2.6 million, after they formed a cartel to divide up customers, fix minimum prices and share commercially sensitive information for tanks used in large construction projects (such as schools and hospitals).
Estate Agents: Somerset estate agents were fined over £370,000 for fixing minimum commission rates, such that local home owners had been denied a fair deal when selling their property. The CMA also secured the disqualification of 2 company directors in this case.
It remains to be seen whether this latest CMA campaign will be as effective as their last. whether its current roster of cartel cases will increase significantly .