The Competitions and Markets Authority is not holding back in imposing heavy sanctions on businesses that breach competition law by taking part in cartels. But the CMA has also issued guidance to help directors avoid the risks of anti-competitive conduct.
Businesses need to exercise caution if approached to take part in a cartel arrangement – even if they decline to be actively involved. The CMA has fined a company £130,000 for sharing commercially sensitive information– even though it did not join the cartel itself. The meeting during which the information was shared was secretly recorded by the CMA.
The actual cartel concerned four galvanised steel tank suppliers which admitted colluding with each other, agreed to share the market by dividing customers among themselves, and to fix prices of tanks and to rig bids for contracts between 2005 and 2012. Their aim was to improve profit margins on the tanks by avoiding customers being able to negotiate the best deal through ‘playing’ the competitors off against each other. The fines on these companies totalled more than £2.6m.
However, the fine issued on the other company for file-sharing serves a particularly cautionary tale for businesses. It shared both generic and sensitive information with its competitors in breach of competition law – even though it was not part of the cartel itself.
Cartels involving furniture parts have resulted in similar fines totalling £2.8m. The CMA investigated cartels involving two furniture parts firms, both of which made parts and supplied them to high-profile furniture manufacturers. However, they agreed not to undercut each other’s prices, and also agreed to share out which customers they would supply. The cartel arrangements (two of them – one involving drawer wraps, the other involving drawer fronts) went on for a couple of years or so.
Following a tipoff, the CMA conducted a 10-month investigation and both companies eventually admitted market sharing, co-ordinating prices, bid-rigging and exchanging commercially sensitive information in breach of competition law. They accepted fines of £1,509,000 and £684,000 respectively.
The CMA is taking firm action to protect consumers from anti-competitive behaviour – whether it is active cartel behaviour or sharing information with competitors, as these cases show. Cartels represent a particular threat to consumer choice and the economy, and the CMA has demonstrated its power to deal robustly with companies involved in cartels.
The regulator has emphasised that strong competition between businesses has clear benefits for customers, and any weakening of competition that maintains or increases prices will ultimately be at the expense of consumers or tax payers.
In January, the CMA issued guidance, Avoiding disqualification: advice for company directors which should be helpful for commercial clients.