Competing Fairly: Why Businesses Need to Know about Competition Law

24th November 2015

Competing Fairly: Why Businesses Need to Know about Competition Law

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Being competitive is vital for a business’ success. Customers or clients are drawn to businesses that offer them a competitive rate or a better quality of service or product than other providers in the market.

Given how important competition is for markets to work effectively and fairly – how much do businesses and their staff really know about what the law says is unfair ‘anti-competitive’ behaviour?

In a recent piece of research conducted on behalf of the Competition and Markets Authority (CMA), the UK’s competition watchdog, 77% of UK businesses admitted they didn’t know competition law well. Crucially, many were unsure whether some of the most serious types of anti-competitive behaviour (such as agreements between competitors on what price to charge, or what geographical territories each will target) were legal or not.

Whilst the CMA has a primary responsibility to enforce competition law where it’s being broken, it also wants to help businesses avoid breaking it in the first place. A key part of this is to help them understand why and how competition is relevant to them – and by extension, why it’s important to recognise that certain anti-competitive activities are illegal and can cause customers (whether they’re other businesses or consumers) to lose out. Knowing more about what competition law covers can also help businesses, especially smaller ones, identify activity that may be unfair or illegal so that they can report it and stop others from ‘cheating’.

With this in mind, the CMA has recently released a collection of materials that help explain competition law in a simple and straightforward way, so businesses can:

  • Stay on the right side of the law
  • Recognise where others (suppliers or competitors) may be acting unfairly, and
  • Report wrongdoers to protect themselves and others from losing out.

These materials include a series of short films, simple at-a-glance 1-page guide and checklist, case studies and an online quiz where users can test how much they know about behaviours that can be illegal. This is all available here.

The CMA has been working closely with organisations and business groups to help promote a stronger awareness of competition law amongst businesses. Better business understanding of what can be illegal is the first step to achieving this, and can also ensure that the CMA focuses its efforts on the real wrongdoers.

In the words of CMA Chief Executive Alex Chisholm, “The more we can promote awareness of competition law and a culture of compliance amongst firms, the more we will be able to demonstrate that those firms who do not comply merit serious punishments”. 

This article was written by the Competition and Markets Authority. 

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