Navigating the minefield of national, international, and European Union (EU) competition law can be challenging for businesses of all sizes. Obtaining legal advice is essential to ensure your company remains compliant and is well placed to take advantage of new opportunities.
We understand that incorporating this level of specialist knowledge into your organisation can feel like a significant undertaking—especially when you’re focused on running your business. That’s why we are here to ease the burden.
Our competition law solicitors provide expert advice exactly when you need it. If you are facing an investigation for competition law infringements, you will need high-quality, commercially minded, strategic guidance.
Speak to our regulatory and corporate defence solicitors today for thorough, expert advice on all aspects of competition law. To arrange an initial consultation, contact our Leeds, Sheffield, or York office.
Our team of competition law solicitors will ensure you are in the best possible position to protect your business and seize opportunities.
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Competition law
In many countries and regions around the world, complex rules and regulations outlaw certain business practices, such as cartels, price fixing, and sharing territories, markets and customers.
UK businesses are subject to domestic law in the form of the Competition Act 1998 and the Enterprise Act 2002, as well as European law in the form of Articles 101 and 102 of the Treaty of the Functioning of the European Union (TFEU). Whilst Brexit may affect this area of law as many others, European law will remain relevant post-Brexit as activity by UK businesses will often have an effect within the EU.
These laws are stringently applied by the Competition and Markets Authority (CMA), National Competition Authorities (NCAs), including the European Competition Network, and the European Commission. These regulations impose conditions on some business mergers and, in some circumstances, will outlaw them altogether.
Competition law can be relevant to formal and informal, binding and non-binding agreements, including verbal agreements. It also applies to cooperation or concerted practices, as well as decisions and recommendations of trade associations.
It is no longer possible to notify the CMA or European Commission of an agreement or practice to obtain guidance or a decision. The emphasis is now on self-assessment. Nevertheless, a complaint may still be made to the CMA, which will, eventually, give its view on whether the agreement complained of infringes the law.
Competition law
In the Competition Act 1998, the ‘Chapter I Prohibition’ outlaws certain agreements or practices that have an appreciable effect on trade in the relevant market within the UK.
The types of agreement and practice that are outlawed as restricting competition include agreeing to:
Price fixing and market sharing are the worst types of agreements and are usually outlawed regardless of market share, although there are some exemptions. The other types are generally allowed as long as the parties’ market shares are below certain thresholds.
Competition law
There is a de minimis rule that exempts all agreements – except for clear anti-competitive agreements, such as price fixing agreements – between undertakings with a relatively low combined applicable turnover and/or low market shares.
Regardless of this, the CMA or the European Commission may investigate such an agreement and make a decision to withdraw this ‘small agreement’ immunity.
The de minimis exemption does not apply to a cartel that is illegal regardless of how small the parties’ market share is.
Other exemptions include parallel and block exemptions, which means agreements falling within an EU block exemption are also protected from challenge under UK competition law. It should also be noted that if the agreement or practice is a merger based mainly in a member state, it will be regulated either by EU Merger Regulation or National Merger Law and Regulations.
Agreements and concerted practices that may have an appreciable effect on trade between EU member states are made illegal by Article 101 of the TFEU. The word ‘may’ catches agreements that only have a potential effect on trade between member states. The agreement may be between, for example, two undertakings in the UK and still have an effect on trade between EU member states.
The types of agreement and practice that are outlawed are similar to those prohibited by UK legislation.
Competition law
There is a de minimis provision for agreements and practices – not including price fixing agreements – of small undertakings. It is contained in the Commission Notice on Agreements of Minor Importance (OJ C368, 22.12.01, p.13).
There are many other ways an agreement can be exempt under EU competition law. For example, there is a system of EU block exemptions, such as for vertical agreements and technology agreements.
It is also possible for an agreement to be exempt under the general exemption in Article 101 (3). This exemption applies to agreements that:
There is also a block exemption on specialisation agreements and another on research and development agreements. Most block agreements have market share thresholds. Typically, these are below 30% market share of the relevant market.
The CMA and European Commission investigate infringements of UK and EU law. The European Commission investigates the most serious infringements of EU competition law. The Commission’s powers of investigation are slightly wider than the CMA’s, as it is able to search private homes if it suspects that a company’s documents are stored there.
The two authorities’ powers are, however, broadly the same and can be briefly summarised as the power to:
In respect of criminal cartel activity, the CMA’s powers are much wider. The CMA may gather evidence of cartel activity at any time by informal methods, including enquiries by correspondence. Once the CMA has reasonable grounds for suspecting that a criminal cartel offence has been committed, it may conduct a formal investigation under the Enterprise Act 2002.
In a formal investigation, the CMA has the power to tap telephones, use hidden cameras and use informants in addition to the power to require a person to answer questions or provide documents. To find out more, read our guide to cartel pricing activity.
Both authorities have the power to regulate mergers and acquisitions, but their powers differ depending on the type and size of such deals. The European Commission investigates and clears/refuses mergers with a European dimension. The CMA, under the Enterprise Act 2002, regulates mergers and acquisitions of the requisite size or nature in the UK. If the CMA investigates mergers initially, the case may then be referred to the European Commission.
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