The CMA is calling for more whistle-blowers to expose business cartels with the launch of a national awareness campaign. It comes as new research shows many firms in the South West don’t know enough about how to comply with competition law.
The Competition and Markets Authority’s (CMA) latest cartel awareness campaign aims to educate businesses about which practices are illegal and urges people to come forward if they suspect a business has taken part in cartel behaviour, such as fixing prices or rigging contracts.
Research released by the CMA today to coincide with the campaign shows that of companies surveyed in the South West:
Over half either didn’t know or thought it was legal to discuss prices with competing bidders when quoting for new work (26% said ‘don’t know’, and 29% actually thought it was legal).
Nearly half either didn’t know or thought it was legal to fix prices (18% said ‘don’t know’ and 22% actually thought it was legal).
Significantly more than half (61%) didn’t know or thought that dividing up and sharing customers with rivals was legal (30% said ‘don’t know’ and 31% actually thought it was legal).
Last year, the CMA found that a group of Somerset estate agents based in Burnham-on-Sea were in a price fixing cartel. They agreed to fix the minimum prices of their commission rates for the sale of residential properties. This meant that local home owners were denied the opportunity of getting the best possible deal when selling their property.
Five of the estate agents involved were fined a total of over £370,000 and two directors were disqualified. The sixth estate agent was not fined as it was the first business to confess its participation in the cartel. It avoided fines under the CMA’s leniency policy and because it cooperated with the CMA’s investigation.
Businesses in the South West may need to do more to make sure they stay on the right side of the law. It’s illegal to collude with rivals in order to reduce the pressure of competition – this cheats customers out of a fair deal. There are serious consequences, for individuals as well as businesses, for breaking the law, so now is a good time to get your house in order.
Examples of CMA action include:
• 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 two company directors in this case.
• Two of the biggest suppliers of charcoal and coal for households in the UK were fined £3.4m for taking part in a market sharing cartel.
• 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).