All Change: What Businesses Need To Know About The UK’s Competition Law Shake-Up

Summary and implications

Businesses should be aware that there is more than institutional change afoot when the new Competition and Markets Authority (CMA) replaces the Office of Fair Trading (OFT) and Competition Commission (CC) from 1 April 2014.

Reform of the UK competition regime is also aimed at sharpening up enforcement. This is likely to mean:

more criminal prosecutions; more dawn raids; compulsory interviews for current and former employees; enforcement of competition law in new sectors; and cross-sector market investigations. Companies need to consider how they will update compliance training, procedures and dawn raid manuals.

Those operating in sectors under increased scrutiny need to consider again what features of their industry might fall foul of the regulators and take steps to mitigate any exposure.

1. Which changes will impact on compliance programmes?

Criminal charges for individuals

At the moment, it is an offence for an individual to agree dishonestly with others to make or implement arrangements relating to:

price fixing; limiting supply/production of goods or services; market sharing; and bid rigging. By now, the Government had expected to secure up to 100 convictions under this offence, but has in fact only secured three. The OFT has found it difficult to show where individuals have acted dishonestly, according to the standard criminal law test.

This requirement will be removed from 1 April 2014. However:

There will be no offence if the customer is informed in advance about a proposed arrangement, or if information on that proposed arrangement is published. A defence will also be available to a person who entered into an agreement but did not intend to conceal it either from customers or regulators, or took legal advice before going ahead. Penalties will not change - these are currently a prison term of up to five years, a fine, or both. However, these are likely to be levied more frequently.

Action - despite these additional wrinkles, the compliance message remains to avoid secret anti-competitive agreements with competitors.

Easier for the CMA to gather evidence in investigations

The Competition Appeal Tribunal (CAT) has been granted powers to sign warrants to authorise unannounced inspection of premises (i.e. dawn raids). These are used not only in relation to business premises but also employees' and directors' homes and vehicles. The ability to obtain warrants from a specialist court rather than the High Court...