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Competition Law – Small Businesses Fail the Test

PLEASE NOTE: Information in this article is correct at the time of publication, please contact DFA Law for current advice on older articles.

It is a widespread (and incorrect) belief among the owners of smaller businesses that competition law is something which applies only to very large firms.

Although most competition law investigations and legal actions are brought against larger companies with the ability to distort the forces of the market in which they operate, competition law bites in all industries. Just because anti-competitive behaviour is localised or specific to a particular project does not mean it is not unlawful.

In this context, the finding by a recent study (‘UK businesses’ understanding of Competition Law’) carried out for the Competition and Markets Authority that of a sample of more than 1,200 businesses, designed and weighted to be representative of the UK private sector business population as a whole, more than 40 per cent engaged in practices that created the ‘potential …to engage in anti-competitive behaviour’ should be of concern.

For example, more than one in five businesses in the construction sector (in which prosecutions for anti-competitive behaviour are relatively common) discussed prices relating to transactions with others in their industry.

The study found that less than a quarter of the businesses surveyed ‘knew competition law well’ and, in response to questions asked by the researchers, ignorance of the law in relation to a whole range of illegal anti-competitive behaviours was widespread, including price-fixing, resale price maintenance, market-sharing and abuse of a dominant market position.

The penalties for breaching competition law can be severe. For advice on ensuring that your business activities comply, contact Clare Towers for advice.

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