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NFDA Roadshow insight: Competition and Market Authority, why compliance matters?Back

CMALucília Falsarella Pereira, Assistant Director – Cartel Enforcement at the Competition and Market Authority (CMA), spoke about the importance of the compliance in the automotive sector.

The role of the CMA

The Competition and Market Authority (CMA) is the UK’s primary competition and consumer law enforcement agency. The CMA is responsible for promoting business competition in the UK and preventing anti-competitive behaviour that can damage markets and cause harm to consumers. It can enforce civil and criminal penalties where businesses and individuals have engaged in anti-competitive behaviour

Awareness of competition law

According to the CMA, 77% of UK businesses at large do not know competition law well and 71% of motor trade dealers and manufacturers surveyed do not know it well either. There seems to be higher awareness amongst manufacturers (67%) than dealerships (26%). Moreover, only a few seem to be aware of leniency (10%) and the benefits of reporting a case (12%).

What is a cartel?

Cartels are the most serious form of anti-competitive behaviour, where two or more businesses agree not to compete with each other.

These include:

  • Price-fixing
  • Bid-rigging (for example, cover pricing)
  • Sharing customers or markets
  • Disclosing commercially sensitive confidential information such as future pricing intentions

What are the consequences of breaking competition law?

  • Penalties of up to 10% of annual worldwide turnover
  • For individuals: up to five years in prison and/or an unlimited fine
  • Director disqualification up to 15 years
  • Damages claims by third parties

What do I need to know?

It is very easy to cross the line between legitimate and illegitimate contact between competitors, a single meeting or informal chat might be enough. Enforcement action will be taken regardless of size and geographic scope of the businesses involved. Even if senior management is unaware of an employee’s behaviour, or even if the employee is acting contrary to instructions, a business is still liable.

What do I need to do?

It is important to promote a culture of compliance. Businesses are encouraged to Identify and mitigate competition risks considering carefully the rules of any agreements, consulting the CMA for guidance and ask for legal advice.

What do I do if I think the law has been broken?

Report it. If you suspect a competitor, supplier, customer or any other business is breaking the law, you must report it using the CMA’s notification form at www.cma.gov.uk. The CMA is prepared to offer financial rewards for information about cartel activity (informant rewards).

Businesses and individuals that report their own involvement in a cartel may have their financial penalty reduced or avoid it completely.

You can use the CMA Cartels Hotline on 020 3738 6888 or email cartelshotline@cma.gsi.gov.uk.

Posted by Sue Robinson on 02/12/2016