CMA Guideline Agreements and Concerted Practices

The UK’s Competition and Markets Authority (CMA) is the primary regulatory agency responsible for enforcing competition law in the UK. The CMA has published guidelines on agreements and concerted practices, which outline the legal framework for businesses operating in the UK.

Agreements

An agreement is defined as any form of cooperation between two or more parties that may affect competition. This can include formal and informal agreements, such as contracts, verbal agreements, and letters of intent. The CMA has stated that agreements can be either lawful or unlawful, depending on their effects on competition.

Lawful agreements are those that enhance competition and create benefits for consumers. Examples of lawful agreements include joint ventures, franchising agreements, and exclusive distribution agreements that lead to efficiencies and lower prices for consumers.

Unlawful agreements are those that harm competition and result in higher prices or reduced choice for consumers. Examples of unlawful agreements include price fixing, market sharing, and bid rigging.

Concerted practices

Concerted practices refer to informal cooperation between businesses that may affect competition. Unlike agreements, concerted practices do not require an explicit agreement between parties. They can arise through a pattern of conduct, an exchange of information, or through a common understanding between businesses.

The CMA has highlighted some examples of concerted practices, such as:

– An exchange of price information between businesses that leads to coordinated pricing

– A group of businesses agreeing to boycott a supplier

– A group of businesses agreeing to restrict output or production to increase prices

Like agreements, concerted practices can be either lawful or unlawful. Lawful concerted practices may arise from legitimate collaboration between businesses that leads to improved efficiency and lower costs for consumers. On the other hand, unlawful concerted practices can have an adverse effect on competition and lead to higher prices or reduced choice for consumers.

Enforcement

The CMA is responsible for enforcing competition law in the UK. The CMA has the power to investigate agreements and concerted practices that may harm competition and have a negative impact on consumers. If the CMA finds that an agreement or concerted practice is unlawful, it may impose fines, issue cease and desist orders, and take legal action against the parties involved.

Conclusion

Businesses operating in the UK must be aware of the CMA guidelines on agreements and concerted practices. By understanding the legal framework for cooperation between businesses, companies can ensure that they comply with competition law and avoid legal action from the CMA. By promoting competition and consumer welfare, businesses can contribute to a healthy and vibrant UK economy.