The move is in response to recent research which has revealed a lack of knowledge about competition law among smaller firms, meaning many could become the victims of others breaking the law, or fall foul themselves.
Earlier this year the Competition and Markets Authority (CMA) commissioned an independent report which found that 77% of firms either did not know competition law very well or hadn’t heard of it at all. Furthermore the research revealed that although 55% of businesses knew price fixing was illegal, 18% wrongly thought it was acceptable to agree prices with rivals and 27% were unsure.
In addition 23% of company representatives thought it was okay to discuss prospective bids with competing bidders and 29% were unsure if bid rigging was illegal. 31% thought it was acceptable for businesses to agree not to sell to the same customers as each other.
However, the CMA has also commissioned further research which reveals that most small businesses have a shared ethical sense that anti-competitive practices such as price fixing are unfair or wrong and want to do the right thing.
The same research also clearly indicates that businesses want straight forward materials that explain what the main behaviours that breach competition law are – price fixing, bid rigging and market sharing – and how to comply with the law.
In response the CMA has created a suite of materials, including 8 animated films and a quiz to help small businesses understand competition law.
Alex Chisholm, CMA Chief Executive, said:
“We have worked closely with groups representing small businesses to learn more about what they do and don’t know about competition law and they told us they need information that is short, simple and easy-to-use.
These new materials explain which behaviours are illegal, and why they cause harm. The victims of anti-competitive activity will often be other businesses, so knowing what illegal behaviour looks like and how to report it can help businesses protect themselves from others which are acting unfairly.
The potential consequences of breaking the law are very serious. That’s why it’s important that businesses know what to look out for and report this to the CMA to prevent other businesses and consumers from losing out.”
John Allan, Federation of Small Businesses National Chairman, said:
“Competition law is a crucial part of doing business in the UK and these films are a useful tool to help raise awareness of this complex topic.
We welcome efforts to help small businesses grasp the law in this area – as the potential fallout of getting it wrong could be severe. Competition policy applies to businesses of all sizes and we encourage our members and all small businesses to make the most of this valuable resource.”
It is important for companies that they understand competition law, as those found to be in breach can be fined up to 10% of global turnover and their directors may be disqualified from managing a company for up to 15 years. In some cases, individuals may also be committing a criminal offence which can result in them being jailed for up to 5 years.
Tags: Economy, Policy and Government, Supporting Business