Restrictive Agreement Competition Law

The Competition Authority (CMA) is the UK`s leading competition authority, although there are a number of industry regulators that are also empowered to apply competition law in their respective sectors. These include the ACF for the financial services sector, Ofgem for electricity and Hydrowat for the water sector. Each of them contains certain conditions that must be met in order for the agreement to be exempted. These conditions may include, for example. B, those relating to the parties` market shares and the types of restrictions contained in the agreement. A number of eu-class exemptions have been transposed into UK legislation with some minor changes and will continue to apply after Brexit under UK competition law. Each company – regardless of its legal status, size and sector – must therefore be aware of competition law, first of all in order to fulfil its obligations, avoiding heavy penalties, but also to assert its own rights and protect its position in the market. UK and EU competition law prohibits two main types of anti-competitive activities: the Competition Act 1998 and the Enterprise Act 2002 prohibit any form of anti-competitive agreement. The ban is contained in Chapter I because it deals with agreements that could affect trade within the UK and distort competition.

Among the strictest restrictive agreements are pricing and market allocation agreements; Such agreements are referred to as “hard” restrictive agreements. Among the agreements that can be considered restrictive are: the fact that an agreement limits competition does not mean that it is automatically banned, unless it is a nuclear cartel. An agreement that goes within the scope of the Chapter I or Article 101 prohibitions may be excluded from competition rules or not from competition rules. Companies involved in anti-competitive behaviour may consider their agreements to be unenforceable and may face fines of up to 10% of the group`s global turnover and possible actions for damages. Restrictive agreements can take the form of vertical and horizontal agreements. Restrictive vertical agreements are agreements between two entities at different levels of the supply chain, which could be a distributor and a retailer. Restrictive horizontal agreements are those between two competing entities. Even if an agreement is not clearly part of a category exemption, it is still not automatically illegal or unenforceable. An agreement may also be excluded individually, as competition restrictions are offset by their positive effects. The burden of proof to meet the requirements of the individual exemption is quite onerous and it is the responsibility of companies to ensure that they themselves assess their compliance with competition rules; it is not possible to apply to the competition authorities for authorisation, except in very limited circumstances. The exemption for anti-competitive agreements is not compliant. However, a dominant undertaking can demonstrate that it has an objective justification for abusive behaviour in other circumstances.

Given the serious consequences of non-compliance, companies should regularly verify that the company`s practices and agreements are in compliance with competition law. For any company, and in particular any company that has a significant share of the markets in which it operates, it is essential to understand by workers what type of behaviour is allowed or not in terms of competition. If, as an organization, you run a competition compliance program, it protects your business from anti-competitive behaviour that could lead to a sanction.