Published: October 26th, 2018
The CMA is calling for more whistle-blowers to expose business cartels with the launch of a national awareness campaign.
It comes as new research shows many firms in the Midlands don’t know enough about how to comply with competition law.
The Competition and Markets Authority’s (CMA) latest cartel awareness campaign aims to educate businesses about which practices are illegal and urges people to come forward if they suspect a business has taken part in cartel behaviour, such as fixing prices or rigging contracts.
Research released by the CMA today to coincide with the campaign shows that of companies surveyed in the Midlands:
– Only 51% knew it was illegal to fix prices
– Over half either didn’t know or thought it was legal to discuss prices with competing bidders when quoting for new work (22% said ‘don’t know’, and 33% actually thought it was legal).
– Significantly more than half (63.5%) didn’t know or thought that dividing up and sharing customers with rivals was legal (19.5% said ‘don’t know’ and 44% actually thought it was legal).
In 2016, the CMA found that two businesses based in the Midlands that sold posters and frames on Amazon Marketplace had participated in. They had agreed that they would not undercut each other’s prices and used automated re-pricing software to give effect to the cartel. One business was fined over £160,000 and its managing director has given an undertaking not to act as a director of any UK company for 5 years.
Douglas Cooper, a Project Director at the CMA and regional champion for the Midlands said:
"Businesses must educate themselves on what competition law means for them. Fixing prices, agreeing with competitors to divide up and share customers and rigging bids for new work are behaviours that damage the economy and cheat customers out of a fair deal.
"The consequences if you are found to be involved in a cartel are severe. It’s better to be safe, not sorry as getting caught is not worth the gamble"
The campaign is targeting industries including construction, manufacturing, recruitment, estate agents and property management and maintenance. These are sectors identified as particularly susceptible to cartels. Previous campaigns have driven a 30% rise in the number of tip-offs to the CMA’s cartels hotline.
The campaign uses simple imagery on social media sites and a dedicated website [www.gov.uk/stopcartels] and comes as the CMA continues to step up its enforcement action. Since April 2015 it has issued over £155m in fines following investigations into anti-competitive practices and it is currently investigating 15 cases including in construction services, roofing materials and estate agency.
Examples of CMA action include:
- An Amazon Marketplace seller was fined over £160,000 and director disqualified from running a company after agreeing to fix the prices of popular posters and frames with a competitor.
- Two of the biggest suppliers of charcoal and coal for households in the UK were fined £3.4m for taking part in a market sharing cartel.
- Water tank firms were fined over £2.6 million, after they formed a cartel to divide up customers, fix minimum prices and share commercially sensitive information for tanks used in large construction projects (such as schools and hospitals).
- A Black Country coal and log supplier was involved in a bid rigging con targeting supermarket giants.
- G.N Grosvenor, based in Monmore Green, Wolverhampton, is one of four companies which make up Fuels Express, which has been hit with a £627,000 fine for running a ‘market sharing cartel’ and rigging competitive tenders to Tesco and Sainsbury’s.
If you have witnessed a cartel or have been involved in a cartel and wish to apply for leniency, call: 0203 738 6888 (witnessed); 0203 738 6833 (leniency). For more information on cartels and the CMA’s campaign, visit the Stop Cartels webpage.