What is an anti-competitive agreement? (Legal Q&A)

by ContactLaw on January 31, 2012

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Competition law is concerned with protecting consumers and businesses from anti-competitive practices. Anti-competitive practices disrupt the running of the free market, which aims to ensure that consumers are given the best products at the best rates. Anti-competitive behaviour covers any practice that results in the loss or perceived loss of competition between businesses. Competition law is made here in the UK as well as in the EU and is practiced by competition law solicitors or corporate lawyers.

An anti-competitive agreement is one where two or more companies make an agreement to do something together such as fix their prices or limit production so that competition is reduced in a given market. Cartels are often charged with acting in this way, by agreeing to set a price at a certain level, or restrict production so that a price is kept artificially high.

The applicable law in this country depends on the activity of the business in question. If an agreement affects trade solely within the UK, then UK law applies. UK competition law is broadly found in the Competition Act 1998 and the Enterprise Act 2002. If a decision by a company has effects seen outside the UK it will be covered by EU competition law, enshrined in Article 81 of the EC Treaty. EU Law has direct effect in the UK so in practice both laws apply in UK courts.

Competition lawyers will be looking to prove that there was an agreement made, or a concerted business practice, and that the result was a prevention, restriction or distortion of competition which has affected trade within the UK or EU. It does not matter if the agreement was written or verbal, or simply implied, the court will be looking to see the effect of their behaviour and whether it resulted in a restriction of competition.

The penalties for a breach of Article 81 are severe. A company can be fined up to 10% of annual global turnover and the elements of an agreement considered anti-competitive are declared null and void, which can invalidate commercial arrangements which have taken years to develop at significant cost.

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