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How can you Minimise the Risk of a Competition Law Breach within your Organisation?

Compliance Knowledge Base | Competition Law

Posted by: Morgan Rennie Published: Mon, 10 Sep 2018 Last Reviewed: Mon, 10 Sep 2018
How can you Minimise the Risk of a Competition Law Breach within your Organisation?

As part of an organisation it is essential that you create a culture which promotes and complies with competition law to ensure that employees and work associates do not engage in anti-competitive behaviour. Once a culture of trust is established, members within an organisation will collectively work together in order to report and avoid anti-competitive behaviour to benefit the organisation and its reputation. Therefore, ensuring compliance with competition law will enable your organisation to minimise the risk of a competition law breach.

What ways can you create compliance with competition law across your organisation?

The Competition and Markets Authority (CMA) has published a "Quick Guide to Complying with Competition Law," with steps that ease the process of company compliance with competition law. This is because CMA have referenced in their 2017/2018 report that they need to crack down on anti-competitive behaviour and the conduct of businesses which are not currently complying with competition law. In turn, the CMA have increased their scope of investigation and their issuing of penalties, meaning that if your organisation does engage in anti-competitive behaviour, it is likely that your organisation will be punished for this.

The penalties for anti-competitive behaviour involve fines of up to 10% of an organisation's global turnover and prison sentences can be inflicted. Furthermore, the Enterprise Act 2002 introduced more changes to the penalties for committing anti-competitive offences, which includes if you hold the position of a director you can face prison sentences up to 5 years and will be disqualified from the position of director for 15 years. Therefore, if you wish to avoid crippling financial consequences and the tarnishing of your organisation's reputation, compliance with competition law is essential.

How can you Minimise the Risk of a Competition Law Breach within your Organisation?

The simple steps that your organisation can take to reduce the risk of a competition law breach:

1) Create a culture of compliance with competition law.

This can be done easily. It is the management team's responsibility to demonstrate that they do not tolerate anti-competitive behaviour, and therefore neither should their employees or work associates. The management team are responsible for setting the example and instigating the culture of compliance. This can be done through circulating information about the competition laws which are relevant to your organisation; for example, if you are a UK business which tends only to conduct business in the UK, you will be subject to the Competition Act 1998 and the Enterprise Act 2002. However, if your organisation does conduct business with European organisations in the EU member states, you will be subject to the European Treaty on the Functioning of the EU (TFEU).

2) Instigate a training programme to educate all of your employees and work associates.

It's all well and good circulating competition law and ensuring that employees are aware of the relevant laws to them, but ensuring they understand what these competition laws actually mean is something different. Training programmes can allow employees to gain an understanding of what the provisions set out in competition laws mean. They can also ensure they are fully trained in what to look out for regarding anti-competitive behaviour and the red flags which appear once it has been conducted.

It is also wise to delegate to a specific individual the role of handling competition law within your organisation, and this relates to organisations large and small. By having a specific individual responsible for competition law, this allows any queries about competition law to be directed to someone who will be able to answer them. Therefore, if an employee ever does notice a red flag which could suggest the breach of competition law, they can highlight this to the individual responsible for competition law to handle the situation from there.

Breaching competition law will inflict severe financial consequences upon an organisation as well as tarnishing the organisation's reputation significantly. Implementing everything possible to reduce the risk of breaching competition law is essential.

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