Competition law compliance is a necessary part of an organisation's set of responsibilities. The management team of an organisation need to appreciate that they are responsible for ensuring competition law is upheld. The best way that this can be achieved is through training. Competition law compliance training can be offered to employees and work associates to ensure that an organisation is collectively responsible for maintaining competition law. Thus, competition law compliance training is essential in teaching individuals what competition law is, what to look out for regarding anti-competitive behaviour, and how to report this to management.
Why is Competition Law Compliance Necessary?
The penalties for not complying with competition law can be severe. For example, if your organisation breaches the provisions set out within the UK Competition Act 1998 and Enterprise Act 2002, the following penalties will apply:
- A fine of up to 10% of the organisation's annual turnover might apply. This can be crippling and will be imposed on both large organisations and small and medium sized organisations (SMEs). As a smaller organisation, do not assume that the competition law and the respective penalties won't apply to you.
- Agreements which include price fixing, bid rigging or sharing information regarding the given market, will be concluded as unenforceable. The Competition Act 1998 and Enterprise Act 2002 both explicitly state that these types of business agreements which incorporate anti-competitive provisions are not enforceable.
- Directors involved in anti-competitive behaviour will be disqualified from their position for up to 15 years. Moreover, the Enterprise Act 2002 states that directors can face up to 5 years imprisonment for anti-competitive behaviour.
- An organisation's reputation will be permanently tarnished if they are found guilty of anti-competitive behaviour. Therefore, business conduct in the future will be hindered.
To avoid the above penalties, competition law compliance training is essential.
What is Involved in Competition Law Compliance Training?
Competition law can be confusing, especially since different competition laws apply in different nations. Before training takes place, you need to establish which countries your organisation conducts business within. For example, if you are a UK based company which conducts business within the UK and within EU member states, the following pieces of competition law have provisions which will be relevant to your organisation:
UK Competition Act 1998
UK Enterprise Act 2002
European Treaty on the Functioning of the European Union (TFEU)
These competition laws need to be picked apart and the relevant provisions need to be analysed. These provisions, such as Chapters I and Chapter II of the UK Competition Act and Enterprise Act, state that certain agreements are considered as invalid and will be regarded as unenforceable.
Through communication and training employees about relevant competition law provisions, employees and work associates will be aware of the red flags to look out for regarding anti-competitive behaviour. Once employees are aware of what can signify anti-competitive behaviour, such as sharing information about the market, there will be a trust system established allowing all individuals within the organisation to collectively be aware of when anti-competitive behaviour could have taken place. Subsequently, the management team or individuals delegated to deal with competition law compliance can act upon these reports.
Training on competition law will ensure that your organisation is protected from competition law penalties and retains its reputation as a strong business.