Who Enforces the Rules on Competition Law?
Organisations which operate across the UK or the EU will encounter competition law and the respective bodies responsible for enforcing these laws. In the UK, the Competition and Markets Authority (CMA) is responsible for enforcing competition laws, and in the EU this responsibility lies with the European Commission. Both of these regulatory bodies enforce competition laws with severity and it is part of a concerted effort to crack down on anti-competitive behaviour. Therefore, for organisations across the UK and the EU, it is important to comply with competition laws and subsequently to co-operate with the bodies enforcing competition regulations.
The Competition and Markets Authority (CMA) enforcing competition law in the UK:
In April 2014 the Competition and Markets Authority (CMA) was established in the UK to enforce competition law and regulations upon UK businesses. CMA is a non-ministerial UK government department with the responsibility to ensure that competition is maintained in the market through enforcing the relevant competition laws and monitoring the conduct of businesses. The CMA are responsible for enforcing Chapter I and Chapter II of the Competition Act 1998 and Enterprise Act 2002, which states that the following agreements are anti-competitive:
- Agreements which include price fixing and trading conditions.
- Agreements which control markets through restricting production, developments and investment.
- Agreements between organisations which state the sharing of markets.
Following an organisation's inability to comply with CMA enforcement, the consequences are:
- The potential fine of up to 10% of global turnover.
- Agreements stated above will be rendered unenforceable.
- Directors who are found guilty of infringing competition law can be banned from holding the position of a director for 15 years and be subject to criminal sanctions.
The CMA have intensified their dealings with competition law since 2017, following a report they published which stressed the need to crack down more on anti-competitive behaviour than has been the case in previous years. The CMA's number of investigations into anti-competitive behaviour and the cases which they have filed have increased.
In August 2018 the recent CMA investigation into anti-competitive behaviour concerns the growing activity of social media influencers who have been using social media platforms, such as Instagram, as a platform to advertise brands. However, the controversy here has stemmed from the realisation that some of these social media influencers are not stating when they have been paid to promote these brands and products.
The CMA have therefore investigated the agreements which have been made between social media influencers and the brands that they are working with. It has been decided that if social media influencers are engaged in commercial agreements with these brands, they need to make this apparent on the platforms they are using, to avoid confusing the consumers. To avoid this confusion and investigation by the CMA, social media influencers need to ensure that they are labelling their posts with clear advertisement credentials. The CMA are working in conjunction here with the Consumer Protection from Unfair Trading Regulations 2008 (CPRs), which states that it is illegal to use editorial content across social media in order to advertise a product without making this explicitly clear to the audience.
The European Commission enforcing competition law in the EU:
Competition laws in the EU are referred to as anti-trust laws, and it is the European Commission which is responsible for enforcing European competition laws upon the organisations conducting business within the EU. The European competition law is stipulated within the Treaty on the Function of the European Union (TFEU), which sets out the following main rules:
Article 101 - This article prohibits agreements between two or more organisations which have the purpose to restrict market competition, with reference to horizontal and vertical agreements.
Article 102 -This article prohibits organisations which hold a dominant market position within a market from abusing this position.
In order to enforce the TFEU, the European Commission is granted specific investigative powers to enable the commission to fulfil its role effectively. These powers include the right to investigate businesses initially and the ability to impose fines.
Evidently, the bodies responsible for enforcing competition law across the UK and the EU do so seriously. It is important for organisations to understand how to comply with competition laws, in order to co-operate with these respective bodies.