Types of anti-competitive activity
You must avoid all types of anti-competitive activity in your business including:
- agreeing not to compete with another business
- abusing a dominant position
You can report anti-competitive activity if you see it.
Agreeing not to compete with another business (‘cartels’)
If 2 or more businesses agree not to compete with each other in certain ways, it’s called a ‘cartel’.
The rules on cartels apply to businesses of any size.
Rules about cartels cover:
- price fixing
- bid rigging
- sharing markets or customers
- sharing commercially sensitive information
An agreement doesn’t have to be in writing for it to be illegal. You can break the law if you have an informal conversation (or ‘gentleman’s agreement’) with another business, even if the agreement isn’t carried out.
You must not discuss the prices you’re going to charge your customers with your competitors.
You’ll be breaking the law if you agree with another business:
- to charge the same prices to your customers
- to offer discounts or increase your prices at the same time
- to charge the same fees to intermediaries, eg retailers selling your products
You can’t discuss bids for a contract tender with your competitors. Bid rigging includes:
- agreeing with your competitors how much you’ll bid for a contract or share information about your bid
- taking turns to win contracts
- asking other businesses to bid when they don’t want the contract (called ‘cover bids’)
- paying other businesses not to bid or when you win a tender
- agreeing with other businesses not to bid or to withdrawing your bid
You can’t agree with other businesses to share markets or customers. You’ll be breaking competition law if you agree with another business:
- not to approach each other’s customers
- not to compete with them for customers, eg in specific locations
You can’t share information with other businesses that might reduce competition between you, eg information about:
- your suppliers, customers or contractors
- the markets you sell or plan to sell to
This includes sharing information through a third party, eg a trade association.
Abusing a dominant position
Your business might have a ‘dominant position’ in the market if:
- it has more than a 40% market share
- it’s not affected by normal competitive restraints
You might be abusing your dominant position if you’re unfair to your customers or other businesses, eg you:
- treat customers differently, eg by offering different prices or terms to similar customers
- make customers buy products they don’t want, eg force them to take warranties for electrical products
- charge low prices that don’t cover your costs so you drive out competitors
Other anti-competitive activities
You must avoid other activities that break competition law, eg:
- buying or selling jointly with your competitors
- agreeing with your competitors to reduce production of something to raise its market value
- restricting how much other businesses can sell your product for
- agreeing with your competitors not to sell to certain customers or deal with certain suppliers
- having long-term exclusive contracts with any customers or suppliers