Case study

Competition law case studies

Examples of cartel and other anti-competitive cases from the UK.

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Local estate agents’ advertising of fees

In 2015, a trade association, 3 estate agents and a newspaper publisher were collectively fined over £735,000 for agreeing to prevent agents from advertising their fees or discounts in the local newspaper. The trade association introduced a rule that prevented its members from advertising their fees or discounts in the local paper, and the paper agreed to extend this agreement to prevent any agents from advertising their fees (whether they were members or not). This limited agents’ ability to compete with each other on their fees, making it harder for consumers to compare prices and get value for money and may also have made it harder for new or smaller businesses to attract new customers.

To read more about this case, see the CMA’s open letter to estate agents.

Eye surgeons

In 2015, a membership organisation of private ophthalmologists (eye surgeons) was fined £382,500 for sharing commercially sensitive information amongst competing consultants and recommending what prices they should charge to insurers. The eye surgeons were working together as part of different, competing groups across the UK. The membership organisation broke competition law by facilitating the exchange of sensitive information between these competing groups on subjects such as their pricing and commercial intentions. These actions were taken in the interests of increasing revenue and profitability for the consultants by removing competition between them. Actions such as these can mean higher prices, which will ultimately have a knock-on effect for patients who may end up paying more through premiums or self-pay fees.

To read more about this case, see the CMA’s open letter to medical practitioners.

Online resale price maintenance

In 2016, the CMA fined 2 businesses in separate cases over £3 million for restricting the prices that retailers could sell their products for. In the first case, a supplier of bathroom fittings threatened retailers with penalties (such as higher prices, or withdrawing rights to use the supplier’s marketing images) if retailers priced below their ‘recommended’ online retail price. In the other case, a supplier of commercial catering equipment imposed a ‘minimum advertised price’ policy for dealers when selling their products online. Both of these arrangements restricted retailers’ ability to set their own prices when selling products online, which can reduce competition between retailers and keep prices artificially high for customers.

To read more about these cases, see the CMA’s more detailed case study.

Amazon Marketplace sellers

In 2016, an online seller was fined £163,371 for being part of an illegal cartel relating to sales of popular posters (featuring the likes of Justin Bieber and One Direction) and frames via Amazon Marketplace. Trod Ltd agreed with a competing seller, GB eye, that they would not undercut each other on price and used automated repricing software to help them monitor and adjust their prices accordingly. Agreements such as this can mean that prices stay artificially high and the benefits of savings are not passed on to customers who end up paying more than they should. GB eye received immunity from fines by reporting the cartel to the CMA first. Trod also received a reduction for admitting their part in the cartel and co-operating with the CMA’s investigation.

To read more about this case, visit the CMA’s case page.

Mercedes-Benz commercial vehicle dealers

In 2013, Mercedes-Benz and 5 of its commercial vehicle dealers were fined over £2.8 million for unlawful cartel activity. The dealers sought to limit competition for the sale of vans and trucks. For example, in one instance 2 dealers agreed that they would include a ‘substantial’ margin when quoting to customers based in each other’s area. In another, 2 dealers agreed that they would not approach customers from each other’s area. The fines imposed represented up to 18 months’ profit after tax of the businesses involved, but one of the companies avoided a penalty altogether by being the first to apply for leniency and subsequently assisting the authorities.

To read more about this case, visit the CMA’s case page.

Construction recruitment agencies

In 2009, 6 recruitment agencies were fined over £7.9 million (after appeal) for price-fixing and for collectively boycotting another company (Parc UK) in the supply of candidates to the construction industry. In 2003 Parc had entered the market with a new and innovative business model to act as an intermediary between construction companies and the different recruitment agencies, which put pressure on the margins of the recruitment agencies. Instead of competing with Parc - and each other - on price and quality, the agencies formed a cartel in which they agreed to boycott Parc and also fix the fee rates they would charge to intermediaries, such as Parc, and certain other construction companies. This type of behaviour can distort competition and drive up staff costs for the construction companies (which in turn can potentially increase the overall cost of projects for clients).

To read more about this case, visit the CMA’s case page.

Supply of medicines to care homes

In 2014, 2 pharmaceutical companies were found to have entered into an illegal market-sharing agreement which resulted in fines of over £370,000. Tomms Pharmacy and Lloyds Pharmacy were competing to supply prescription medicines to care homes. The companies agreed that Tomms would not target existing Lloyds’ care home customers and in return, for at least some of the time, Lloyds also agreed not to approach existing customers of Tomms. This market-sharing agreement had the aim of reducing competitive pressure between the two pharmacies and may have denied care homes from receiving the benefits of healthy competition, such as improved quality or service. Lloyds came forward first to report the cartel and qualified for immunity, which meant they avoided paying any fines in the case.

To read more about this case, visit the CMA’s case page.

Double-glazing spacer bars

In 2006, a number of companies were fined £900,000 for agreeing to fix prices and share the market for supplying aluminium spacer bars (a key material used in double glazing). The companies agreed to divide up ‘target’ customers between them and fix prices for the most popular sizes of spacer bar. They also set up a non-compete agreement which included fixing a minimum price when quoting to other customers. The ultimate aim of this strategy was to reduce competition between the companies, resulting in higher prices and less choice for their customers and ultimately consumers, who may have ended up paying more for the overall cost of double glazing.

To read more about this case, visit the CMA’s case page.

Bid-rigging in the construction industry

In 2009, around 100 construction companies were fined a total of £63.6 million (after appeal) for engaging in illegal bid-rigging activity on nearly 200 projects. The companies colluded when tendering for building contracts, mostly in the form of ‘cover pricing’. In some of the tendering rounds, the lowest bidder faced no genuine competition at all because all other bids were ‘cover bids’ (ie the firm(s) that did not win the contract had colluded with other bidder(s) so as to submit inflated quotes, knowing they would not be picked). This affected building projects across England and included schools, universities and hospitals. As well as reducing the number of genuine bids in the tender process, ‘cover pricing’ activity such as this deceives customers into thinking that they have received a higher number of genuine bids than is actually the case, and prevents them from taking appropriate action by, for example, approaching other potential bidders for a quote. As a result, clients can end up unknowingly paying a higher price.

To read more about this case, visit the CMA’s case page.

Access and alarm systems in retirement homes

In 2013, 4 companies were fined over £50,000 for agreeing what prices to submit for contracts to fit access and alarm systems in retirement homes. When bidding for these contracts, one of the companies shared details of its proposal with a competing bidder with the aim that they would submit a higher bid, thereby enabling the first company to win the bid by having the cheaper price. A minimum of 65 tenders were identified as being affected by these collusive tendering agreements, having a combined value of £1.4 million. This deprived the retirement homes from receiving genuinely competitive bids for these contracts and thus increased the likelihood that they overpaid for the work.

To read more about this case, visit the CMA’s case page.

Published 18 November 2015