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This publication is available at https://www.gov.uk/government/publications/competition-law-information-for-chartered-accountants/competition-law-information-for-accountants-in-practice
Accountants help businesses and their owners protect profits and assets. Making businesses aware of competition law and the associated risks can be one way of doing this.
What is competition law and why might my clients be at risk?
- Competition encourages businesses to improve and innovate, for the benefit of their customers. The law ensures businesses compete on a level playing field and are protected from others acting unfairly, for example by fixing prices or rigging bids. Breaking the law can incur significant penalties.
- CMA research reveals a significant knowledge gap amongst businesses, on the implications of competition law. 77% said they didn’t understand competition law well.
- As an accountant and trusted business adviser, you may find yourself well placed to put competition law on a client’s radar and encourage them to avoid the risks of breaking it.
What can I look out for?
- Does your client recognise what anti-competitive behaviour looks like? If so, how seriously do they take it?
- Does your client know what the potential penalties are for breaking competition law?
- Do they have systems in place to deal with competition law risks, appropriate to their size and nature?
What can accountants do?
- Be aware of the common competition law risks and red flags that signal when competition law could have been broken, and pass this on to clients, as appropriate. The Competition and Markets Authority’s (CMA) advice for Company Directors and Competition law risk: a short guide will be useful in this context.
- If a business is concerned they may be in danger of breaking the law, encourage them to seek appropriate legal advice.
- Be aware of the CMA’s leniency programme and, where appropriate, pass this on to clients.
Accountants can add value by helping clients understand competition law risks.
What are the consequences of breaking the law?
Businesses can be fined up to 10% of their global turnover and their directors may be disqualified for up to 15 years.
Individuals can go to prison for up to 5 years in some cases.
The reputational damage of breaking competition law is significant and long lasting. Small businesses as well as large ones are at risk of enforcement action by the CMA.