29 September 2014
The Competition and Markets Authority (CMA) has issued new guidance focusing on trade associations, company directors and handling of sensitive information.
The CMA states that as trade associations play an important role in promoting their members’ interests, it has outlined dos and don’ts in order to refrain from creating or encouraging an infringement of competition law, which would affect both the association and its members.
Some guidance dos include establishing a competition compliance policy for the association, and making sure members are familiar with it; forbidding members from discussing competitively sensitive information; and requiring members to leave, and to report to the association or the CMA, any meetings with competitors where competitively sensitive information is discussed.
Some guidance don’ts include letting the association be a channel for, or otherwise facilitate, the sharing of competitively sensitive information between members about pricing, customers or output plans; allowing members to discuss competitively sensitive information in or around association events, including in ‘unofficial meetings’ or at social events; and issuing formal or informal pricing or output recommendations to members.
The CMA has also issued guidance outlining how company directors can help avoid breaking competition law.
Some of the questions the regulator expects a company director to ask includes the following: what the present competition law compliance risks are; what the high, medium and low risks are; what measures are being taken to mitigate these risks; and when the next review of the effectiveness of risk mitigation activities will take place.
The CMA adds that a company director should ensure the company has taken measures to make sure relevant staff know that the company must comply with competition law; that they must not discuss competitively sensitive information with the company’s competitors – especially the prices at which the company or its competitors will sell, or how it will bid for tenders and where or to whom the company sells; and that there may be consequences for staff who do.
Directors of companies that breach competition law can be disqualified for up to 15 years.
According to the CMA, being part of discussions of certain aspects of business with competitors and suppliers may risk a breach of competition law. Discussions might take place in meetings, by phone or email, or face to face.
The regulator states that you should not discuss with competitors your business’s future; disclose any of your customers’ future pricing plans to other customers; remain in any situation, professional or social, in which any competitor discusses their future pricing plans or other competitively sensitive information – leave and seek the advice of a lawyer.
However, you can discuss historical and aggregated industry pricing or cost trends (which don’t allow individual players’ pricing or costing to be identified) with your competitors; and you can have friends in competing businesses, but you should be mindful of competition law.