An investigation into price fixing in the catering equipment sector three years ago required additional follow-up work after the case had concluded because of suspicions the practice was “widespread”, the head of the Competitions and Markets Authority (CMA) has said.
The CMA finished its two-year probe into the sector in 2016, issuing a £2.3m fine to Foster Refrigerator for implementing minimum advertising price polices and subsequently sending warning letters to 20 other suppliers without naming them publicly.
Giving the keynote speech at the Thomson Reuters Conference this week, the CMA’s senior director for antitrust enforcement Ann Pope cited catering equipment as one of three markets where “follow-up compliance” was necessary because of concerns that regulatory breaches were prevalent.
She said: “Follow-up compliance is particularly important in markets where we have prioritised an investigation because we suspect the conduct is widespread within a sector as was the case with our investigations into resale price maintenance in the bathroom fittings, catering equipment and lighting sectors. In all those cases, we sent several warning letters to other suppliers and also engaged with trade associations in the sector to highlight the decision and the consequences of breaking the law.”
Mrs Pope said that most businesses “want to comply with the law” and that one way the CMA endeavours to help them do this is by undertaking compliance work on the back of its infringement decisions.
“We often talk about an ‘end-to-end’ approach to cases, which means it’s not the end of the case when we issue an infringement decision. We don’t completely disband the case team the day after we’ve issued the decision, but we use them, along with our specialist communications team, to develop targeted compliance messages for the industry concerned, explaining the infringement we have found and communicating to businesses how they can ensure they do not break the law.”
Research conducted by DotEcon in the sectors where the CMA has issued infringement decisions has found a clear link between CMA intervention and greater levels of understanding of the law.
The CMA’s own research, meanwhile, shows that less than a quarter of businesses claim to be “very or fairly familiar” with competition law, while 16% had never even heard of it.
The CMA was created out of the Office of Fair Trading four years ago and has developed a track record for enforcement, making progress in dealing with some of the concerns that were expressed about the regime in the past.
Unlike the OFT, it has used its powers to issue Competition Disqualification Orders, which bar individuals from being a director of any UK company for up to 15 years, as a result of their involvement in a competition law infringement.
“The reason all of this matters is that when businesses compete fairly this puts downward pressure on prices and is a spur to higher quality and innovation in goods and services – but these benefits are jeopardised when competition is weakened by anti-competitive agreements and practices,” said Mrs Pope.
“By issuing infringement decisions, imposing fines and disqualifying directors, the CMA not only directly punishes those who have engaged in harmful anticompetitive practices but also raises awareness of the consequences of getting caught, which drives compliance among other businesses bringing further benefits to ordinary consumers.”