Everybody's Free (To Worry About Competition Law)
Friday, September 09, 2005
by
Douglas McLachlan
Baz Luhrmann once said in his now almost forgotten number one hit single “Everybody’s Free (to Wear Sunscreen)”:-
“Don’t worry about the future; or worry, but know that worrying is as effective as trying to solve an algebra equation by chewing bubble gum. The real troubles in your life are apt to be things that never cross your worried mind; the kind that blindside you at 4pm on some idle Tuesday”.
Six years later, Baz’s words still ring true for most things. Except competition law.
If you’re worried about your business complying with competition law, you’ll know that real troubles can blindside you at 9am on some idle Tuesday, not 4pm, and will come in the shape of a number of stern looking grey suited men from the Office of Fair Trading (the “OFT”) turning up in your reception without an appointment. And if you’re not worried, well, maybe you should be.
The OFT is continuing its campaign to enforce competition law across the UK. Every month the OFT launches a series of simultaneous "dawn raids" on firms suspected of illegal cartel activity such as price fixing, limitation of production and supply, bid-rigging and market sharing. The OFT’s inspectors turn up (unannounced of course) and demand access to your files and to your computers. They hijack your photocopier, your main meeting room and your time. And this is just Day 1. They might tell you to expect them back again tomorrow. And of course the investigation itself is likely to take the best part of two years.
An investigation of one cartel will often uncover evidence of a different cartel for the OFT to investigate, and the OFT have recently been given wide (although closely monitored) powers to plant surveillance devices in private residences and vehicles, to intercept e-mails and telephone conversations and to use undercover investigators and informants.
Contrary to popular belief, it is not big multinational companies based in London that the OFT has been investigating. In fact, it is SMEs which have predominately been the targets of “dawn raids” and a lot of these have been in Scotland. While it’s widely believed that the OFT is on the lookout for a big corporate scalp to add to its collection, don’t be fooled that they are only looking to London for that scalp. Recent investigations in the roofing industry have brought their attention to Scotland, and the trail has led into the wider construction industry in Scotland. Large and small companies alike will be caught up in the OFT’s net.
And the OFT won’t stop there. It also has estate agents, credit services and the healthcare industry in its sights. And those are just the ones we know about.
Don’t forget there are now substantial civil and criminal penalties for breaching competition law. The OFT can impose a fine of up to 10% of a firm’s worldwide turnover and individuals convicted of dishonestly agreeing with one another to engage in illegal cartel activity can receive a maximum of 5 years imprisonment and/or an unlimited fine.
These are substantial commercial and personal risks that businesses need to worry about now. Not when it’s too late.
If you think your business may have been involved in illegal cartel activity in the past, then now may be the time to consider confessing your involvement to the OFT to take advantage of the OFT’s Leniency Programme. The OFT’s Leniency Programme is a wonderful thing. It can lead to a 100% reduction on any fine and complete immunity from criminal prosecution. That can save you a lot of worry. But it can also cause a lot of worry : if you don’t get in there first, one of your competitor’s might.
Even if you’re pretty sure your business has done nothing to worry about, it’s best to put appropriate compliance and training programs in place now. Knowing the number of a competition lawyer to call on the day the OFT’s inspectors show up is one thing, but making that call before then can help avoid a lot of worry.
The information contained in this article is given for general information only and does not constitute legal advice on any specific matter.