The Competition Act 1998 is the current major source of
competition law
Competition law is the field of law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented through public and private enforcement. It is also known as antitrust l ...
in the
United Kingdom
The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and North ...
, along with the
Enterprise Act 2002
The Enterprise Act 2002 is an Act of the Parliament of the United Kingdom which made major changes to UK competition law with respect to mergers and also changed the law governing insolvency bankruptcy.
It made cartels illegal with a maximum pri ...
. The act provides an updated framework for identifying and dealing with restrictive business practices and abuse of a dominant market position.
One of the main purposes of this act was to harmonise the UK with EU competition policy, with Chapter I and II of the act mirroring the content of Articles 81 and 82 of the
Treaty of Amsterdam
The Treaty of Amsterdam, officially the Treaty of Amsterdam amending the Treaty on European Union, the Treaties establishing the European Communities and certain related acts, was signed on 2 October 1997, and entered into force on 1 May 1999; i ...
(formally Articles 85 and 86 of the
Treaty of Rome
The Treaty of Rome, or EEC Treaty (officially the Treaty establishing the European Economic Community), brought about the creation of the European Economic Community (EEC), the best known of the European Communities (EC). The treaty was sig ...
).
[Note: Arts 81 & 81 have since been renumbered as Arts 101 & 102]
Chapter I Prohibitions
Deals with restrictive practices engaged by companies operating within the UK that distort, restrict or prevent competition. These are primarily in the form of horizontal agreements (agreements to collude between firms on the same level of the supply chain such as retailers or wholesalers). These agreements could be to limit output,
collusively share information, fix prices, tender collectively and share markets out.
Competition and Markets Authority
The Competition and Markets Authority (CMA) is the competition regulator in United Kingdom. It is a non-ministerial government department in the United Kingdom, responsible for strengthening business competition and preventing and reducing anti-com ...
(CMA) is responsible for prosecuting such firms who engage in these activities, and are able to levy fines up to 10% of annual global turnover for every year in which a violation has taken place up to a maximum of 3 years.
Exemptions from prohibition are available if the firm can demonstrate that these practices are in the interest of the consumer through increasing market efficiencies or advancing technical progress.
Chapter II Prohibitions
Chapter II deals with the abuse of a dominant position by a firm who uses practices such as
predatory pricing
Predatory pricing is a Pricing strategies, pricing strategy, using the method of undercutting on a larger scale, where a Article 102 of the Treaty on the Functioning of the European Union#Dominance, dominant firm in an industry will deliberately ...
, excessive prices, refusal to supply,
vertical restraints Vertical restraints are competition restrictions in agreements between firms or individuals at different levels of the production and distribution process. Vertical restraints are to be distinguished from so-called "horizontal restraints", which are ...
and
price discrimination
Price discrimination is a microeconomic pricing strategy where identical or largely similar goods or services are sold at different prices by the same provider in different markets. Price discrimination is distinguished from product different ...
to maximise profit, gain competitive advantage or otherwise restrict competition.
In investigating alleged breaches of chapter II a two-stage process is involved. Firstly it must be identified if the firm actually possesses a dominant market position. This can be done through various concentration indices such as the
Herfindahl-Hirchman Index (HHI). Generally if a firm is found to have a market share in excess of 40% then it is considered a threat to competition.
There are no exemptions to chapter II as by its very definition as "abuse" of a market position, one must be guilty of wrongdoing for the chapter to apply.
An example of the effects of the act is that in 2004,
public schools were
investigated for fee-fixing by the
Office of Fair Trading
The Office of Fair Trading (OFT) was a non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforced both consumer protection and competition law, acting as the United Kingdom's economic ...
, and in 2005 fifty of the leading schools (including
Ampleforth,
Eton Eton most commonly refers to Eton College, a public school in Eton, Berkshire, England.
Eton may also refer to:
Places
*Eton, Berkshire, a town in Berkshire, England
* Eton, Georgia, a town in the United States
* Éton, a commune in the Meuse dep ...
,
Charterhouse
Charterhouse may refer to:
* Charterhouse (monastery), of the Carthusian religious order
Charterhouse may also refer to:
Places
* The Charterhouse, Coventry, a former monastery
* Charterhouse School, an English public school in Surrey
London ...
,
Gresham's,
Harrow,
Haileybury,
Marlborough
Marlborough may refer to:
Places United Kingdom
* Marlborough, Wiltshire, England
** Marlborough College, public school
* Marlborough School, Woodstock in Oxfordshire, England
* The Marlborough Science Academy in Hertfordshire, England
Austral ...
,
Rugby
Rugby may refer to:
Sport
* Rugby football in many forms:
** Rugby league: 13 players per side
*** Masters Rugby League
*** Mod league
*** Rugby league nines
*** Rugby league sevens
*** Touch (sport)
*** Wheelchair rugby league
** Rugby union: 1 ...
,
Sevenoaks
Sevenoaks is a town in Kent with a population of 29,506 situated south-east of London, England. Also classified as a civil parishes in England, civil parish, Sevenoaks is served by a commuter South Eastern Main Line, main line railway into Lon ...
,
Shrewsbury
Shrewsbury ( , also ) is a market town, civil parish, and the county town of Shropshire, England, on the River Severn, north-west of London; at the 2021 census, it had a population of 76,782. The town's name can be pronounced as either 'Sh ...
,
Stowe
Stowe may refer to:
Places United Kingdom
*Stowe, Buckinghamshire, a civil parish and former village
**Stowe House
**Stowe School
* Stowe, Cornwall, in Kilkhampton parish
* Stowe, Herefordshire, in the List of places in Herefordshire
* Stowe, Linc ...
,
Wellington
Wellington ( mi, Te Whanganui-a-Tara or ) is the capital city of New Zealand. It is located at the south-western tip of the North Island, between Cook Strait and the Remutaka Range. Wellington is the second-largest city in New Zealand by me ...
and
Winchester
Winchester is a City status in the United Kingdom, cathedral city in Hampshire, England. The city lies at the heart of the wider City of Winchester, a local government Districts of England, district, at the western end of the South Downs Nation ...
) were ordered to raise £3 million between them to be spent on charities nominated by the pupils of the schools involved in the years 2001–2003, and were banned from further sharing of information on their external fees.
References
External links
*
{{UK legislation
United Kingdom Acts of Parliament 1998
United Kingdom competition law