CMA has found evidence of cartel arrangements in the supply of precast concrete drainage products
First published by Admin on January 12, 2018 in the following categories: Investigations and tagged with cartels | cma
The Competition and Markets Authority (CMA) will be going ahead with their investigations into the supply of precast concrete drainage products industry over suspicions of cartel behaviour after reportedly finding enough evidence from their initial probes.
The case was opened on 15 April 2016 and the CMA has spent over a year obtaining vital information for analysis and review. The competition watchdog’s preliminary investigations have apparently proved fruitful as it announces its intention to continue the probes.
The investigations are concerned with “suspected infringements of the Chapter I prohibition” in the UK’s Competition Act as well as EU Competition laws (Article 101 of the TFEU). These laws prohibit anti-competitive collusion through undertakings that prohibit, restrict or distort competition in the market.
Under UK and EU competition laws, businesses are not allowed to:
1. Directly or indirectly fix purchase or selling prices or any other trading conditions:
Price fixing is the most common example of this. By fixing prices or certain trading conditions, businesses may be able to control the levels of supply and demand. Businesses shouldn’t tell their competitors what prices they will charge to incite them to do the same: e.g. agreeing to raise the prices for bread everywhere so customers have to pay a higher price regardless of where they shop.
2. Limit or control production, markets, technical development, or investment:
Limiting production and markets can force prices to be higher by distorting the mechanics of supply and demand. Limiting technical development and investment can keep a market stagnant and not allow new products to trigger new demand and new competition.
3. Share markets or sources of supply:
Competing businesses shouldn’t do this as it can limit availability for other players as well as consumers. Sharing the market usually involves companies agreeing to only sell certain products to certain people so as not to step on their competitors’ toes; providing they return the favour, of course. Customers may therefore be unable to benefit from true competing businesses, and this may also make it harder for new businesses to join the market.
4. Apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage:
Businesses shouldn’t subject their suppliers or distributors to certain conditions that are different to others. If they do, they could risk putting customers and business stakeholders at an unfair disadvantage.
5. Make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
Terms and conditions in contracts should be appropriate and related. Any unrelated inclusions are not allowed.
A lot of anti-competitive practices have elements from more than one of these headings above, with the most common being colluding to fix prices and share the market in some way.
The CMA’s announcement here refers to a case where one individual was held responsible for the supply of concrete drainage pipes. Mr Barry Cooper was found guilty of dividing supply, fixing prices and dividing customers. The Authority is likely to be looking at a very similar case in the supply of similar products.