The announcement of three Office of Fair Trading investigations in the past three weeks is likely to be only the tip of the iceberg and companies should brace themselves for much further scrutiny, a Midland competition lawyer has warned.
Stephen Wyer, partner and commercial and competition specialist at Black Country law firm George Green, says that the OFT's naming of 112 firms in an inquiry into price-fixing in the construction industry, and the naming of the big supermarkets in investigations into price fixing of tobacco, and health and beauty products, is a sign that the watchdog is becoming much more aggressive in tackling anti-competitive practices.
"The OFT is making ever wider use of powers granted to it in the Competition Act 1998 and the Enterprise Act 2002 which make the UK's competition law regime now one of the toughest in the world." Mr Wyer said.
"Although supermarkets feature in two out of the three of the recently launched investigations, the OFT is as likely to investigate small businesses as it is multi-nationals.
"This is clear in the case of the probe into construction tendering practices, so all businesses need to be sure that they tender for and carry out work in line with the law and the spirit of competition.
"Many long standing industry practices which involve some sort of contact with competitors or encourage suppliers or customers to set a standard price will be in breach of rules on unfair practices.
"As in the case of the construction industry any collusion may be happening at a level far below the directors, but it is they who will end up carrying the can for these practices, which may even have been perpetrated by a subsidiary company.
According to Mr Wyer, while the Competition Act broadly deals with corporate competition law offences, the Enterprise Act, under which many more cases are now being investigated, contains sanctions aimed at individuals in control of their companies rather than just their companies themselves.
He said: "The OFT has wide ranging powers of enforcement including the right to carry out on the spot investigations (known generally as dawn raids) and the ability to impose extensive fines on both companies, up to ten per cent of turnover.
"Under the Enterprise Act the OFT can also push for criminal convictions for individuals involved in cartels and possible disqualification for directors as a result of their company's competition law infringements."
Multi-national companies can easily come unstuck when it comes to trying to keep on the right side of UK competition law.
"Even in Europe, what is accepted practice in one legal jurisdiction is considered anti-competitive in another, so it is important that overseas companies are especially aware of UK competition law and its possible impact on their business. When we carried out a training programme on procurement and contracting procedures recently for a large multi-national with a significant presence in the Midlands, the directors were surprised at what could be deemed to be anti-competitive in the UK.
"It is important for companies to realise that UK competition law relates not only to price fixing and cartel offences as in the current construction case, but also to abuse of a market dominant position and other activities preventing, restricting or distorting competition, whether involving joint ventures, research and development, agency and distribution arrangements and commercial agreements generally.
"The OFT has publicly stated that businesses have no excuse for not knowing and abiding by the law and is obliged to investigate whenever it receives a complaint, so companies need to ensure that their people are trained in the correct procurement and contracting procedures, so that they are not caught out in the future," Mr Wyer went on to say.
* Companies involved in the grocery sector probe need to move quickly if they are to secure leniency from the authority, according to lawyers at Pinsent Masons.
Applying for leniency could give them immunity from fines and other sanctions the OFT could impose, but it is only available on a 'first-come, first-served' basis.