The Competition and Markets Authority (CMA) has just published a new set of heat maps showing where businesses across the UK have received warning or advisory letters for potentially breaking competition law. It’s the first time the CMA has published this kind of information, and it’s a reminder for all businesses to ensure they’re on the right side of the law.
If you run a retail business, manufacture goods, or operate in any competitive market, the CMA’s report could be of interest to you.
What Is the CMA Doing?
From 2018 to 2023, the CMA sent 557 letters to businesses in various sectors, including household goods, technology products, heating equipment, and clothing. These letters are meant to warn businesses about practices that could be harming consumers and breaking competition law.
The most common issue? Resale Price Maintenance (RPM). This happens when suppliers or manufacturers restrict retailers from offering discounts, keeping prices higher for consumers. If your business is involved in setting prices for products sold by resellers or distributors, it’s worth reviewing those agreements carefully.
What could happen if you ignore a warning?
If you receive a letter from the CMA, take it seriously. Businesses that ignore these warnings could face significant penalties.
For example, GAK, a business that resells digital keyboards and guitars, were fined £278,945 for having an agreement with Yamaha not to discount online prices for certain products. This was increased by 15% because GAK had already been sent an advisory letter from the CMA expressing their concerns it was potentially engaging in RPM.
The penalties don’t stop at fines. In some cases, the CMA can disqualify company directors, which could be disastrous for a business.
Why this matters for your business
Even if you haven’t received a letter, this is a good reminder to review your practices. Staying on the right side of competition law can help to protect your business and reputation.
It may be good to review your supplier and reseller agreements. If you’re involved in setting prices or giving instructions on how your products are sold, make sure you’re not limiting competition. Restricting discounts could land you in trouble.
The CMA’s heat maps show that warning letters have been sent to businesses all over the UK, with higher concentrations in regions like the South East and London. If you operate in these areas, it’s worth being extra vigilant.
At the end of the day, keeping your business compliant with competition law isn’t just about avoiding fines - it’s about protecting your customers, your reputation, and your future growth.
If you’ve received a warning or advisory letter, or if you just want to ensure your business is operating within the law, get in touch with us today. We’re here to support you and help safeguard your business.
See: https://www.gov.uk/government/news/cma-reveals-geographic-spread-of-warnings-issued-to-businesses
October 17, 2024