How-to guide: Understanding the Competition Act 1998 prohibitions (UK)

Introduction

This guide helps in-house lawyers and compliance professionals in organisations of all sizes and sectors in the UK to understand the scope and key elements of the UK Competition Act 1998 (CA 1998) prohibitions.

The CA 1998 targets anticompetitive business conduct. An understanding of the CA 1998 should underpin the creation and implementation of a compliance programme and help you to take appropriate steps if you identify anticompetitive conduct. Compliance with competition law is important because failure to comply can lead to a variety of possible consequences, including large fines.

This guide includes the following sections:

Overview
Chapter I prohibition – anticompetitive agreements
Chapter II prohibition – abuse of a dominant position
Territorial scope and application
Liability

This guide can be read in conjunction with How-to guides: How to identify and prioritise competition law risk in your organisation (non-dominant and dominant organisations; How to identify and remediate competition law infringements and Checklists: Competition law compliance and Meeting with a competitor.

Section 1 – Overview

The CA 1998 is primarily enforced by the Competition and Markets Authority (CMA). The CMA is a non-ministerial government department that is responsible for strengthening business competition, and preventing and reducing anticompetitive activities.

The CA 1998 can also be enforced in a regulated sector by the relevant competent regulator. The regulators with concurrent competition powers are the Office of Communications (Ofcom), the Gas and Electricity Markets Authority (Ofgem), the Water Services Regulation Authority (Ofwat), the Office of Rail and Road, the Northern Ireland Authority for Utility Regulation, the Civil Aviation Authority (CAA), Monitor (part of a single integrated organisation known as NHS Improvement), the Payment Systems Regulator (PSR) and the Financial Conduct Authority (FCA). Guidance on the enforcement of competition law by the sectoral regulators is available in the CMA guidance on Concurrent application of competition law to regulated industries or from the relevant regulator’s website.

The CA 1998 contains two main prohibitions:

Prohibition on anticompetitive agreements – the ‘Chapter I prohibition’; and
Prohibition on abuse of a dominant position – the ‘Chapter II prohibition’.

Section 2 – Chapter I prohibition: anticompetitive agreements

The Chapter I prohibition is set out in section 2(1) CA 1998. It prohibits agreements between undertakings, decisions by associations of undertakings and concerted practices which:

may affect trade within the UK; and
have as their object or effect the prevention, restriction or distortion of competition.

The Chapter I prohibition applies only where an agreement brings about an appreciable restriction of competition.

2.1 The elements of the prohibition

The main elements of the Chapter I prohibition are explained in more detail below.

2.1.1 Undertakings

The concept of ‘undertaking’ refers to any entity engaged in economic activity (ie, offering goods or services on a market) regardless of the legal status of that entity and the way in which it is financed.

2.1.2 Agreements between undertakings

The Chapter I prohibition is concerned with agreements between two or more undertakings, as opposed to the Chapter II prohibition which focuses on unilateral conduct (see section 3 below).

Where two or more entities are so close that, economically, they form a ‘single economic entity’, the Chapter I prohibition will not apply. This may be the case, for example, where a parent company exercises decisive influence over a subsidiary, such that the subsidiary cannot be said to enjoy real autonomy on the market, or in the case of a principal-agent relationship where the agent concludes agreements on behalf of the principal and does not bear real risk on its own behalf. In such cases, there is no agreement formed between undertakings.

The term ‘agreement’ has a wide meaning and covers written or oral agreements whether legally enforceable or not. It also includes so-called gentlemen’s agreements (ie, informal and unwritten agreements). There does not have to be a physical meeting of the parties for an agreement to be reached (eg, an exchange of letters or telephone calls may suffice).

Agreements may be entered into between undertakings operating at the same level of the supply chain (horizontal agreements) or between undertakings operating at different levels of the supply chain (vertical agreements).

2.1.3 Decisions by associations of undertakings

The wording ‘decisions by associations of undertakings’ is intended to cover rules, recommendations and regulations of bodies which are self-standing, usually with members, but that do not necessarily carry on any economic activity of their own. Examples of associations of undertakings include trade unions or associations and cooperatives.

2.1.4 Concerted practices

Conduct which falls short of an agreement may still be caught by the prohibition where it amounts to a ‘concerted practice’ (ie, a form of practical cooperation, knowingly entered into between competitors which is intended to amount to a substitution for competition in the market). Concerted practices may take many forms, one example being information exchanged between parties which reduces competitive uncertainty. Examples of factors the CMA may consider when establishing whether a concerted practice exists are set out as follows:

whether the parties knowingly entered into practical cooperation;
whether behaviour in the market is influenced as a result of direct or indirect contact between undertakings;
whether parallel behaviour is a result of contact between undertakings leading to conditions of competition which do not correspond to normal conditions of the market;
the structure of the relevant market and the nature of the product involved;
the number of undertakings in the market; and
where there are only a few undertakings, whether they have similar cost structures and outputs.

For the purposes of this guide, the term ‘agreements’ is used below to refer collectively to agreements between undertakings, decisions by associations of undertakings or concerted practices.

2.1.5 Object or effect prevention, restriction or distortion of competition

In order to fall foul of the Chapter I prohibition, an agreement must have as its object or effect the prevention, restriction or distortion of competition.

Restriction of competition by object

An agreement will have the restriction of competition as its object where the coordination reveals in itself ‘a sufficient degree of harm to competition’.

Where an agreement has the object of restricting competition, it is not necessary to prove that it has an anticompetitive effect in order to find an infringement of the Chapter I prohibition – it is automatically considered to be an infringement. Examples of agreements which have the object of restricting competition include agreements which:

fix prices;
share markets;
establish collusive tendering (bid-rigging);
exchange sensitive pricing information; and
impose export bans.

When deciding whether there is a restriction of competition by object, regard must be had to the agreement’s provisions, objectives, and the economic and legal context. When determining that context, it is also necessary to take into consideration the nature of the goods or services affected, as well as the real conditions of the functioning and structure of the market or markets in question.

Restriction of competition by effect

Where an agreement does not have the object of restricting competition, there is a need to consider whether the agreement has the actual or potential effect of restricting competition. An analysis of the effects of an agreement must be based on a consideration of the economic and legal context of the agreement and take into account the specificities of the relevant market. An effects analysis will involve the following:

identifying the relevant agreement (or provision) said to constitute a restriction of competition;
identifying the markets in which the effect of that agreement is to be assessed;
presenting a ‘theory of harm’ that guides the assessment. Articulating a theory of harm enables the CMA to focus on the evidence that supports the allegedly harmful effects. Without a theory of harm, it is very difficult, if not impossible, to focus the inquiry;
testing the theory of harm and the effects alleged to occur against the evidence; and
comparing the state of competition with the agreement in place with the position in the ‘counterfactual’ world in which the agreement had never been made. In this way, by comparing the actual case or the real-world case with the counterfactual case, the CMA can determine whether the provision or agreement under scrutiny is indeed restrictive of competition.

2.1.6 Effect on trade within the UK

The Chapter I prohibition applies to agreements and concerted practices which may affect trade within the UK or a part of it.

It is not necessary to show that an agreement has an actual impact on trade; the fact that an agreement is capable of having such an effect is sufficient.

2.1.7 Appreciability

As noted above, the Chapter I prohibition applies only where an agreement brings about an appreciable restriction of competition.

An agreement that may affect trade within the UK (or a part of it) and that has an anticompetitive object constitutes, by its nature, an appreciable restriction on competition.

When determining whether a restriction of competition by effect is appreciable, the authority or court must have regard to the European Commission’s Notice on agreements of minor importance (De Minimis Notice). The De Minimis Notice provides a ‘safe harbour’ for agreements between undertakings if the market share held by each of the parties to the agreement does not exceed 15% on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are not actual or potential competitors. Such agreements will be considered to have non-appreciable effects on competition. The CMA considers the De Minimis Notice to be a guideline; however, the CMA would not fine undertakings relying in good faith on the De Minimis Notice.

If undertakings fall outside the safe harbour of the De Minimis Notice, the agreement is not automatically considered to have an appreciable effect on competition; further analysis will be required. The CMA will consider a variety of factors such as the nature of the agreement, market structure and barriers to entry to determine whether the agreement has an appreciable effect on competition.

2.2 Typical infringing behaviour

According to section 2(2) CA 1998, the types of agreements that will be caught include the following:

fixing purchase or selling prices or other trading conditions;
limiting or controlling production or investment;
market sharing;
applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
making 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.

The last two types of agreements are usually investigated as Chapter II prohibitions instead, as they tend to give rise to competition concerns when they are applied by undertakings with significant market power (see section 3 below).

2.3 Examples of anticompetitive agreements

In 2025, the CMA fined 10 vehicle manufacturers and two trade bodies £77.7 million for illegally agreeing not to compete when advertising the percentage of their cars that could be recycled and for colluding to avoid paying third‑parties to recycle end‑of‑life vehicles.

In 2025, the CMA fined four major sports broadcasters BT, IMG, ITV, and the BBC, a total of £4.24 million for colluding on freelance pay rates. Between 2014 and 2021, the companies unlawfully shared sensitive information about day rates and pay rises for freelancers such as camera operators and sound technicians. Sky reported its participation to the CMA and was granted immunity from penalties.

2.4 Exemptions and exclusions

The presence of a restriction on competition does not necessarily mean that an agreement is prohibited. Exemptions are available either because an agreement falls within a category of agreements which are subject to block exemption or because on an individual basis the agreement has certain pro-competitive efficiencies which outweigh its negative effects. Certain agreements are also excluded from the scope of the Chapter I prohibition.

2.4.1 Agreements exempt from the Chapter I prohibition

Block exemptions

The CMA considers that certain categories of agreements that produce sufficient efficiencies and benefits to outweigh any anticompetitive effects should be subject to block exemption from the scope of the Chapter I prohibition. These categories of block exemptions are set out in block exemption regulations, which detail the criteria that must be met for an agreement to be block exempted (this may include for example, market share thresholds and the non-inclusion of certain restrictions). The type of agreements covered include technology transfer agreements, research and development agreements, and specialisation agreements.

Following its exit from the EU, the UK retained the block exemption regulations that were in force in the EU on 31 December 2020. These are due to expire between 2022 and 2026 and the CMA is or will be conducting reviews and consultations on varying or revoking the retained block exemption regulations or replacing them with UK legislation. For example, the retained Vertical Agreements Block Exemption Regulation which was made under EU law and retained in UK law after the UK’s withdrawal from the EU expired on 31 May 2022 and was replaced by the Vertical Agreements Block Exemption Order, which came into force on 1 June 2022.

Individual exemption

Where an agreement does not fall within the scope of a block exemption, it may still be exempt individually where it meets certain criteria. In Section 9(1) CA 1998 the following agreements are exempt from the Chapter I prohibition:

those agreements that contribute to improving production or distribution, or promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit; but
do not impose on the undertakings concerned restrictions which are not indispensable to the attainment of those objectives, or afford the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the products in question.

Undertakings must conduct a self-assessment of whether an agreement that might otherwise infringe the Chapter I prohibition satisfies the criteria of section 9(1) CA 1998. The possible application of the exemption criteria should be carefully considered as the burden will be on the organisation seeking to rely upon it to show that the criteria are met.

Although exemption under section 9(1) may be possible for both restrictions of competition by object and by effect, in practice it is much more difficult to show that an object restriction meets the criteria for exemption.

The CMA will have regard to the European Commission’s Guidelines on the application of Article 101(3) Treaty on the Functioning of the European Union (TFEU) when applying section 9(1).

2.4.2 Agreements excluded from the scope of the Chapter I prohibition

There are limited exclusions for certain types of agreements from the scope of the Chapter I prohibition. These exclusions include merger agreements, certain agreements which are subject to competition scrutiny under a sectoral regime and where conduct is required in order to comply with a legal requirement. The exclusions are more particularly detailed in Schedules 1, 2 and 3 CA 1998.

Section 3 – Chapter II prohibition: abuse of a dominant position

The Chapter II prohibition is set out in section 18(1) CA 1998 and prohibits any conduct on the part of one or more undertakings which amounts to an abuse of a dominant position in a market if it may affect trade within the UK.

It is clear from the prohibition that possessing a dominant position is not in and of itself a problem, but a company with a dominant position has a special responsibility not to allow its conduct to impair competition.

In contrast to the Chapter I prohibition, which is concerned with agreements between undertakings, the Chapter II prohibition is focussed on unilateral conduct.

3.1 The elements of the prohibition

The main elements of the prohibition are explained in more detail below.

3.1.1 Undertaking

The concept of undertaking has the same meaning as in the Chapter I prohibition, see section 2.1.1 above.

3.1.2 Dominant position

Section 18(3) provides that ‘dominant position’ means a dominant position within the UK, and ‘the UK’ means the UK or any part of it. A company that has a dominant position is one that enjoys a position of economic strength that enables it to prevent effective competition from being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of consumers. The key is whether the undertaking is able to act independently on the market (ie, it has ‘substantial market power’).

Determining the relevant market

In order to determine whether an undertaking has substantial market power, first establish the relevant markets. In defining a market as part of a dominance investigation, the CMA will consider two dimensions: the relevant product market and the relevant geographic market. The key question is whether a product or geographic area exercises a sufficient competitive constraint on another product or area to be regarded as being in the same relevant market.

In defining the relevant product market, a major factor considered by the CMA is substitutability. The CMA will consider the products which are the focus of the assessment (ie, those sold by the undertaking in question and which are under investigation) and ask which products (if any) customers would switch to in the event of a small but significant (ie, 5-10%) increase in price of the products. If a sufficiently large number of customers would switch to another product, this indicates that this other product forms part of the same product market as the products under investigation.
In defining the geographic market, a similar approach is deployed. The starting point is the geographic area which the dominant undertaking supplies. The CMA will then consider other information relevant to supply, such as whether products can be profitably shipped long distances and the ability of suppliers from other geographic areas (including abroad) to also supply customers of the company in question.

Market definition is a complex and nuanced process; specialist advice should be sought if there is a possibility that your organisation might be in a dominant position in respect of any of its activities.

Determining market power

Once the relevant markets have been established, you should carry out an assessment of market power. Consider various factors as part of that assessment.

Market shares are one factor to consider, although these are indicative, rather than determinative of dominance. The CMA has said that although it considers it ‘unlikely that an undertaking will be individually dominant if its share of the relevant market is below 40 per cent . . . dominance could be established below that figure if other relevant factors (such as the weak position of competitors in that market and high entry barriers) provided strong evidence of dominance’. An undertaking with a market share of 50 per cent or more will be presumed to be dominant, and the evidential burden of rebutting this presumption falls on the undertaking.

In assessing whether an undertaking enjoys substantial market power, there should also be a consideration of competitive constraints on the undertaking. Competitive constraints may come from existing competitors, potential competitors and strong buyer power from customers.

3.1.3 Effect on trade within the UK

The Chapter II prohibition only applies to conduct by a dominant undertaking which may affect trade in the UK (or a part of it). Most conduct that is an abuse of dominant position within the UK will also affect trade there. This excludes an abuse of a dominant position within the UK which has effects that are entirely outside the UK. Where this is the case, this could be caught by another jurisdiction’s competition laws.

A dominant undertaking’s conduct does not have to actually affect trade as long as it is capable of doing so.

3.1.4 Abuse

The categories of conduct which might amount to an abuse are not closed, they are considered below in section 3.2.

3.2 Typical infringing behaviour

Below are examples of the categories of behaviour that may constitute an abuse, and therefore a Chapter II prohibition, according to section 18(2) of the CA 1998:

directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
limiting production, markets or technical development to the prejudice of consumers;
applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; or
making 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.

The type of behaviours that may be abusive fall into two broad categories: exclusionary abuses (eg, applying dissimilar conditions to similar transactions) and exploitative abuses (eg, imposing unfair purchase or selling prices).

Any conduct on the part of one or more organisations that amounts to the abuse of a dominant position in a market is prohibited.

On 13 February 2025, the Commission hosted a stakeholder workshop to discuss its draft Guidelines on Exclusionary Abuses, first published on 1 August 2024. These guidelines seek to improve the predictability, coherence, and practical application of the framework for assessing exclusionary conduct under Article 102 TFEU. The final guidelines are expected to be published by the end of 2025.

3.3 Example of abuse of a dominant position

In 2022, the CMA fined Pfizer and Flynn £63 million and £6.7 million respectively after finding that they abused their dominant positions to overcharge the NHS for a life-saving epilepsy drug.

In 2025, the CMA’s fine of £99 million on Advanz and associated parties was upheld by the Court of Appeal after finding they abused their dominant position by overcharging the NHS for the thyroid drug liothyronine.

3.4 Defences and exemptions

3.4.1 Objective justification

Whilst there is no defence set out in the CA 1998 to an abuse of a dominant position, if a dominant company shows that the conduct was objectively justified, the conduct will not amount to an abuse. In relation to objective justification, it is clear from case law that:

it is open to the dominant undertaking to show that any exclusionary effect on the market is counterbalanced or outweighed by advantages that also benefit consumers; and
the conduct in question must be proportionate.

In practice, it is not easy to show that there was an objective justification, although the defence has been accepted in a number of cases.

3.4.2 Efficiency defence

A dominant undertaking may justify exclusionary conduct on efficiency grounds. The competition authorities and courts must have regard to the European Commission’s Article 102 Enforcement Priorities Guidance (Article 102 Guidance). The Article 102 Guidance explains that conduct leading to foreclosure of competitors may be justified on the ground of efficiencies that are sufficient to guarantee that no net harm to consumers is likely to arise. In this regard, the four conditions laid out in paragraph 30 of the Article 102 Guidance would need to be shown to be fulfilled in order for any such justification to succeed.

3.4.3 Agreements excluded from the scope of the Chapter II prohibition

As with the Chapter I prohibition, there are certain limited exclusions from the scope of the Chapter II prohibition. These exclusions include conduct which results in a merger, the operation of services of general economic interest and conduct which is in compliance with a legal requirement. The exclusions are more particularly described in Schedules 1 and 3 CA 1998.

Section 4 – Territorial scope and application

4.1 Territorial scope of the CA 1998

4.1.1 Chapter I prohibition

Section 2(1) CA 1998 provides that the Chapter I prohibition applies where an agreement, decision, or concerted practice has as its object or effect the prevention, restriction, or distortion of competition within the UK, and either:

it is implemented, or intended to be implemented in the UK and may affect trade in the UK; or
it is likely to have an immediate, substantial and foreseeable effect on trade within the UK.

Prior to 1 January 2025, only agreements etc. implemented or intended to be implemented in the United Kingdom were caught by the Chapter I prohibition. The introduction of the qualified effects test is stated in the Explanatory Notes as being to ensure that ‘UK trade and businesses and consumers based in the United Kingdom are protected from the detrimental effects of anticompetitive conduct, regardless of where that conduct takes place, even when an agreement is implemented in another jurisdiction’.

Agreements that are implemented outside of the United Kingdom which are likely to have a more limited effect in the United Kingdom than those which are immediate, substantial and foreseeable will not be captured by the Chapter I prohibition.

4.1.2 Chapter II prohibition

Section 18(3) CA 1998 requires that the dominant position must be within the UK for the Chapter II prohibition to apply. The prohibition will also apply when the dominant position is held partly within the UK and partly beyond the UK, but will not apply when the dominant position is held entirely outside the UK.

4.2 EU competition law and Brexit

The Chapter I and Chapter II prohibitions are modelled closely upon articles 101 and 102 of the TFEU, the main difference between the two sets of provisions being the territorial scope. Prior to 31 January 2021, the UK competition authorities were empowered to apply the similarly worded EU prohibitions (where relevant) but following the UK’s exit the CMA may only apply UK law.

There is limited continued interaction between the two regimes by virtue of section 60A CA 1998 which provides that the CMA and UK courts must do the following:

ensure consistency between UK competition law and the principles laid down by the TFEU and the Court of Justice of the European Union (CJEU) before the UK’s exit and any pre-Brexit decision made by the CJEU, other than where it is appropriate to do otherwise in light of the specified circumstances set out in section 60A(8); and
in addition, have regard to any relevant decision or statement of the European Commission made before the UK’s exit (which has not been withdrawn).

Keep in mind that an anticompetitive agreement or conduct amounting to an abuse of a dominant position, could simultaneously be caught by UK competition law, EU competition law and/or another jurisdiction’s competition law if it falls under the territorial scope of each. Seek specialist advice if there is a possibility that your organisation’s conduct or agreement could fall within the scope of several jurisdictions’ competition laws.

Section 5 – Liability

The penalties for non-compliance with competition law can be severe, both for companies and individuals. The potential consequences for each are dealt with in turn below.

5.1 Corporate liability

If your organisation is found to have broken competition law, consequences may include the following:

financial penalties;
unenforceability of restrictions in agreements;
directions requiring agreements or conduct to be modified or brought to an end;
exclusion from tender processes;
private damages claims; and
other business implications

Each of the above possible consequences is explained in more detail below.

5.1.1 Financial penalties

Infringement of the Chapter I or Chapter II prohibitions can lead to the imposition of a fine of up to 10% of worldwide group turnover in the previous business year. The CMA has published guidance on the appropriate amount of a penalty.

5.1.2 Unenforceability of restrictions in agreements

An agreement prohibited by Chapter I will be void. Unless the offending clauses can be severed from the remainder of the agreement in accordance with general contractual principles, the agreement will be unenforceable. In addition to being void, an agreement that is prohibited by Chapter I will also be illegal.

5.1.3 Directions

A possible enforcement action that may be taken in the event of anticompetitive conduct is the issuance of directions.

If the CMA has made a decision that an agreement infringes the Chapter I or Chapter II prohibition, the CMA may give such directions as it considers appropriate to bring the infringement to an end.

In respect of an infringement of the Chapter I prohibition, a direction may include provisions requiring the parties to the agreement to modify the agreement, or requiring the parties to the agreement to terminate the agreement.

In respect of the Chapter II prohibition, a direction may include provisions requiring the person concerned to modify the conduct in question, or requiring them to cease that conduct.

5.1.4 Exclusion from tender processes

Section 57 of the Procurement Act 2023, which came into force on 24 February 2025, details the circumstances under which suppliers must or may be excluded from participating in procurements and being awarded public contracts.

Excluded and excludable suppliers are those that meet either mandatory or discretionary grounds for exclusion, where the contracting authority considers it likely that the circumstances giving rise to the ground will reoccur or are continuing. Suppliers on the debarment list for either mandatory or discretionary grounds for exclusion must also be considered excluded or excludable. This applies if the supplier or an associated person is on the debarment list by virtue of a mandatory or discretionary exclusion ground.

Mandatory exclusion grounds related to competition law are set out in Schedule 6 of the Procurement Act 2023:

If the supplier or a connected person was a party to a CMA (or concurrent regulator) infringement decision finding that there was a cartel (save for where the supplier or connected person was an immunity recipient) (paragraph 41), or (pursuant to paragraph 42) if the supplier or a connected person has been subject to a penalty or a decision by a regulator, court or other authority outside the UK, where the conduct giving rise to that penalty or decision is conduct that would give rise to an infringement decision if committed in the UK; or
If the supplier or a connected person has been convicted of an offence under section 188 of the Enterprise Act 2002 (cartel offence) (paragraph 32) or equivalent overseas convictions (paragraph 34).

Discretionary exclusion grounds related to competition law are set out in Schedule 7 of the Procurement Act:

the decision-maker considers that an agreement or concerted practice to which the supplier or a connected person is party has infringed the Chapter I prohibition or any substantially similar prohibition applicable in a jurisdiction outside the UK (save where the supplier or connected person is an immunity recipient or, has been granted immunity from penalties by a regulator or authority outside the UK (paragraph 7);
the decision-maker considers that the supplier or a connected person has infringed the Chapter II prohibition, or any substantially similar prohibition applicable in a jurisdiction outside the UK (paragraph 8);
the CMA has made a decision that the supplier or a connected person has infringed the Chapter II prohibition, or a regulator or other authority outside the UK has made a decision that the supplier or a connected person has infringed any substantially similar prohibition (paragraph 9); or
the decision-maker considers that the supplier or a connected person has engaged in conduct constituting an offence under section 188 of the Enterprise Act 2002 (cartel offence), or a substantially similar offence under the law of a country or territory outside the United Kingdom (paragraph 10).

A supplier will be an ‘excluded supplier’ or ‘excludable supplier’ where (in addition to there being a mandatory or discretionary ground for exclusion), the circumstances giving rise to the application of the exclusion ground are continuing or likely to occur again, or the supplier or an associated person is on the debarment list. In considering, for the purposes of whether the circumstances giving rise to the application of an exclusion ground are continuing or likely to occur again, a contracting authority may have regard to the matters set out in section 58.

5.1.5 Private damages actions

Organisations that do not comply with competition laws can be subject to damages claims brought by third parties seeking redress for loss suffered because of an infringement of competition law. For example, the victims of a cartel may seek damages for the higher prices they had to pay for products because of the cartel.

Competition damages actions can take the following forms:

follow-on claims;
stand-alone claims; or
a combination of a both (ie, follow-on and stand-alone claims).

Follow-on claims are claims for damages where the infringement of competition law has already been established by a regulator such as the CMA. In this type of claim, the party seeking damages does not need to prove that there was an infringement of competition law but rather that the infringement (already established by the CMA) has caused them harm.

Stand-alone claims are appropriate where an infringement has not been established by the CMA. Therefore, the party seeking damages must first establish the breach of competition law before showing that the infringement caused them harm.

5.1.6 Other business implications

Furthermore, in addition to the legal consequences, there may be business implications. Competition investigations can be lengthy and time-consuming. In addition to the legal costs that will necessarily be incurred in the course of an investigation, there will also be an opportunity cost for the business as an investigation will likely divert a significant amount of director and senior management time from their other activities. In addition, the negative impact on a company’s reputation of a finding of infringement can be significant and long lasting. For more detailed information on the CMA’s investigation procedures, prosecutions and the application of competition law, see the UK government’s CA 1998 guidance.

5.2 Individual liability

In addition to corporate liability, breaches of competition law may also lead to individual liability.

5.2.1 Cartel offence

Section 188 of the Enterprise Act 2002 (EA 2002) introduced a criminal offence for individuals who engage in horizontal cartel arrangements which:

fix prices;
limit or prevent supply or production;
lead to market-sharing or customer allocation; or
rig bids.

For cartel agreements which commenced after 1 April 2014, there is no requirement to prove dishonesty as an element of the cartel offence, although there are certain exclusions and defences to the offence relating to the open nature of the agreements made. The maximum penalty on conviction on indictment is five years imprisonment and/or an unlimited fine, and confiscation proceedings under the Proceeds of Crime Act 2002 may follow.

The CMA has published guidance on the principles to be applied in determining, in any case, whether criminal proceedings should be brought under section 188 of the EA 2002. More information is available in the CMA guideline Cartel offence prosecution: CMA9.

5.2.2 Director disqualification

The CMA has the power to apply to court for what is called a competition disqualification order. Under section 204 EA 2002, the court must make such an order disqualifying a person from being a director of a company, acting as a receiver of a company’s property and in any way being concerned in or taking part in the promotion, formation or management of a company or acting as an insolvency practitioner where conditions are met as follows:

the person is a director of a company that commits a breach of competition law (ie, any infringement of the Chapter I and Chapter II prohibitions); and
the court considers that person’s conduct as a director makes them unfit to be concerned in the management of a company.

Under the EA 2002 provisions, company directors can be disqualified from managing a company for up to 15 years. See Quick view: Director disqualification for breach of competition law.

Directors must be clear in articulating to staff the risks of breaking competition law and must lead by example. A culture of compliance led from the top down is key. See How-to guide: How to implement a culture of compliance with competition law in your organisation.

Additional resources

Detailed information and guidance on the law has been issued by the UK government:

detailed information on Competition law and cartels;
guidance on the Abuse of dominant position and on the Assessment of market power;
a basic guide on How to comply with competition law;
Agreements and concerted practices; and
Competition law risk: a short guide.