Sep 13, 2011
Understanding Competition Law
At the end of June 2011, the Office of Fair Trading (“the OFT”) published a collection of online resources to help raise business’ increasing awareness and understanding of competition law, as well as explaining what they can do if something goes wrong with their compliance.
The video, Understanding Competition Law forms part of a wider package of materials that provide guidance to businesses on the relevance of competition law and how they can comply.
The OFT, the U.K.’s primary competition and consumer enforcement authority, is keen to help companies develop an effective culture of competition law compliance. Successfully creating a compliance culture can help companies avoid the severe consequences of infringing competition law.
The OFT is actively enforcing competition law. For example, in the first half of 2011, the OFT imposed fines exceeding £50 million for infringements of competition law. The OFT has also secured convictions resulting in prison terms and director disqualification orders and has a number of criminal cartel investigations underway.
But enforcement is only one aspect of the OFT’s work. We recognize that the majority of businesses wish to comply with competition law and engaging with business is an effective way to complement the “hard tool” actions undertaken by the Office by stimulating wider deterrent and educational effects.
The Office works with businesses to increase compliance with both consumer and competition law. We aim to provide information on how to comply with the law in formats and manners suitable for the key audience and ensure that businesses and intermediaries are aware of the availability of this information.
We recently consulted on guidance for businesses on how to comply with competition law, including receiving specific advice for Directors. In response to this consultation it was suggested that it would be useful to provide some basic training material, such as a film, in conjunction with a detailed guidance document and a quick guide. This approach has also been used by other competition authorities, such as the FTC. A respondent also noted that competition law is far from straightforward and there is significant scope for breaches being committed purely out of ignorance.
Additionally, recent consultations signaled that although respondents felt they had a sufficient compliance infrastructure, they could easily see how uncertainty about the law could drive non-compliance in businesses that did not have the resources to have advisers to explain more complex or uncertain areas of competition law in a business-friendly way to employees. An identified way to overcome this driver of non-compliance would be clear and practical OFT guidelines and to ensure that competition law compliance advice and training was delivered in a non-legalistic, understandable, and business-friendly way.
The Understanding Competition Law film aims to increase awareness among businesses of all sizes of how to comply with competition law. It innovatively explains the importance of competition law, the different ways in which competition law can be breached, and highlights practical steps that businesses can take to ensure compliance, with a focus on the OFT’s suggested four-step process for achieving competition law compliance. The film includes a dramatization of a dawn raid, alongside interviews with Richard Whish, Professor of Law at King’s College London, and OFT officials. The film expands on the written guidance in that it allows the OFT an opportunity to exemplify the complex competition law issues in a succinct manner for busy business people. It highlights some of the consequences of non-compliance for various staff within the business, for example directors and sales staff. It also provides guidance to businesses on how to report suspected breaches of the law. People can watch only the elements relevant to them or to view it in its entirety and it is flexible for business or firms that wish to use parts for their own training or compliance programmes.
The film and wider materials are available to order for free from the OFT’s website and can be viewed online on OFT’s website and YouTube (receiving over 4,000 views to date).
We are currently proactively promoting the materials and are encouraging organizations and firms to include elements of the DVD into their training programs. We are also working with trade associations and industry bodies to promote the DVD via their websites, newsletters, and magazines such as the Institute of Directors, Federation of Small Business, and the Trade Association Forum.
The wider materials produced are:
1. Company Directors and Competition Law (the Directors Guidance), which sets out:
- The key competition law risks for individual company directors to be aware of;
- The role directors can play in minimizing the risks of their company infringing competition law; and
- How the OFT will assess the extent of a director’s responsibility for an infringement of competition law by their company in deciding whether to pursue a disqualification order against the director
2. How Your Business Can Achieve Compliance With Competition Law (the Compliance Guidance) sets out the OFT’s recommended four-step process for achieving a compliance culture, which is also represented in the form of a wheel:
3. Quick Guide to Competition Law Compliance, which draws on the content of both guidance documents. It offers a high-level summary of the key points for competition law compliance and may be of particular benefit to managers within smaller businesses.