In February 2020, the Competition and Market’s Authority (CMA) launched a new cartels awareness campaign aimed at businesses themed ‘Cheating or Competing?’. With the arrival of a global pandemic in March, it may not have received the attention it deserves. Its importance in tackling cartel activity at the source, however, is not to be underestimated.
The CMA’s 2018 survey found surprisingly poor awareness among UK businesses. Most shockingly perhaps, 22% of respondents claimed that it was not against the law for competitors to agree prices in order to avoid losing money.
The impetus for the campaign – the third in six years by our count – was precisely this low level of understanding around the kind of activities the business community, in certain sectors in particular, should be avoiding.
It was clear to the CMA that grass roots action was required. The campaign was launched with two main objectives in mind. The first and primary objective is to raise awareness of cartels among businesses – and indeed the general public – to ensure compliance with anti-cartel laws. The secondary objective is to encourage reporting to the CMA’s 020 3738 6888 hotline and leniency applications in relation to cartel activity.
By targeting firms via a combination of social media, radio spots and digital display advertising for the first time, the CMA wishes to modernise its campaign and aims to improve on the limited reach of past campaigns. It encourages people to visit the CMA’s designated 'Cheating or Competing' page which features prominently a ‘cartel quiz’ – a series of true-false statements to measure to what extent visitors are aware of which practices are non-compliant with basic anti-cartel laws and which finds its inspiration in the aforementioned 2018 survey.
The UK construction sector under close scrutiny
According to Howard Cartlidge, the CMA’s Senior Director of Cartels, before the CMA launched its latest campaign, it carried out a survey specifically focused on the construction sector, on the back of several high-profile cases that the CMA has taken recently, notably against concrete companies in 2019.
The CMA was disappointed in the level of awareness among senior representatives within the UK construction industry: of those recently surveyed, only 6% had any familiarity with competition law. Indeed:
- 29% of senior representatives thought it was absolutely okay to attend a meeting at which competitors agree prices with each other
- 32% thought agreeing not to supply each other’s customers was legal
- 25% saw no problem with discussing bids and agreeing who would get which tenders.
These numbers are quite staggering given the number of cartel enforcement cases targeting the construction industry around the world – the cement cartel notably being one of the first truly global cartel, dating back decades, spanning at least 14 jurisdictions and more than 75 companies, with aggregate fines of over US$2.7 billion.
Given the small number of civil and criminal enforcement cases undertaken by the CMA against cartels –having only last week secured its first contested application for the disqualification of a director whose Somerset estate agency breached anti-cartel laws – it is important that the enforcement decisions at the end of those investigations are publicised so as to improve business awareness of competition rules and the expensive consequences of breaching them. Therefore, it is also a step in the right direction that the CMA is actively seeking to highlight these illegal business practices with this ambitious grass roots campaign that will for the first time reach out to the wider UK business community via popular advertising and social media tools.
Still, the persistent misunderstanding and deliberate breaches of competition rules are troubling, and raise the obvious question: what about the harm that is not captured by the CMA? The aggregated impact of cartels can be very substantial, particularly in some sectors such as construction where cartel recidivism is rife. The CMA’s surveys and principles of deterrence imply that the current levels of public enforcement in the UK should be increased significantly and publicised more. Failing that, however, private enforcement by litigants – as well as press coverage of high-stakes competition litigation – fills the gap left by public enforcement.