Sunday, May 22, 2016
As published in the Sunday Business Post, Sunday 22 May 2016.
If you are in business producing, supplying or distributing goods or services, then Competition Law will apply to you.
Mistakes in the area of Competition Law can lead to hefty fines and even prison sentences, as well as void and unenforceable agreements, so when taking your fist steps in business, bear a few key principles in mind in order to remain on the right side of the law.
Competition Law covers agreements that are formal, informal, written and oral and even understandings that are not legally binding. It can also cover contact between you and your competitor that doesn’t quite amount to an agreement or a plan.
Competition Law is especially stringent regarding any contact between you and your direct competitors, so take special care in any agreements, discussions or meetings involving competitors.
- Price fixing: Do not enter into an agreement, however informal it may seem, that fixes the price at which you and your competitors will buy or sell products or services to customers. This is classic cartel behaviour and would leave you open to criminal prosecution and fines.
- Market sharing: Do not carve out particular customers or territories you and your competitors will and won’t do business with. This includes allocating particular customers or geographical territories to particular companies, restricting sales based on those customer or territorial allocations or agreements that could lead to that result.
- Sharing information regarding future pricing or future intended conduct on the market: Do not exchange commercially sensitive information with your competitors. This is a slightly complex concept and covers, for example, information regarding pricing or quantities and situations in which you could be disclosing to your competitors what prices you intend to charge and to whom or when you intend to increase or decrease prices.It can also cover other strategic information such as production costs, demand, customer lists, turnovers, sales, capacities or marketing plans, depending on the circumstances.
- Agreeing to limit sales or output: Do not agree to production quotas or anything that could lead to a limitation of sales or output, such as not using production capacity for specified periods of time or closing particular production facilities. You should also be careful not to agree to limit the amount of sales you will make to particular customers.
- Disassociate from illegal behaviour: If you have accidentally been part of discussions or contacts that relate to any of these matters, for example if you attended a meeting where such a discussion took place or you received correspondence by email that includes this type of information, you could already be implicated. You should leave the meeting, publicly distance yourself from the matters discussed and make it clear that you do not intend to use or act on the information that was exchanged or abide by any agreement that was made.
- Cartel immunity programme: If you have been a party to any such activity, there are cartel immunity programmes available under EU and Irish Competition Law, which allow you to apply to the authorities for immunity from fines and prosecution on the basis that certain information is provided regarding the cartel. It is important to bear in mind, however, that only the first applicant can benefit from immunity.
For further information please contact Philip Lee or Vivienne Walsh from our Competition Law Group.