On 27 May 2015 the Competition and Markets Authority (“CMA”) published the findings of a research study examining competition law awareness among businesses in the UK. The research reveals that although most businesses consider it important to comply with competition law, there is a low understanding of what conduct violates competition law and compliance training is rare, particularly among small to medium sized businesses.

High risk for small to medium sized businesses

The research highlights that there is a very high risk of non-compliance with competition law for small to medium businesses, given their poor understanding of how the law works and the lack of compliance training. This finding is all the more worrying in light of the CMA’s recent enforcement activity; which includes a criminal cartel trial beginning in June as a result of an investigation involving medium sized businesses in the sector for water tanks and a previous government investigation in the construction industry which implicates, among others, small family owned businesses.

Findings and indicators

Key findings of the research, which is based on interviews with senior employees of 1,200 businesses, include the following:

• There is a poor understanding of what constitutes anti-competitive behaviour, even when it comes to hard-core competition violations.
• For instance, a staggering 55% of the interviewees incorrectly responded that it is OK for competitors to agree prices in order to avoid losing money.
• 21% of all businesses mistakenly think that the most common disadvantage of non-compliance by competitors is being undercut.
• Given that 83% of businesses meet competitors from their sector and that some discuss transactions and prices during meetings, companies are potentially at high risk of infringing competition law.
• Most businesses are not aware of the sanctions and penalties for non-compliance and how to report anti-competitive activity.
• Businesses that have had some competition law training are more likely to act in compliance with competition law; and
• Only 6% of all businesses interviewed had held compliance training sessions. That number increases to 41% for larger businesses, explaining why the latter are generally better informed than small to medium sized businesses.

Compliance means active risk management

In view of the above and considering the very serious consequences of non-compliance for both businesses and individuals, it is critical for companies to ensure that senior managers as well as sales and marketing employees are educated on the competition law risks they face and how to manage them proactively in order to avoid fines or prison sentences.