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08/10/2009
£173 million in fines for anti-competitive recruiters
As has been seen in the recent case involving the massive fines imposed on a consortium of recruitment businesses called " the Construction Industry Forum”, the penalties for engaging in anti competitive behaviour can be severe . Apart from fines, they can extend in certain circumstances to the disqualification of directors. So what effect could this have on your business?
Most of you may not even consider the implications of competition law in your daily business. However UK competition law is drafted widely, with any agreement between businesses that may have an effect on trade or that may prevent, restrict or distort competition within the UK being prohibited. Whilst clearly, the establishment of a “cartel like” forum specific to a certain industry or sector as in this case may well ring “anti competitive” bells, less obvious arrangements could also attract attention from the authorities.
Consortiums, joint ventures
If you are part of a consortium or are considering entering a join venture, it is unlikely that you will actively be going out to undercut rivals, or carve up markets or sectors, however due to the wide drafting of competition law, other more subtle arrangements could have an effect on the market. For example, discussing margins, potential tenders, arrangements with clients or sharing other information may result in anti competitive behaviour even where this was not the intention in the first place and may result in investigation.
What about your staff?
It is possible that you could face liability as a result of the actions of your individual consultants if they engage in “cartel like” activity off their own backs which may be tempting particularly where there are master vendors or other managed service providers involved in the supply to a particular client. Even if you are not aware that this is occurring, you may still be liable to investigation and potentially heavy fines.
What can you do?
It may sound obvious, but don’t enter into arrangements with your competitors to, for example, supply to a particular client, or agree not to deal with a different competitor or make plans to keep potential new competitors from entering the market. Whilst at the time these may appear to be shrewd business decisions with great commercial benefits to your company, given the interest in the current case you may find yourself at the centre of an investigation which may be administratively burdensome and damaging to your reputation and client relationships. Any such arrangement should always be subject to specialist competition law advice, but as a general rule you should ensure that any business relationship is entered into independently and objectively.
You may want to consider if your consultants are entering into arrangements with consultants employed by your competitors – should all contracts be agreed through senior managers, should they be reviewed regularly. Having a simple process like this in place and suitable training in respect of the potential dangers of an investigation and those anti-competitive activities that could have an impact on the business may make all the difference in respect of any investigation.
If you would like any further information or advice on your arrangements with your clients or for more information about Lawspeed’s innovative “Consultant Manager” system to streamline your processes and assist with compliance, CALL US NOW ON 01273 236 236
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