Introduction to the Competition and Markets Authority (CMA)

The Competition and Markets Authority (CMA) is an independent non-ministerial UK Government department and is the UK’s principal competition and consumer protection authority.

In this article we’ve collaborated with the CMA to highlight what the organisation does, how it helps smaller businesses, and how to stay compliant with competition law.

How competition impacts starting and growing a business

You will know all too well the complexity of starting and growing a business. 

Competitive, well-functioning markets are vital in creating the right conditions for a business to grow, innovate and succeed.  

Competition rewards innovation and helps ensure more choices for customers.  

The CMA works to ensure that consumers, including business customers, can be confident they are getting great choices and fair deals.  

It is the CMA’s mission to help ensure markets are open so that fair-dealing businesses – large and small – are free to compete and thrive.

The CMA has free advice to help businesses stay on the right side of competition law.  

Importantly, the CMA’s advice also helps you as businesses to spot and report illegal business practices that could be harming you and your customers.

As a business there are two key things you need to be aware of:

1.Lack of competition can impact a small business like yours

You can be harmed in a variety of ways.

Honest businesses can be held back from growing if a group of rivals collude rather than compete to win contracts, to fix prices or to divide up a market among themselves. 

This not only harms consumers and business customers, but also prevents those not in the illegal arrangement from winning business on fair terms whilst also tarnishing the reputation of that industry as a whole.

Alternatively, you might be harmed if a dominant firm abuses its market position by imposing restrictions or barriers to entry, or if suppliers try to control the resale price of products or services. 

If you think other businesses might be breaking competition law, the CMA wants to hear from you. 

The CMA has strong powers of detection, an increased informant reward (up to £250,000), and will go to great lengths to protect intelligence sources.  

For more information on how best to report concerns, visit the reporting page on the CMA website, call 020 3738 6888, or email: [email protected].

2. Competition law also applies to you

You need to know and comply with the rules yourself. 

For example, you can’t:

• coordinate with competitors or share commercially sensitive information in an attempt to protect margins or profit
• agree with competitors to fix prices or divide up a market between you agreeing who sells to which customers and at what price
• get together with rivals to agree who wins a contract in a tender process, you can’t ‘take turns’ to win contracts for example
• agree to fix wages with competitors or enter into ‘no poaching agreements’ concerning staff.

The CMA’s Cheating or Competing campaign page explains the anti-competitive agreements to avoid and how to report concerns if you have them.  

The consequences of breaking the law are serious with potentially large fines and also include ramifications for individuals involved so it is important to be clear on red lines when it comes to interaction with competitors and how to report breaches.

Not all dealings with competitors are problematic. 

For example, some types of collaboration can be legitimate when necessary to achieve net zero goals. 

If you are considering collaborating with competitors to achieve environmental sustainability goals, you may want to read the CMA’s green agreements guidance. 

This guidance also introduces the CMA’s open-door policy that is available for when you may still be uncertain on how the competition law applies to your collaboration on environmental sustainability.

To find out more about what anti-competitive activity looks like in practice, for compliance advice and how to report wrongdoing that could be harming your business, visit Cheating or Competing.

Read on to find out more about the CMA, how their work on promoting and protecting competition applies to SMEs, more detail on how to report concerns, and how their leniency (self-reporting) programme works.

What is the CMA responsible for?

The CMA help people, businesses, and the UK economy by promoting competitive markets and tackling unfair behaviour in a number of ways such as by:

• investigating mergers that have the potential to lead to a substantial lessening of competition. If a merger is likely to reduce competition substantially, the CMA can block it or impose remedies to address those concerns
• taking action against businesses and individuals that take part in cartels or anti-competitive behaviour – where rivals agree to collude rather than compete fairly for example or where a dominate business abuses its position of market power
• protecting people from unfair trading practices, including in cases where unfair treatment suggests there may be a systemic market problem
• investigating entire markets if the CMA think there are competition or consumer problems
• encouraging government and other regulators to use competition effectively on behalf of consumers
• carrying out regulatory appeals in relation to issues like price controls
• providing information and guidance to people and businesses about rights and obligations under competition and consumer law
• providing technical advice, reporting, and monitoring in relation to the UK internal market, through the Office for the Internal Market
• providing guidance, reporting, and monitoring in relation to government subsidies, through the Subsidy Advice Unit.

How competition law protects smaller businesses

Healthy competition between rivals is good for businesses and customers alike. 

As a business, it means that when you’re choosing a supplier, potential candidates will offer the best possible service at the lowest price they can, because they want you to choose them.

But sometimes suppliers get together and collude, instead of competing. 

This is a type of anti-competitive behaviour and businesses engaging in it are sometimes described as a ‘business cartel’. 

Alternatively, one very powerful ‘dominant’ firm’s conduct may threaten a competitor’s survival. 

These types of behaviours stop customers getting a fair deal and harm honest businesses. 
Often SMEs are particularly vulnerable – here’s why…

1. Prices go up

If your suppliers agree to keep their prices artificially high, you may have no choice but to pay them at an inflated price.

2. Innovation and efficiency go down 

When your suppliers are in competition with one another, they will often try to be more innovative and efficient to win your custom. 

However, if behind your back, they agree not to compete, you will not reap those benefits. 

Instead, you may have to put up with a poorer product or service, longer lead times, and less value for money.

3. You get poorer service 

Suppliers who are afraid of losing your business to a competitor will make sure they keep providing the best service they can. 

But when suppliers agree between themselves not to compete, they have less to fear – and less motivation to look after you.

4. Businesses don’t actually have a real choice of suppliers

You might appear to have a choice, on the surface. 

But if those suppliers have colluded to offer the same thing for the same price, that choice is just an illusion – and bad for your business.

5. A dominant firm’s conduct threatens the survival of your business and other competing firms 

A dominant firm may prevent or stop you from operating in a market if they decide not to supply you with an essential input because you are in competition with them in a downstream market.  

You could be pushed out of a market if a dominant firm drops prices to loss-making levels, only to increase prices again once all competition has been eliminated.

6. Industry reputations suffer

If elements of an industry or sector become known for being anti-competitive or behaving like a business cartel, people may become suspicious of everyone in the industry – even those who have never behaved in this way. 

As a result, the whole industry may suffer.

How to tell the CMA about anti-competitive business behaviour

It’s important that the CMA hears about any competition problems in markets, for example if you think businesses in your industry are colluding or if you think a dominant firm in your market is abusing its position of market power for example, you should contact the CMA.  

You can report competition, consumer or market problems to the CMA in a number of ways:
•    online: Report an issue to the CMA
•    by phone: 020 3738 6000
•    by email: [email protected].

Whistleblowing

Whistleblowers are employees, or former employees, that report illegal activities carried out by the business or organisation they’re employed by.

If the illegal activity relates to the sale of products, the supply of services, or about competition affecting markets in the UK, it’s important you report it to the CMA.

You can report whistleblowing concerns to the CMA in a number of ways:
•    online: Make a whistleblower report
•    by email: mailto:[email protected]
•    by phone: 020 3738 6556.
Find out more about whistleblowing, and what it means to be a whistleblower, including your rights and how the CMA will protect your identity.

What happens if you break competition law?

The consequences of getting caught breaking the law are serious and can include:

• fines (up to 10% of annual turnover)
• risk of third-party damages claims
• director disqualification (up to 15 years)
• reputational harm 
• in the most serious criminal cases – prison (up to 5 years). 

If you’re senior within your business, it’s particularly important to be clear on the risks of breaking competition law and to lead by example – promoting a culture of compliance led from the top down is key.  

Have a clearly established speaking up policy so if there are concerns about competition law risk they can be spotted and dealt with as soon as possible.

If you suspect that you or someone in your business may have broken competition law, if you are one of the first to report wrongdoing to the CMA you might qualify, in relation to some types of behaviour, for lenient treatment and possibly even immunity from sanctions.  

Benefits of co-operating with an investigation

If a company is the first to report being part of a cartel and fully co-operates with an investigation, it can benefit from immunity from fines and its co-operating directors can avoid director disqualification.

Even after an investigation has started, it can still benefit from reduced fines through the CMA’s leniency programme. 

Individuals may also be eligible for immunity from prosecution and director disqualification if they come forward independently and cooperate with the investigation.

If you think you may have broken the law, the CMA always recommend that you seek independent legal advice.

If you have information on other companies in your industry that may have been involved in an anti-competitive arrangement, report it to the CMA; you may qualify for a reward.

Getting information about leniency 

Call 0203 738 6833 for confidential guidance on the CMA’s leniency programme, to check whether leniency may be available or to make a formal application for leniency. 

Leniency enquiries should be made during office hours.

Resources to help you comply with competition law 

•    Cheating or Competing campaign page 

•    Joint ventures: how to comply with competition law

•    How to manage competitively sensitive information

•    How to respond to a warning or advisory letter from the CMA.