6 Actions Which Commercial Law Deems Anti-Competitive

Heads Of Agreement - What It Is And Its Legal Implications

We face competition in all walks of life. Whether it is competing with someone for a promotion, challenging the other team on the sports field or even having a love rival as you try to convince someone to go out with you, there are going to be winners and losers. The same exists in the world of business, and whilst the likes of sports competitions have rules applied by referees, in the business world it is the rules set within commercial law which apply.

One of the main reasons that commercial law has its guidelines, its rules, and ultimately its legislation, is to try to ensure that every business, whether it be a sole trader, or a large corporation has as much chance of succeeding as any other. Further, commercial lawyers seek to prevent those with ill-intentions from what is effectively cheating.

One area where this is especially true is competition law and specifically anti-competitive actions. These are actions where a business owner or those within a business act in a way that prevents other businesses from having as equal an opportunity to succeed within a marketplace as they have. The main piece of legislation anti-competitive law that can be found in is the 2010 Competition and Consumer Act.

The 2010 Act contains the legal structure for eliminating anti-competitive behaviour, and also the punishments for those who try to carry them out. Within this legal framework, 6 anti-competitive actions are highlighted as being those which are believed to cause reductions, or worse, barriers to market competition.

Invoking Minimum Resale Prices

A business has the right to set its prices so when several businesses collude to set a minimum price for a specific product or service this makes that objective impossible. Another way this is done is when suppliers insist that their products are not advertised for less than a certain price.

Operating Cartels

Probably the most definitive anti-competitive action is when a group of businesses agree that they are not going to compete with each other at all. They form a cartel and may agree on territories, what prices they will all set, which suppliers they will all use, and what price they are all prepared to pay suppliers.

Abusing Market Power / Operating A Monopoly

This is regarded as bullying tactics whereby a single company not only has a lot of power within a market, but it wields it as well to eradicate any potential competition. This often happens in a market where only one supplier exists and thus consumers have no choice but to buy from them, regardless of what prices they set.

Enforcing Exclusive Dealing

Just as a business has the right to set its prices, it also has the right to choose its suppliers. When one company pressurises another to use only suppliers which it agrees to, then this limits not only freedom of choice but is likely to drive up prices both for the business and ultimately consumers.

Collective Bargaining & Supplier Boycotts

Not quite the same as a cartel, but every bit as unacceptable. Here a group of businesses will collude to force their suppliers to set a low price, and their customers to pay a high price. If they refuse, the businesses then threaten to boycott them.

Unconscionable Conduct

This has no specific actions and is more of a catch-all for any uncompetitive behaviour which has not already been defined in the 2010 Act. If such behaviour is deemed to be unacceptable, reduces competition within a market, and hurts consumer choice, then it will be covered by the term “unconscionable conduct”.