New guidelines issued to clarify competition law breaches

The Competition and Markets Authority (CMA) has recently published new guidance to clarify the redress options open to victims of competition law breaches.

The guidance (Competition law redress: A guide to taking action for breaches of competition law) reflects changes in the law as a result of the Consumer Rights Act 2015, which make it easier for individuals and businesses to seek redress for breaches of competition law.

These changes include allowing the Competition Appeal Tribunal to hear standalone competition claims, where previously it could only hear cases where there was an existing infringement decision. There is also a new fast-track procedure to enable simpler cases brought by small businesses to be resolved more quickly at a lower cost.

Enhanced collective actions and settlements, including opt-out actions with safeguards allowing meritorious collective claims, can also be brought more easily.

They have also introducing a new power enabling the CMA or a sector regulator to approve voluntary redress schemes, which is intended to provide compensation for those who have suffered loss as a result of competition law infringements without having to go to court.

The new guidelines have been released at the same time as the government has announced that it is considering banning non-compete clauses in employment contracts, with a view to either banning or severely restricting them. As the law currently stands, a non-compete clause will be enforceable if it goes no further than is reasonably necessary to protect a legitimate business interest. Factors such as the length of the ban, the type of work the individual was employed to do, that individual’s access to confidential or sensitive information and their relationship with customers or clients will be directly relevant factors.

Roland Green, CMA Senior Director with responsibility for Policy, said: “It is important that those who suffer harm from breaches of competition law are able to obtain effective redress. We hope this guide will help consumers and businesses understand how to do so.”

The Competition Act 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK. The Chapter I prohibition covers anti-competitive agreements and concerted practices between businesses (‘undertakings’) which have as their object or effect the prevention, restriction or distortion of competition within the UK. Article 101 of the Treaty on the Functioning of the European Union (TFEU) covers equivalent agreements or practices which may affect trade between EU member states. Any business found to have infringed the prohibitions in the Competition Act 1998 or the TFEU can be fined up to 10% of its annual worldwide group turnover.