United Kingdom

Bailey, David

doi:10.1007/978-3-642-54000-4_14

David Bailey⁵

Part of the book series: LIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition ((LIDC))

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Abstract

This contribution discusses the domestic competition law, policy, and practice towards small and medium-sized enterprises in the United Kingdom. A draft version of the report was circulated to members of the UK Competition Law Association (“CLA”) in March 2012 to seek the views of members on its content. The final version of this report incorporates the views expressed by CLA members at a meeting held in May 2012.

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Notes

1.
Available at http://www.legislation.gov.uk/ukpga/1998/41/contents.
2.
BIS Economics Paper No 16, SME Access to External Finance, January 2012, available at www.bis.gov.uk.
3.
Department for Business, Innovation & Skills/HM Treasury, Financing a private sector recovery, Cm 7923, July 2010, para 3.5.
4.
See, e.g., the Department for Business, Innovation & Skills initiative, Business Coaching for Growth programme, available at www.businessgrowth.uk.com; HM Treasury Accelerating the SME economic engine: through transparent, simple and strategic procurement, available at www.hm-treasury.gov.uk.
5.
COM(2008) 394, final, 25 June 2008. See Commission Press Release IP/11/218, 23 February 2011.
6.
COM (2011) 803, 23 November 2011.
7.
See similarly the OECD Best Practices Roundtable, General Cartel Bans: Criteria for Exemption for Small and Medium-sized Enterprises (1996), available at www.oced.org.
8.
OJ 2003 L 1, p. 1.
9.
Staff Working Paper accompanying the Report on the functioning of Regulation 1/2003, SEC(2009) 574 final, paras 162–169 (describing the domestic provisions on economic dependence in France, Germany, Italy, Portugal, Spain, Greece, Latvia, and Hungary).
10.
Cf Sections 140A-D of the Consumer Credit Act 1974, inserted by Section 19 of the Consumer Credit Act 2006, which enables a court to make an order if it finds that the relationship between a creditor and the debtor arising out of a consumer credit agreement is unfair because of the terms of the agreement, the way in which it has been applied by the creditor, or any other thing done or not done by the creditor.
11.
Report on Abuse of Superior Bargaining Position (ICN, April 2008), p. 5, n 7, and p. 10.
12.
See, e.g., the Milk (Pricing) Bill, which was introduced in the House of Commons in July 2007 with the intention to confer further powers on the OFT and the CC to investigate the prices of milk paid by retailers to producers. The Bill was introduced, but not enacted, following concern about the low prices that farmers were paid for producing milk that is sold in supermarkets.
13.
There is no equivalent provision of domestic law purporting to confer immunity from the imposition of fines for infringements of Articles 101 and/or 102 TFEU.
14.
SI 2000/262, Reg 3.
15.
Ibid, Reg 4.
16.
E.g., price-fixing agreements are excluded from partial immunity under Sections 39(1)(b) and 39(9) of the Act, and the OFT may withdraw the benefit of immunity in an individual case, and immunity does not extend to transgressions of Article 101 TFEU (Section 39(4)).
17.
OFT Decision of 18 November 2008, available at www.oft.gov.uk.
18.
Ibid, paras 8.5–8.7.
19.
Case No 1044/2/1/04 JJ Burgess & Sons v OFT [2005] CAT 25.
20.
Available at http://www.legislation.gov.uk/ukpga/2002/40/contents.
21.
OFT1122, December 2004, available at www.oft.gov.uk.
22.
www.oft.gov.uk/shared_oft/mergers_ea02/2011/rentokil.pdf; see also Sports Universal Process SAS/Prozone Group Limited, 4 October 2011, www.oft.gov.uk/shared_oft/mergers_ea02/2011/sports-universal.pdf.
23.
OFT 1020, September 2008, available at www.oft.gov.uk.
24.
Ibid, paras 1.9, 7.25, 7.28, and 7.32. The Government’s response to the OFT market study is available on the BIS website, www.bis.gov.uk.
25.
OFT 1314.
26.
OFT Press Release 92/05, available at www.oft.gov.uk.
27.
Synovate, Competition Act and Consumer Rights, OFT 799, April 2005, available at www.oft.gov.uk.
28.
The OFT Annual Plan 2005–06, HC461, March 2005, p. 6, available at www.oft.gov.uk.
29.
Guidance as to the appropriate amount of a penalty (OFT 423, December 2004), Part 3.
30.
OFT Press Release 129/05, 21 July 2005, available at www.oft.gov.uk. For the purposes of NOP World research, SMEs were defined as a business employing between 10 and 250 employees, with a turnover under EUR 50 million for medium-sized companies and under EUR 10 million for small companies. See further Storey ‘The Competitive Experience of UK SMEs: Fair and Unfair’ (2009–2010) 17(1) Small Enterprise Research Journal 19.
31.
OFT Press Release 206/05, 2 November 2005, available at www.oft.gov.uk.
32.
How your business can achieve compliance OFT1341, June 2011, available at www.oft.gov.uk; on the motivation for compliance and non-compliance with competition law generally see Drivers of Compliance and Non-compliance with Competition Law (OFT 1227, May 2010) (excluding SMEs: ibid, paras 3.4 and 6.26).
33.
The first step is to identify the key competition law risks faced by the business. The second step is to assess how serious the identified risks are. The third step involves risk mitigation in the form of establishing policies, procedures, and training to prevent the risks identified from occurring or adequately dealing with them if they do arise. The fourth step is regularly reviewing the first three steps to ensure that the business has ‘an effective compliance culture’.
34.
www.oft.gov.uk/OFTwork/competition-act-and-cartels/competition-law-compliance.
35.
OFT 1340, June 2011, available at www.oft.gov.uk.
36.
OFT 1270, June 2011.
37.
Ibid, para 4.3.
38.
OFT Press Release 74/11, 27 June 2011.
39.
Assessing the Impact of Competition Intervention on Compliance and Deterrence (OFT 1391), available at www.oft.gov.uk.
40.
See, e.g., Bork “Vertical Restraints: Schwinn Overruled” (1977) The Supreme Court Review 171, at 189; see also Bork The Antitrust Paradox (Free Press, 1978), 54.
41.
OFT Decision of 1 August 2003.
42.
On appeal by another retailer, JJB Sports, Case No 1021/1/1/03 JJB Sports plc v OFT [2004] CAT 17, the CAT upheld most of the OFT’s findings of infringement but held that JJB had not been a party to an agreement with Sportsetail and others in relation to prices charged on the England Direct website from spring 2000 to autumn 2001: ibid, paras 990–1053 (appeal on other grounds dismissed, [2006] EWCA Civ 1318).
43.
OFT Decisions of 17 March 2004 (West Midlands Roofing), 18 March 2005 (Scotland Roofing), 18 March 2005 (North East England Roofing), 12 July 2005 (Western-Central Scotland Roofing), 23 February 2006 (England and Scotland Roofing), upheld on appeal, Case No 1061/1/1/06 Makers UK Ltd v OFT [2007] CAT 11.
44.
See, e.g., Briggs Roofing & Cladding Ltd, Pirie Group Ltd, Rio Asphalt & Paving Company Ltd and WG Walker Ltd.
45.
Case Nos 1114/1/1/09, etc, Kier Group plc & Ors v OFT [2011] CAT 3; Case No 1121/1/1/09 Durkan Holdings Ltd v OFT [2011] CAT 6; Case Nos 1117/1/1/10, etc, GF Tomlinson Building Ltd & Ors v OFT [2011] CAT 7 (the Court of Appeal allowed an appeal by Interclass Holdings Ltd on the ground that the CAT had given no reasons for doubling the provisional penalty imposed on Interclass to secure deterrence: [2012] EWCA Civ 1056, paras 49–72); Case Nos 1125/1/1/09, etc, Barrett Estate Services Ltd v OFT [2011] CAT 9; Case No 1126/1/1/09 ISG Pearce Ltd v OFT [2011] CAT 10; Case No 1120/1/1/09 Quarmby Construction Company Ltd v OFT [2011] CAT 11; Case No 1118/1/1/09 GMI Construction Holdings plc v OFT [2011] CAT 12; Case No 1124/1/1/09 North Midland Construction plc v OFT [2011] CAT 14; Case No 1122/1/1/09 AH Willis & Sons Ltd v OFT [2011] CAT 13.
46.
See, e.g., Case Nos, etc, 1114/1/1/09 Kier Group plc & Ors v OFT [2011] CAT 3, para 78 et seq.
47.
See, e.g., Case Nos, etc, 1117/1/1/09 GF Tomlinson Group Ltd Ors v OFT [2011] CAT 7, paras 222–237; the Court of Appeal dismissed Interclass’ appeal on the ground of financial hardship: [2012] EWCA Civ 1056, paras 73–82.
48.
OFT 740rev, November 2011.
49.
OFT 444, June 2004.
50.
OFT 452, March 2009, paras 4.14–4.15.
51.
OJ 2001C 368/13, para 3.
52.
OJ 2004 C 101/81, para 50.
53.
OJ 2003 L 124/36: Small undertakings are defined in that recommendation as undertakings that have fewer than 50 employees and have either an annual turnover not exceeding EUR 10 million or an annual balance sheet total not exceeding EUR 10 million. Medium-sized undertakings are defined as those that have fewer than 250 employees and have either an annual turnover not exceeding EUR 50 million or an annual balance sheet total not exceeding EUR 43 million.
54.
OJ 2004 C 101/81, para 50.
55.
Note that Section 60(2) imposes a stronger obligation to maintain consistency between the principles applied and the decision reached by the domestic authority and the principles laid down by the Treaty and the EU Courts and any decisions of the EU Courts in determining corresponding questions of competition law.
56.
Case No 1009/1/1/02 [2003] CAT 11.
57.
Ibid, paras 459–460.
58.
P&S Amusements Ltd v Valley House Leisure Ltd [2006] EWHC 1510, para 22 per Sir Andrew Morritt (formerly the Chancellor of the High Court) and in Pirtek (UK) Ltd v Joinplace Ltd (t/a Pirtek Darlington) [2010] EWHC 1641, paras 61–62 per Briggs J.
59.
Ibid. Cf. Case No 1124/1/1/09 North Midland v OFT [2011] CAT 14, para 49 (the reasoning in Aberdeen Journals applies equally to the effect on trade requirement in the Chapter I prohibition).
60.
In addition to the Burgess, Albion Water, Brannigan and Cityhook cases discussed in the text below, see also Case No 1006/2/1/01 BetterCare Group Ltd v Director General of Fair Trading [2002] CAT 7; Case No 1024/2/3/04 Floe Telecom Ltd v Director General of Telecommunications [2004] CAT 18; Case No 1068/2/1/06 Casting Book Ltd v OFT [2006] CAT 35; Case No 1027/2/3/04 VIP Communications Ltd v OFCOM [2009] CAT 28.
61.
Case No 1001/1/1/01 [2002] CAT 1.
62.
Ibid, para 228.
63.
During the period of infringement, there was only one other competitor, Link, an SME with an annual turnover of £6.7 million, who had managed to acquire and maintain a “toehold” in the market (4 per cent of the total market): see paras 16 and 284.
64.
Case No 1016/1/1/03 [2004] CAT 4.
65.
Ibid, para 552.
66.
Ibid, paras 555 and 575.
67.
Ibid, paras 584–585.
68.
Case No 1044/2/1/04 [2005] CAT 25.
69.
Case No 1046/2/4/04 [2006] CAT 23 and [2006] CAT 36, upheld on appeal, Dŵr Cymru Cyfyngedig v Albion Water Ltd [2008] EWCA Civ 536. The CAT awarded Albion Water approximately £1.8 million in damages to compensate Albion for the harm it had suffered as a result of the infringement found by the CAT: Case No 1166/5/7/10 [2013] CAT 6.
70.
Case No 1046/2/4/04 [2006] CAT 23, para 139.
71.
Case No 1006/2/1/01 BetterCare Group Ltd v Director General of Fair Trading [2002] CAT 7.
72.
Ibid, para 261.
73.
Case No 1073/2/1/06 Brannigan v Office of Fair Trading [2006] CAT 28.
74.
Ibid, para 82.
75.
www.probonogroup.org.uk/competition/index.php.
76.
Involving third parties in Competition Act investigations, OFT 451, April 2006, para A.1.
77.
OFT 451, April 2006.
78.
OFT 404, December 2004, para 3.11.
79.
OFT 953, October 2008.
80.
Para 4.2 of the draft Prioritisation Principles (OFT 953con, September 2007) said that: “increased competition in a market serving small or medium-sized business consumers would also be considered as a positive direct impact”. This was amended in the final version to say that: “the effects of increased competition in a market serving businesses would therefore also be considered as a positive direct impact”: OFT 953, para 4.2.
81.
OFT Decision of 15 April 2010, para 2.100.
82.
See, e.g., the complaint made by Cityhook Ltd to the OFT about an alleged collective boycott in R (Cityhook Ltd and Cityhook (Cornwall) Ltd) v Office of Fair Trading [2009] EWHC 57.
83.
OFT Decision of 31 March 2003, available at www.oft.gov.uk.
84.
Case 1178/5/7/11 2 Travel Group plc (In liquidation) v Cardiff City Transport Services Limited [2012] CAT 7.
85.
Case No 1017/2/1/03 [2004] CAT 10, para 196.
86.
See, e.g., Case No 1017/2/1/03 Pernod Ricard v OFT [2004] CAT 10, paras 197 and 229, and Case 1071/2/1/06 Cityhook Ltd v OFT [2007] CAT 18, para 203.
87.
Case No 1007/2/3/02 [2003] CAT 5.
88.
Ibid, paras 114–115.
89.
Case No 1024/2/3/04 Floe Telecom Ltd v Office of Communications [2004] CAT 7, para 43, noting that appeals are brought by well-funded major companies and ‘by small companies, or even sole traders, and with few resources, little or no access to legal advice, but having a genuine sense of grievance’ and emphasising the need to manage cases appropriately; see also para 50.
90.
Case No 1032/1/1/04 Apex Asphalt and Paving Co Ltd v OFT (costs) [2005] CAT 11, para 25.
91.
Case No 1028/5/7/04 BCL Old Co Ltd v Aventis SA [2005] CAT 2 (declining the defendants’ request that the claimants should be required to give security for costs).
92.
Case No 1002-4/2/1/01 Institute of Independent Insurance Brokers v Director General of Fair Trading (costs) [2002] CAT 2, para 54.
93.
Ibid.
94.
Case No 1032/1/1/04 Apex Asphalt and Paving Co Ltd v OFT (costs) [2005] CAT 11, para 25.
95.
This applies both to penalty-only appeals and appeals against liability for an infringement of the Act.
96.
Case Nos 1140 and 1142/1/1/09 Eden Brown Ltd v OFT (costs) [2011] CAT 29, paras 3–18, in particular para 18.
97.
OFT 1263, March 2011.
98.
See, e.g., Transparency: A Statement on the OFT’s Approach OFT 1234, June 2010.
99.
OFT 1263, March 2011, para 3.11 et seq. See also Involving third parties in Competition Act investigations, OFT 451, April 2006, Annexe A (guidance on making complaints).
100.
OFT 1263, March 2011, paras 11.19–11.21.
101.
OFT 1263, March 2011, Chap. 10.
102.
Involving third parties in Competition Act investigations, OFT 451, April 2006, para 3.22.
103.
On leniency, see OFT’s guidance as to the appropriate amount of a penalty, OFT 423, paras 3.1–3.18. The OFT has consulted on revising its guidance: see OFT’s guidance as to the appropriate amount of a penalty: A consultation on OFT guidance, OFT 423con, October 2011, paras 3.1–3.24, and also Applications for leniency and no-action in cartel cases: OFT’s detailed guidance on the principles and process, OFT803con, October 2011.
104.
On early resolution agreements, see Case Nos 1160-5/1/1/10 Imperial Tobacco Group plc v OFT [2011] CAT 41, paras 5 and 89.
105.
On commitments, see Competition Act, s 31A and Enforcement, OFT 407, December 2004, Part 4 and Annexe A.
106.
Competition Act 1998, s 36(8).
107.
Case Nos, etc, 1125/1/1/09 Barrett Estate Services Ltd & Ors v OFT [2011] CAT 8.
108.
Ibid, para 95.
109.
Director disqualification orders in competition cases, OFT 510, June 2010, para 4.11.
110.
Case No 1178/5/7/11 [2012] CAT 19.
111.
[2013] CAT 6.
112.
Case No 1060/5/7/06 [2006] CAT 29.
113.
CPR, r 1.1.
114.
Competition Appeal Tribunal Rules 2003, SI 2003/1372, r 19(1).
115.
CPR, r 1.2.
116.
Competition Appeal Tribunal Rules 2003, SI 2003/1372, r 19(2).
117.
A named claimant or defendant may act on his or her own behalf and also on behalf of a class of individuals under CPR, r 19.6.
118.
Multiple actions based on the same or similar facts can be bought. Under rules 19.10–15, GLOs are ‘opt in’ in nature so all claimants must be identified and parties to the proceedings.
119.
It is also possible to apply to the court to consolidate multiple actions into a single case with multiple parties under CPR, r 3.1(2)(g).
120.
Commission Decision of 9 November 2010, on appeal to the General Court, Cases T-9/11, etc, Air Canada v Commission, not yet decided.
121.
[2009] EWHC 741.
122.
[2010] EWCA Civ 1284.
123.
[2009] EWHC 741, para 38.
124.
See www.justice.gov.uk/guidance/courts-and-tribunals/courts/group-litigation-orders.htm.
125.
Further details of the action are available at www.concurrences.com/article.php3?id_article=36187&lang=en.
126.
http://www.which.co.uk/.
127.
See The Specified Body (Consumer Claims) Order 2005 SI 2365/2005.
128.
OFT Decision of 1 August 2003, substantially upheld on appeal Case Nos 1021/1/1/03-1022/1/1/03 JJB Sports Plc v Office of Fair Trading [2004] CAT 17, upheld on appeal [2006] EWCA Civ 1318, permission to appeal to the House of Lords (now the UK Supreme Court) refused on 5 February 2007.
129.
Case No 1078/7/9/07 The Consumers Association v JJB Sports plc [2009] CAT 2, para 8.
130.
See, e.g., Wells ‘Collective Actions in the United Kingdom’ [2008] Competition Law Journal 57.
131.
Private actions in competition law: a consultation on options for reform, April 2012.
132.
Available at https://www.gov.uk/government/publications/draft-consumer-rights-bill.
133.
Ibid, para 3.20.
134.
Ibid, paras 4.24–4.35.
135.
It is proposed that SMEs should be able to bring collective actions in both ‘follow-on’ actions, which follow on from that preexisting infringement finding and ‘standalone’ claims, where there is no pre-existing infringement finding by a competition authority.

Acknowledgement

The author gratefully acknowledges the editorial assistance of Sarah Long of the OECD. All views expressed in this paper are those of certain members of the UK Competition Law Association.

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David Bailey

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Pranvera Këllezi
Addleshaw Goddard, London, United Kingdom
Bruce Kilpatrick
Etude Hirsch Kobel, Geneva, Switzerland
Pierre Kobel

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Bailey, D. (2014). United Kingdom. In: Këllezi, P., Kilpatrick, B., Kobel, P. (eds) Antitrust for Small and Middle Size Undertakings and Image Protection from Non-Competitors. LIDC Contributions on Antitrust Law, Intellectual Property and Unfair Competition. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54000-4_14

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