CMA publishes guidance on competition law and joint ventures

The Competition and Markets Authority has published a short guide for businesses on competition law compliance in relation to joint ventures.

The guidance follows a decision of the CMA in December 2017 where it imposed a fine of £1.7 million on two suppliers of laundry services for a market sharing agreement that it found to be in breach of the Chapter I prohibition of the Competition Act 1998.  The CMA’s case was that the violation occurred under the cover of a joint venture.

The guidance comprises ‘dos and don’ts’ for businesses who are considering entering into or who are already involved in joint ventures, alliances or similar forms of cooperation with competitors.  The CMA has stated that it will be communicating with over 1000 law firms across the UK asking them to draw this guidance to the attention of their clients.

The substantive content of the guidance is nothing new. It recognises that agreements may be a response to increasing competitive pressures driven by globalisation, the speed of technological progress and the generally more dynamic nature of markets.  Cooperation can also be a means to share risk and pool know-how to get innovative products and services to market faster.

Where the economic and consumer benefits outweigh the negative effects on competition, such agreements will usually be lawful.  However, the guidance is a timely reminder that many cooperative business arrangements or routine agreements may fall foul of competition law and need to be scrutinised to ensure that any restrictions imposed are the minimum necessary to deliver their claimed benefits.

Source: CMA press release of 12 April 2018:  https://www.gov.uk/government/publications/joint-ventures-and-competition-law-dos-and-donts