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
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