United Kingdom Competition & Markets Authority Releases Survey on Businesses’ Understanding of Competition Law

On October 22, the United Kingdom Competition & Markets Authority (CMA) released the results of an extensive survey of 1,200 United Kingdom businesses of all types and sectors about businesses’ understanding and awareness of competition law.  The survey, which ICM Unlimited conducted on behalf of the CMA, included the following findings, which in some instances included results from a 2014 survey of United Kingdom businesses about competition-law knowledge:

• Knowledge About Specific Anti-Competitive Behaviors
  • Sixty percent of respondents correctly responded that price fixing with other companies can lead to imprisonment. That represents a 7 point increase over the percentage of correct responses to the question in 2014.  In contrast, 30 percent responded that they did not know whether it can lead to imprisonment.
  • Fifty-nine percent were aware that it can be illegal to attend a meeting where competitors agree on prices.
  • Thirty-four percent were aware that it is unlawful to set the price at which others resell their product(s).
  • Fifty-seven percent correctly responded that it was not “okay for competitors to agree prices in order to avoid losing money.”
• Noncompliance Risks
  • Although nearly all respondents (95 percent) regarded compliance with competition law as important, 57 percent believed that “the risk of breaching it is low within their sector.”
  • Sixty-eight percent responded that they “have a ‘poor’ awareness of the penalties for non-compliance with competition law.”  This finding is consistent with the 2014 survey responses.
• Corporate Commitment to Compliance
  • With regard to corporate motive for compliance, “[t]he strongest factor for compliance is moral”: 80 percent responded that complying with competition law is “the right thing to do ethically,” 75 percent responded that “it provides a level playing field for everyone in the market,” and 75 percent responded that “it is important for our reputation.”
  • “Even though compliance with competition law is more likely to be encouraged by ‘pull’ factors, the majority of businesses are also influenced by several ‘push’ factors.” Seventy-five percent of respondents agreed that they were motivated to comply with the law because “it’s obligatory-it’s the law,” 68 percent agreed that “non-compliance leads to the risks of fines,” and 65 percent agreed that “non-compliance risks directors being prosecuted.”
  • Fifty-seven percent regarded their commercial activities as being at a low risk of breaching competition law (virtually unchanged from 56 percent in 2014). Of those who indicated that they know competition law “very/fairly well,” 39 percent responded that there is at least a medium risk and 48 percent saw a low risk.  By comparison, of those who indicated they know competition law “less well/have never heard of it,” 29 percent saw at least a medium risk and 57 percent saw a low risk.
  • Eighty-eight percent stated that they would take action if illegal activity was taking place within their own business, and 77 percent stated that they would do so if it were taking place within a competing business.

Note:  The ICM survey results contain a number of lessons for the CMA and for corporate compliance functions.  For the CMA, not the least of those lessons is the need for the CMA to increase its public visibility: 64 percent of respondents indicated that they do not know who enforces competition law in the United Kingdom, 39 percent had never heard of the CMA, and only 3 percent responded that they know the CMA “well.”  The CMA has harnessed the survey results to a broad-based “cartel awareness campaign [that] aims to educate businesses about which practices are illegal and urges people to come forward if they suspect a business has taken part in cartel behaviour, such as fixing prices or rigging contracts.”

For their part, compliance functions should draw on the survey results to review their companies’ antitrust and competition law-related training courses.  Those courses need to include clear explanations of what business conduct is permissible under United Kingdom competition law, along with simple and stark messages such as, “If you participate in fixing prices with our competitors in any way – in person, by phone, or online — you can go to prison.”

At the same time, corporate training and dialogue between senior leadership and compliance officers should recognize the value of “pull” factors, such as compliance being “the right thing to do ethically” and being important for corporate reputation.  Specific actions and statements by C-level executives that demonstrate their commitment to competition-law compliance, including the ethical dimensions of that commitment, can be influential with regulators such as the CMA in evaluating the soundness of a company’s competition compliance program.