Competition Act - Severe Penalties If Not Compliant

The Government has announced its proposal that companies in breach of the new Competition Act should face financial penalties of up to 10% of UK turnover for each year of breach, up to a maximum of 3 years.

The main provisions of the Competition Act 1998 come into force in less than 7 months' time, on 1st March 2000. The Act will prohibit anti-competitive agreements and conduct which abuses a dominant position.

The proposal to cumulate penalties goes much further than the equivalent EC provisions, which impose an absolute maximum penalty of 10% of world-wide annual turnover in the preceding business year.

The Director General of Fair Trading has made clear in recent speeches that he expects all businesses to take steps to comply with the new legislation. In return, he undertakes to take into account the existence of an effective compliance programme in determining the level of financial penalty to impose on businesses which infringe the new law.

If the Government's proposal on penalties is enacted, UK businesses could face fines of many millions of pounds, perhaps even wiping out their profits. This brings home the need to comply with the new law. All businesses should be taking steps to comply with the new legislation.

For a summary of the Director General of Fair Trading's formal compliance policy, visit our website at http://www.cmck.com, go to LawNow and click on "your latest information". Alternatively conduct a pre-selected topic search on "Competition".

For information on how to organise a compliance programme, or on the Competition Act generally, contact Dick Taylor, Sue Hankey or Vicky Sandry of our Competition Group on Tel 0171 367 3000 or e-mail [email protected]

Alternatively, visit the "Hot Topics" section of LawNow to see our Competition Act Guidelines. If you do not have access to the Internet and would like to receive hard-copies, please e-mail your request to [email protected]