SMEs urged to wage war against cartels

The Office of Fair Trading's 'complain, comply or confess' awareness campaign to educate small businesses about the dangers of cartels may have run its course, but it stresses that the message continues to be the same: stamp them out!

In the most straightforward terms, a cartel is an agreement – usually verbal and often informal – between businesses not to compete with each other. Cartels restrict competition and can result in higher prices, little or no choice and poorer quality goods and services for consumers and businesses.

Cartel members can agree on a range of matters from prices and output levels, to credit terms, which customers and areas they will supply, and who should win a contract (bid rigging). They can occur in practically any industry and can involve services or products at the retail, distribution or manufacturing level.

Small businesses in particular are vulnerable to the effects of cartels, a fact the OFT continues to emphasise. Says OFT press spokeswoman Kathryn Hinchliffe, “smaller businesses have less room for manoeuvre than larger companies, which can more afford to absorb the costs.” The OFT’s war against cartels aims to give small businesses “a better deal for themselves and their customers. It is in your best interest to learn the law.”

Although small businesses are often the victim of a cartel, they might, in certain circumstances, be an actual member of a cartel without knowing. To those small businesses who think they might be a member, Hinchliffe says they should approach the OFT to “gain immunity.” Her comments relate to the OFT’s leniency programme, which provides immunity from fines to the first member of a cartel that comes forward and confesses. The benefits of this are obvious – cartel members can be fined up to 10% of their UK turnover for up to three years under the Competition Act 1998.

To complain if you suspect local companies are operating a cartel, phone the 24-hour OFT Cartel Hotline on 020-7211 8888. To avoid the heavy penalties for anti-competitive behaviour, to check that you are complying with the Competition Act 1998 or to find out more about the advantages of the leniency programme, visit the OFT’s website at www.oft.gov.uk .

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