Competition Law
A summary for all AREF committee members
This summarises the competition rules that apply to AREF and the consequences of infringement. The summary only deals with the impact on AREF. However, as you will be aware, anti-competitive conduct that involves AREF is likely to affect members too and to cause damage to the reputation of the industry as a whole.
COMPETITION LAW
The general aim of competition law is to ensure that competition in a market is open, genuine and fair. This gives consumers the best choice of products and services at the lowest prices.
The two competition law prohibitions ensure that:
- competitors do not: jointly fix prices, share markets, limit provision of goods/services, or rig the outcome of bids/tenders. This also includes sharing sensitive data through a trade association
- businesses with high market shares or market power do not abuse their position in relation to suppliers, customers or competitors
CONSEQUENCES OF GETTING IT WRONG
Infringing competition law would have serious consequences for AREF:
-
involvement in proceedings damages AREF’s good name and reputation
- dealing with an investigation is time consuming, expensive and distracting
- fines of up to 10% of turnover
- for implicated individuals: potential disqualification from directorship roles, fines and/or imprisonment
- arrangements void and unenforceable
- actions for compensation from affected parties
APPLICATION OF COMPETITION LAW TO AREF
Competition law applies to AREF directly as well as to AREF members acting through AREF. For instance, competition law applies to agreements, decisions and concerted practices entered into or facilitated by AREF:
Agreements - can be informal or formal and do not need to be in writing. An agreement can be implied from conduct of AREF and/or its members and it does not need to be binding. If an agreement is anti-competitive the fact that such an agreement was made under the auspices of a trade association makes no difference, it will still be caught by the prohibition.
Decisions - includes resolutions of AREF committees or of the members generally; binding decisions of AREF Board or senior committees, the effect of which are to limit the commercial freedom of action of the members in some respect; AREF recommendations, including oral recommendations that members are intended to follow; and AREF membership rules.
Concerted practices – this is informal co-operation within AREF and/or with members without any formal agreement or decision having been reached. In order for there to be a concerted practice there needs only to have been a meeting of minds which infers commitment to act in a certain way so replacing the risk of competition with a practical form of co-operation.
ABUSE OF DOMINANT POSITION
AREF is unlikely to infringe this prohibition but it should be aware that such an offence exists where a company is in a dominant position in its market and abuses that position, for example by imposing excessive prices or refusing to supply.