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Businesses in Wales Warned to Watch Out for Cartels

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The CMA is calling for more whistle-blowers to expose business cartels with the launch of a national awareness campaign.

It comes as new research shows many firms in Wales don’t know enough about how to comply with competition law.

The Competition and Markets Authority’s (CMA) latest cartel awareness campaign 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.

Research released by the CMA today to coincide with the campaign shows that of companies surveyed in Wales:

  • Only 56% knew it was illegal to fix prices
  • Nearly half either didn’t know or thought it was legal to discuss prices with competing bidders when quoting for new work (23% said ‘don’t know’, and 25% actually thought it was legal).
  • Significantly more than half (59%) didn’t know or thought that dividing up and sharing customers with rivals was legal (25% said ‘don’t know’ and 34% actually thought it was legal).

Cartels cheat customers out of a fair deal by forcing prices up, reducing quality, choice and innovation.

Simon Harris, the CMA’s Representative for Wales, said:

“Competition law exists to make sure customers, including other businesses, are protected. When followed, the law maintains a level playing field in Wales.

“Business in Wales need to be educated and checking their practices, to make sure they are obeying the law – the penalties for not doing so can be severe.”

The campaign is targeting industries including construction, manufacturing, recruitment, estate agents and property management and maintenance. These are sectors identified as particularly susceptible to cartels. Previous campaigns have driven a 30% rise in the number of tip-offs to the CMA’s cartels hotline.

The campaign uses simple imagery on social media sites and a dedicated website [www.gov.uk/stopcartels] and comes as the CMA continues to step up its enforcement action. Since April 2015 it has issued over £155m in fines following investigations into anti-competitive practices and it is currently investigating 15 cases including in construction services, roofing materials and estate agency.

Examples of CMA action include:

  • Two of the biggest suppliers of charcoal and coal for households in the UK were fined £3.4m for taking part in a market sharing cartel.
  • Water tank firms were fined over £2.6 million, after they formed a cartel to divide up customers, fix minimum prices and share commercially sensitive information for tanks used in large construction projects (such as schools and hospitals).
  • Somerset estate agents were fined over £370,000for fixing minimum commission rates, such that local home owners had been denied a fair deal when selling their property. The CMA also secured the disqualification of two company directors in this case.