The Act prohibits 1) written or oral agreements which prevent, restrict or distort competition and which may affect trade within the United Kingdom and 2) conduct by undertakings which amounts to an abuse of a dominant position in a market and which may affect trade within the United Kingdom.
Although both prohibitions mirror Articles 81 and 82 (formerly Articles 85 and 86) of the EC Treaty, the Act will apply only to those agreements that solely have an effect on competition within the United Kingdom. Articles 81 and 82 continue to apply to agreements or conduct that may affect trade between EC Member States.
The following are examples of agreements covered by the first prohibition mentioned above:
1) agreements which directly or indirectly fix purchase or selling prices or any other trading conditions;
2) agreements which limit or control production, markets, technical development or investment;
3) agreements which share markets or sources of supply;
4) agreements which apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
5) agreements which make the conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
2) agreements which limit or control production, markets, technical development or investment;
3) agreements which share markets or sources of supply;
4) agreements which apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
5) agreements which make the conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
An agreement will only infringe this first prohibition if it will have an appreciable effect on competition. No appreciable effect on competition will normally be found if the parties' share of the relevant market does not exceed 25%.
The following are examples of conduct which may amount to an abuse of a dominant position and therefore covered by the second prohibition mentioned above:
1) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
2) limiting production, markets or technical development to the prejudice of consumers;
3) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
4) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts.
2) limiting production, markets or technical development to the prejudice of consumers;
3) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
4) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts.
Complaints alleging breach of the prohibitions set forth in the Act may be made to the Director General of Fair Trading.
The Act imposes no obligation to notify agreements or conduct to the Director General of Fair Trading. It is for the parties themselves to assume the responsibility of making certain that their agreements and conduct are lawful and decide on their own initiative whether the agreement warrants notification.
The Act also provides safeguards against the disclosure of confidential information and gives the Director General wide powers of investigation and enforcement, including powers to enter premises and take copies of documents, and to require infringing agreements or conduct to be modified or terminated. He may also impose financial penalties of up to 10% of the turnover of an undertaking for an infringement of the above-mentioned prohibitions.
The Department of Trade and Industry is expected to issue guidance notes on the application of the Act with respect to intellectual property matters.
August 1999 Index