Civil Engineering Reference
In-Depth Information
The important issue is not the manner in which any such agreement was reached
or concerted practice engaged - rather it is the fact that the parties have removed the
element of uncertainty which should normally exist between competitors and have
replaced that uncertainty with certainty as to future behaviour. The business knows
what its competitor is going to do and can adjust its behaviour accordingly. So the
simple message is that very little is required to constitute an agreement or concerted
practice for the purposes of the Chapter I prohibition.
It should also be noted that the Chapter I prohibition targets agreements which
haveastheirobjectorefecttheprevention,restrictionordistortionofcompetition.
So, the CMA can target agreements which are intended to be anti-competitive, but
can also target agreements which have an anti-competitive effect, even though that
was not the intention of the parties.
21.4.2 Is the subject matter of the agreement prohibited?
When considering the subject matter of the agreement, there are types of behaviour
which are automatically illegal. hese include price fixing, market sharing, bid rigging
and collective boycotts (see Construction recruitment forum (CE/7510-06)) - each is
very relevant to the construction industry and is regarded as a serious breach of the
competition rules. There are, however, types of behaviour which may be permitted
in some circumstances, but prohibited in others. These cases, which in the context of
the construction industry include information exchanges, trade associations and joint
ventures, all depend on the particular circumstances.
Price fixing
In terms of price fixing, the message is quite simple - it is illegal for a business to
co-operate with its competitors to fix the prices at which goods and/or services will
be supplied. Price fixing, however, is not just restricted to fixing the exact price of
such goods and/or services. It extends to agreeing minimum prices, price ranges,
discounts, allowances, rebates and other such components of the price. In short, a
business should not be discussing prices or any aspect related to pricing with its
competitors.
Market sharing
Asformarketsharing,itisillegalforabusinesstoagreewithitscompetitorsthecus-
tomers that they will serve or the geographic areas in which they will operate (see
the Roofing case concerning the North-East of England (CA98/02/2005) discussed
in Section 21.5.1). In effect, market sharing seeks to insulate the parties in question
from competition. The basic rule is that a business should target customers or areas
based on its own unilateral commercial decisions and not on the basis of agreements
or understandings with competitors.
