Anti-competitive Agreements and Abuse of Market Power
Have you come across any of the following commercial agreements or business practices in the course of your business?
- Imposing unfair purchase or selling price or other unfair trading conditions
- Refusing to supply to a particular enterprise or group of enterprises
- Applying different and discriminatory terms and conditions to equivalent transactions
- Tying or bundling of goods or services sold
- Predatory behavior or pricing
- Single branding agreement
- Exclusive customer allocation, exclusive purchase or supply agreement, or other forms of exclusive distribution agreement
- Selective distribution
- Upfront access payments or shelf-space payments
- Franchising
- Resale price restrictions or recommended retail pricing
- Collaboration or cooperation between competitors
- Merger or acquisition between two competitors
If you have, you should read on.
Did you know that some or all of the above agreements (or some of the terms and conditions) or practices may or may not be anti-competitive under the Competition Act 2010?
Yes, some or all of the above may or may not be deemed anti-competitive under the Competition Act 2010. Whether they are anti-competitive depends to a large extent on the issue of “market power”.
Did you know that the concept of “market power” does not depend on your company’s market capitalization, authorized or paid-up capital, number of employees, gross revenue or net profit?
The concept of “market power” in Competition Law depends primarily on market share of the relevant product or service market. The determination of market share, on the other hand, depends on the technique of market definition, a combined legal and economic analysis. Only a Competition Law specialist is able to carry out this kind of analysis.
Do you know about the legal and non-legal consequences if the above agreements or practices are deemed anti-competitive under the Competition Act 2010?
The legal consequences include: financial penalties by the enforcement authority, civil compensation payable to the victims of anti-competitive agreements and practices, and “dawn raid” on your company’s offices by the enforcement authority.
The non-legal consequences include: reports of investigations in the news media, spread of such negative news on social media like FB and whatsapp, boycott of your company’s products and services by customers and consumers, and disruptions to your company’s day-to-day business operations as a result of seizure of documents and equipment by the enforcement authority.
How could you assure yourself that your commercial agreements or business practices are within the permitted boundary of the Competition Act 2010?
You should feel relieved to know that you can have the relevant commercial agreements or business practices analysed by a Competition Law specialist to determine their competitiveness (or anti-competitiveness) under Competition Law. You are strongly advised to consult a Competition Law specialist for a competitive analysis of your commercial agreements or business practices. Our firm shall be glad to assist you in this respect.
Did you know that your contractual partners or business partners may walk out of the deal by relying on the Competition Law if they do not like it because they think (with hindsight) that they have made a bad deal?
An anti-competitive agreement is void and, as a result, the other party to the agreement may simply walk out of the deal. Not only that, the other party may even sue your company to recover all the moneys paid to your company plus compensation for being a victim of the anti-competitive agreement.
Correspondingly, if you think your company have been subject to some unfair or unreasonable terms imposed by the other party, Competition Law may be just there to help you walk out of the deal.
Do you have any further queries?
If you do, please do not hesitate to CONTACT US or send us an email at legal@ETCoLaw.com.
You are assured that all communications passed between you and our firm are protected by legal professional privilege and the commensurate level of confidentiality.