Competition And Markets Authority Reveals Geographic Spread Of Warnings Issued To Businesses
2nd October 2024
New heat maps show the number of competition law warning and advisory letters sent to businesses across the UK between 2018 and 2023.
The Competition and Markets Authority (CMA) has, for the first time, published heat maps illustrating where it has issued warning and advisory letters to businesses it is concerned may be breaking competition law and whose practices could be harming consumers. The heat maps display the number of letters sent to each region compared to its share of the UK business population.
The letters form part of the CMA's enforcement toolkit and businesses that receive a warning or advisory letter should act on the advice provided - which could include reviewing and making changes to practices. Failure to do so can result in significant consequences. If businesses are later found to have broken competition law, the CMA can use formal enforcement - including higher financial penalties and its director disqualification powers - to take action against the worst offenders.
From 2018 to 2023, the CMA sent a total of 557 letters to businesses across the UK covering multiple sectors - including household goods, technology products, heating equipment and clothing. The number of letters sent varies by region, reflecting the distribution and density of businesses across the UK:
484 letters were sent to businesses registered in England
38 letters were sent to businesses registered in Scotland
23 letters were sent to businesses registered in Wales
12 letters were sent to businesses registered in Northern Ireland
These maps provide a snapshot of the CMA's proactive approach to ensuring businesses across the UK comply with competition law - regardless of size or location – to promote fair market conditions and potentially save consumers money.
The most common practice the CMA writes to businesses about is ‘resale price maintenance' (RPM) – which is restricting the ability of retailers to discount products below a certain price. Research indicates that prices of products fell by around 17% in the Bathroom Fittings and Light Fittings sectors after the CMA formally intervened and imposed fines to stop RPM practices. However, for many businesses, receiving a letter is enough for them to take immediate action, leading to quick savings for consumers. See https://assets.publishing.service.gov.uk/media/5b29014740f0b634b469fb2f/cma_ca98_evaluation_-_dotecon_report.pdf
The CMA operates a leniency policy under which businesses and individuals can provide evidence of potentially illegal activity. Co-operation with the CMA can result in a reduction or, in some circumstances, immunity from penalties. Businesses concerned about potential breaches should seek legal advice and consider self-reporting. Separately, the CMA also offers financial incentives to individuals who provide information about anti-competitive practices but are not involved themselves. https://www.gov.uk/government/publications/cartels-informant-rewards-policy/rewards-for-information-about-cartels
Juliette Enser, Executive Director of Competition Enforcement at the CMA, said:
The publication of these maps underscores our commitment to tackling poor business practice across the UK, so that consumers can trust they will get a fair deal and potentially save money wherever they are in the country. We believe that most businesses want to compete fairly and stay on the right side of the law but that does not give carte blanche to those which undermine competition and leave consumers worse off.
To avoid action from the CMA, all businesses should regularly review their practices to ensure they are complying with competition law. Any business that thinks it could be at risk of breaking the law should seek legal advice and consider the CMA's leniency programme.
For more information and to view the heat maps, visit the warning and advisory letter maps page.
1 . The date range for the statistics listed are 1 January 2018 up to and including 31 December 2023. The CMA plans to publish these maps annually.
2 . The CMA maintains a register of warning and advisory letters about competition law issues detailing the market sector and the suspected breach. Individual businesses are not named on the register. At the end of each year, we provide an annual total of warning letters sent that year. After 5 years, individual register entries will be removed from the register. Annual aggregate figures will remain.
3 . Failing to act on warning letters can result in bigger fines later on – for instance the CMA applied a 35% increase as part of the fine calculation for Dar Lighting after it failed to act on 2 warning letters.
4 . Research carried out on behalf of the CMA, following infringement decisions for RPM in the Bathroom Fittings and Light Fittings sectors, indicated they had led to an estimated fall in prices of around 17%. This research was endorsed by the Competition Appeal Tribunal in its Roland Decision, see paragraphs 67 and 81 below:
Para 67. The CMA referred to the DotEcon report which recorded that its decisions condemning RPM in Bathroom Fittings and Light Fittings had led to an estimated fall in prices of around 17%.
Para 81. In assessing the relative seriousness of RPM, it is necessary to consider the harm to competition which RPM causes. The immediate effect of RPM is to restrict resellers' freedom to set their own prices and to compete fully and effectively. RPM restricts intra-brand competition and tends to increase the prices paid by consumers for a particular brand. The fact that RPM leads to higher prices for consumers is supported by the empirical evidence in the DotEcon report referred to above.
5 . The location of businesses on the map is based on where their registered head office is located rather than where they are active.
