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Competition Law Research 2018

Sunday 26 May 2019

Competition law research - 2018 

This report presents the findings from the 2018 competition law survey conducted by ICM Unlimited on behalf of the Competition and Markets Authority (CMA). The findings are based on a representative sample of 1,200 UK businesses.

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This report presents the findings from the 2018 competition law survey conducted by ICM Unlimited on behalf of the Competition and Markets Authority (CMA). The findings are based on a representative sample of 1,200 UK businesses; the survey was conducted via telephone.

The research was designed to measure current levels of understanding and awareness of competition law. The research covers businesses of all sizes and in all sectors of the UK.

Fieldwork took place between 4th December 2017 and 13th February 2018. Respondents are senior individuals with responsibility for sales in their business.

The research enables results to be compared with findings from the survey conducted in 20141.

Key findings

  • Familiarity with competition law and the CMA’s role remains low but has increased slightly since 2014.
    • While just a quarter of UK businesses say they know competition law ‘well,’there has been a significant decrease in the proportion who have not heard of competition law at all. This suggests that that top-line levels of awareness of the issue have increased.
    • Significantly fewer businesses now report they have never heard of the CMA compared to 2014.
    • Awareness of competition law is higher in medium/large size business than micro/small organisations. Across regions, awareness is highest in Northern Ireland (28%) and lowest in the North West (19%). On average, competition law awareness is 23% across all UK regions.
  • There is a mixed picture in terms of knowledge about specific anti-competitive behaviours.
    • A majority of businesses are aware of key anti-competitive behaviours, for example, that price fixing with other companies can lead to imprisonment (60%) and that it can be illegal to attend a meeting where competitors agree prices (59%).
    • However, there is less certainty around issues such as reselling and the consequences of reporting cartel activity. For instance, a third (34%) are aware that it is unlawful to set the price at which others resell their product(s), whilst only 18% are aware that they can gain immunity from admitting to participation in a cartel.
    • The number of correct answers has increased since 2014 across all statements.
  • The perceived risk of non-compliance remains low but most respondents say they would take action if competition law were breached:
    • While a large majority (95%) rate compliance with competition law as important, over half (57%) believe the risk of breaching it is low within their sector.
    • Nine in ten (88%) claim they would take action if illegal activity was taking place within their own business, while three quarters (77%) claim they would do so if it were taking place within a competing business. An easy method of reporting and assurances over confidentiality were factors that would help encourage people to speak up.

Businesses’ contact with their competitors

  • Four in five (79%) UK businesses are in contact with other businesses in their sector. When asked the motivation for this contact, the most commonly cited reason is“professional networking purposes” (43%). Interestingly, businesses are having fewer conversations relating to transactions compared to 2014 (34%). One in ten (10%) of businesses do however mention that they have been in contact with other businesses in the same sector to ‘discuss prices,’ a proportion that was also evident in 2014 (9%).
  • A similar proportion of businesses (75%) are monitoring competitor prices. The mostpopular approach continues to be “finding the price as advertised online/in shop” (45%).However, there has been a significant decrease in “other businesses tell us their prices”which is encouraging as this contact, if between rivals, carries competition law risks.

Awareness of competition law

  • There has been little change in the number of businesses claiming substantial knowledge of competition law since 2014, with one in five (23%) stating that they are very or fairly familiar with it. However, there has been a statistically significant 4 point decrease in the percentage who have never heard of competition law (from 20% to 16%). This demonstrates that whilst relatively few businesses possess an in-depth knowledge of the Law, the proportion of those with some level of awareness has increased since 2014.
  • When weighted according to the UK profile of employment as opposed to the UK profile of business sizes, awareness of competition law is significantly higher. Moreover, there has been a decrease in the proportion of businesses that state that they have never heard of competition law (from 16% to 9%).
  • The proportion of businesses running training sessions and having senior level discussions about competition law is the same as four years ago. Six per cent of respondents say their business has run a training session on competition law in the last year, while three times as many (18%) state their employer has had a senior level discussion on the same topic. As in 2014, health and safety is the most common subject for training sessions and senior level discussions.
  • Two thirds (68%) of respondents say they have a ‘poor’ awareness of the penalties fornon-compliance with competition law. This finding is consistent with the result recorded four years ago.
  • The internet is the most popular source when seeking information on competition law (cited by 78% of respondents).

Awareness of anti-competitive behaviours

  • Businesses’ awareness of what constitutes anti-competitive behaviour shows a marginal improvement since the 2014 survey.
    • Positively, among the 10 true/false questions in the survey, excluding the new additions for this year, the average number of correct responses is 4.5, up from 4.2 four years ago. Top scoring true statements are “it’s okay to tell suppliersthe prices that other suppliers are quoting you, as part of bargaining for a better deal” (identified as true by 63% of respondents) and “individuals who are found to have agreed to fix prices with other companies can be sentenced to imprisonment (identified as true by 60%).
    • Awareness in relation to cartel activity remains low. Less than half were awarethat “companies that admit participation in a cartel to the competition authorities may be able to obtain immunity from a penalty” (41% incorrectly answered that this was false). Meanwhile, only 34% correctly considered it true that “it is unlawful to set the price at which others can resell your products.”
    • There has been a decrease in the proportion of respondents stating ‘do not know’ (or giving incorrect responses in respect of nearly all anti-competitive practices), when asked whether a specific practice breaches competition law or not.

Corporate commitment to compliance

  • Most businesses (80%) feel that complying with competition law is “the right thing to do ethically.” Moreover, the majority indicate that ‘pull factors’ such as ethics and themaintenance of reputation hold a greater sway for compliance with the law than ‘push’factors such as the risk of financial sanctions or prosecution.
  • The proportion of businesses citing push and pull factors for compliance is broadly in line with 2014.
  • Three in five (57%) businesses view their commercial activities as being at a low risk of breaching competition law, an identical finding to four years ago (56%). Those who have a better knowledge of competition law are less likely to view their companies’ activities asbeing at a low risk of breaking the law (39%).
  • The majority of respondents would take action if they suspected illegal activity, whether within their own businesses (88%) or within a competing business (77%). A confidential hotline, dedicated website or an online form were factors that would encourage respondents to report potentially illegal activity.

Technology and digital markets

  • Most respondents speak favourably about the impact of the internet and technology:
    • Over half (54%) agree that it has changed the way their business operates for the better;
    • Two thirds agree that it has helped reach new customers (64%) and has opened up new market opportunities (63%).
  • Seven in ten (71%) respondents believe that technology and the internet has increased competition from other businesses.

Awareness and understanding of the CMA and its role

  • Unprompted, spontaneous awareness of the CMA remains low, with two thirds (64%) of respondents reporting that they do not know who enforces competition law in the UK.
  • When prompted, the Office of Fair Trading, the CMA’s predecessor which existed for over 40 years from 1973 to 2014, is the most commonly cited body responsible for enforcing competition law (49%). Around one in seven (14%) correctly identify the CMA.
  • Whilst only 3% of businesses are familiar with the CMA (know the CMA ‘well’), since 2014 there has been a significant decrease (18 percentage point) in the percentage of businesses who say they have never heard of the CMA. Currently, two in five (39%) have never heard of the CMA.
  • Those who report having a good knowledge of the CMA are more likely to correctly identify the responsibilities of the CMA.

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This report presents the findings from the 2018 competition law survey conducted by ICM Unlimited on behalf of the Competition and Markets Authority (CMA). The findings are based on a representative sample of 1,200 UK businesses.