Anti-competitive behaviour falls more than 50 per cent in a year

The number of allegations of anti-competitive behaviour made to the competition watchdog has plummeted to less than half the level seen last year, according to commercial law firm EMW.

EMW suggests the sharp fall from 2,165 complaints in 2012 to just 975 in 2013 means grievances sent to by the Competition and Markets Authority (CMA), which replaced the Office of Fair Trading (OFT), over anti-competitive behaviour has now returned to pre-credit crunch levels.

James Geary, head of commercial contracts at EMW, said the economic recovery is the main driver of the fall in complaints as companies are less likely to engage in anti-competitive practices during periods of growth: "Anti-competitive behaviour by businesses became much more prevalent during the recession, but that has fallen away as the economy has returned to growth.

"When businesses are struggling with stagnating or falling revenues, they are more likely to be driven to cartel-type behaviours. As economic growth delivers more sales, there is far less pressure than there was during the recession to pursue cut-throat and potentially anti-competitive tactics."

Geary continued: "Practices, such as using at-cost or below-cost pricing, which rivals might see as unfair competition, were much more attractive as firms fought to preserve their share of a shrinking market, but are less likely to be used during periods of growth. Weak profit margins may also encourage rivals to collude and engage in price fixing."

As the outlook for business improves, firms are also more likely to become focused on driving their own growth rather than using resources to fight anti-competitive tactics by their competitors. "During an upturn, spending time and money on pursuing claims against competitors is less of a priority in comparison with driving your own growth," said Geary. "Cartel behaviour won't necessarily be ignored, but many businesses will let smaller infractions go if they deem them not to be a threat."

Geary concluded: "With the establishment of the new CMA earlier this year in place of the OFT, it remains to be seen whether its greater scope of responsibilities and powers will act as a further deterrent to anti-competitive behaviour."

John van der Luit-Drummond is legal reporter for Solicitors Journal