Small Businesses Missing Out on Benefits of Competition

Is your business lagging behind in your knowledge of your rights and responsibilities under competition legislation?

In a recent survey by the Office of Fair trading (OFT), just over half of small businesses are unaware of the details of the Competition Act; compared to just 20% of larger businesses (over 200 employees).

The OFT has launched the ‘Championing Competition’ campaign to highlight the positive aspects of competition for business and to demonstrate to the SME community that competition should be embraced rather than feared. As well as promoting the benefits of competition to the SME sector, the OFT will help businesses avoid anti-competitive behaviour, for which significant fines can be imposed.

While almost half of businesses are aware of the act, only 40% have taken any action to ensure they comply with it; this figure is even less for small businesses. Many companies still wrongly believe that competition law is not relevant to their business or market.

Sir John Vickers, OFT Chairman, said: ‘This campaign will aim to improve understanding of competition law and how it can help SMEs. We want to help them seize opportunities that competition brings. It is important for SMEs to be aware of their rights and responsibilities under competition law so that they can take best advantage from competitive markets’.

The campaign also aims to encourage businesses who are involved in anti-competitive behaviour like cartel arrangements involving, bid-rigging and price-fixing, to report such activities and take advantage of leniency policies that could exempt them from penalties.

Competition laws are often seen as only applying to big companies, but small businesses often face a more competitive environment with more rivals in their local area. It is important that you know the laws and follow them when carrying out competitive strategies.

Some OFT guides are available to help you understand the laws; ‘Competing fairly’, ‘How your business can achieve compliance’, ‘Under investigation?’, ‘Cartels and the Competition Act 1998′, and ‘Leniency in cartel cases’.

The guides are available from the OFT website, and can also be ordered free of charge on 0800 389 3158.