CMA advises on competition law for start-ups

The CMA advised start-ups to watch out for price fixing.

The Competition and Markets Authority (CMA) has cautioned start-up businesses to be wary of anti-competitive behaviour.

As many distributors in the catering equipment sector are small, self-owned firms, this advice could be particularly useful for this sector.

Judith Frame, CMA’s head of compliance and reporting, said: “Sometimes start-ups can be sabotaged when bigger, established businesses don’t like a new competitor’s cheaper prices, better products or innovative, more efficient business models.

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“They try to find ways of blocking them from advertising cheaper prices. Or they use their revenues from other products to fund discounted prices and squeeze their fledgling competitor out of the market – before hiking their prices right back up again.”

She also cautioned that start-ups could be stopped or slowed by suppliers colluding on prices or dividing up markets. “This artificially drives up prices, making a new company pay more than they should for essential services,” she commented.

CMA believes that dividing up and sharing markets, bid rigging and discussing and price fixing are the three key behaviours companies should watch out for.

“Hindering other businesses like this is unfair, anti-competitive and illegal. Indeed, healthy competition is the very reason why new businesses launch in the first place,” said Frame.

She warned: “There are serious penalties for businesses and individuals who behave anti-competitively, including fines and prison sentences.”

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