David Woods

+44 (0)1733 887793 dvwoods@greenwoodsgrm.co.uk

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A carve-up is a stitch-up – and unlawful

Essentials / 25 January 2017

Competition Law prohibits anti-competitive actions.  We’ve already seen that any form of price fixing is unlawful.  Now we have a reminder that “market-sharing agreements” are also unlawful.

Two suppliers of cleanroom laundry services operated a joint venture.  It appears that the two suppliers agreed to divide customers between them along a geographic boundary and by reference to the nature of the customers’ businesses or the products/services they required.  The alleged arrangement prevented each supplier from supplying customers which were located outside that supplier’s designated area and product/service type.

The Competition and Markets Authority has provisionally concluded that these arrangements restricted competition between the two suppliers.

The CMA said that market-sharing agreements are a serious breach of competition law, which usually deny customers the benefits that arise from competition – such as lower prices, greater choice, innovation and improved service.

Great care needs to be taken not to enter into arrangements of this type – particularly in the context of joint venture and other “partnering” arrangements.

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