“People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” Adam Smith in The Wealth of Nations.
Cartel whistle-blowers are being told they can get rewards of £100,000 for exposing price fixing by the companies they work for.
The announcement came today (20 March) as the government's Competitions & Market Authority (CMA) launched its first-ever advertising campaign to crack down on secret arrangements to fix prices.
Cartels are illegal. They stop customers and other businesses from getting a fair deal as well as stifling competition.
It is not unknown for companies to agree among themselves not to compete on price for jobs, usually in reciprocal arrangements that keep prices artifically high to the benefit of two or more companies. Even companies in the stone industry have been prosecuted for such practices, which are not unknown throughout the construction sector.
The CMA’s campaign 'Cracking down on Cartels' is highlighting the £100,000 incentive for employees who witness illegal agreements of price fixing to report it. CMA says it will assure whistleblowers remain anonymous.
Firms convicted of operating cartels can be fined up to 10% of their turnover and the individuals involved can be sent to prison for up to five years.
The CMA is also reminding firms that they can avoid penalties if they are the first to confess to having been involved in price fixing.
Andrea Coscelli, Acting Chief Executive of CMA, says: "Cartels are a form of stealing that cheat ordinary people as well as other businesses by undermining competition. We are committed to tackling them wherever we find them. Cartels are carried out in secret to make you think you are getting a fair deal, even when you are being conspired against to keep prices high.
"Cartels are both harmful and illegal, and the consequences of breaking the law are extremely serious. That is why we are launching this campaign – to help people understand what cartel activity looks like and how to report it so we can take action."
CMA research found that while most businesses have a shared ethical sense that conduct such as price-fixing is unfair and just plain wrong, less than a quarter of them said they knew competition law well and that:
- Only 16% knew that informants could get a reward for reporting a suspected cartel, and
- Only 15% knew that the CMA operates a leniency programme for businesses and individuals that confess their involvement in a cartel and co-operate with the CMA.
This research has led to the creation of the first ever advertising campaign run by the CMA specifically designed to stamp out cartel activity and encourage people to report it.
Adverts will appear in social media feeds, such as Twitter and LinkedIn, as well as on key websites.
Cartels have been uncovered in a range of industries and the campaign builds on recent CMA cartel cases.
These have included:
- Fining two furniture parts-makers £2.8 million for agreeing not to compete on price and who would supply which customers, following a tip-off from an informant
- Fining four estate agents a total of £370,000 for price-fixing after information was received as a result of an earlier CMA campaign following a previous case in the estate agency sector
- Disqualifying the managing director of an online poster supplier from being a director for five years after his company was found to have been part of an online price-fixing cartel. The prosecution followed an application for leniency by the other company involved.
Further cases of suspected cartel are currently under investigation.
To report a cartel: email [email protected] or ring 0800 085 1664 / 020 3738 6888.
For more about the CMA campaign go to https://stopcartels.campaign.gov.uk/