Frank Ilett and Bruno Augustin are both members of Ernst & Young's Litigation Support Services Group.
Imagine that you run the only petrol station on a remote island off Scotland, with a captive market of motorists who cannot easily obtain their fuel anywhere else. If you are charging higher prices than mainland suppliers, you may soon have to justify them in court.
Under the newly introduced Competition Act 1998 (the Act), which will come into full force on 1 March 2000, the principles of European Community competition law are now to be applied to trade in the UK. The relevant market which could be affected under the Act by anti-competitive behaviour can include a very small part of the UK such as a village or an island. If an undertaking's share of a local market is at least 25 per cent, or if at least 10 per cent of the local market is affected, this too will probably be of sufficient size to be covered by the Act.
Dissatisfied consumers who suffer loss due to anti-competitive behaviour could now obtain relief through the courts more effectively than ever before. A consumer could report the case to the Director General of Fair Trading (DGFT) first, who now has the power to require interim measures, such as suspending the alleged anti-competitive behaviour pending the outcome of his investigation. The consumer also has the right to appeal a decision of the DGFT to the newly formed Competition Commission.
The DGFT has the discretion to impose fines of up to 10 per cent of the turnover of the guilty party as a penalty for its previous behaviour. The consumer could then use this decision to support a claim for damages in the courts. Our unfortunate petrol station owner could, therefore, pay out twice for his previous actions.
Of course, there are many hurdles any complainant has to cross to obtain redress, but one mustn't be fooled into thinking that no such cases will ever arise.
It makes sense, therefore, for any business to consider whether it has ever agreed, even tacitly, with a fellow competitor to do anything that may be perceived as not being in the normal course of an arm's length business relationship. This may include imposing conditions on customers or suppliers for the purpose of improving the performance of its business and which might be considered to be unduly harsh – that is, anti-competitive.
The new millennium may indeed introduce new powers for the consumer that will shape the way trade is conducted and regulated for a long time to come.