Competition Law In The UK Explained

If you buy from suppliers, sell to customers, or work with other businesses, competition law affects you. It isn’t just for big tech or supermarkets - the Competition and Markets Authority (CMA) regularly looks at small and mid-sized firms too.

Getting the basics right will help you avoid heavy fines, director disqualification and reputational damage. More positively, a clear compliance approach makes your business more resilient and trustworthy as you grow.

In this guide, we break down what UK competition law (sometimes called “antitrust” law) means in plain English, the behaviours to avoid, and the practical steps you can take to stay compliant from day one.

What Is Competition Law In The UK?

UK competition law is a set of rules designed to keep markets fair and open. The key statutes are the Competition Act 1998 and the Enterprise Act 2002. The CMA is the main enforcer, with sector regulators (like Ofcom or Ofgem) able to enforce in their industries. The Digital Markets, Competition and Consumers Act 2024 also expands powers in certain digital and consumer-facing areas.

At a high level, the law prohibits two things:

• Agreements or coordination between businesses that prevent, restrict or distort competition (for example, price fixing or sharing markets); and
• Abuse of a dominant position (using market power in ways that harm competition or consumers).

Competition law applies regardless of your size. Even a small business can breach the rules if it slots into a wider anti-competitive arrangement, or if it’s dominant in a narrow local or niche market.

Key Behaviours To Avoid Under UK Competition Law

Certain practices are considered “hardcore” restrictions and are almost always unlawful. Others can be lawful in some circumstances but carry risk without careful structuring. Here are the main areas to watch.

Cartels And Collusion

Cartels are agreements between competitors to fix prices, limit output, rig bids, or share customers or territories. These are serious infringements and can be criminal offences for individuals.

Red flags include:

• Discussing current or future prices, discounts or costs with competitors.
• Agreeing not to poach each other’s customers or to respect “territories”.
• Coordinating responses to tenders or agreeing who will submit a “cover bid”.

Even a casual chat at an industry event can cross the line if competitively sensitive information is exchanged. If a competitor tries to start such a discussion, walk away and record that you refused.

Resale Price Maintenance (RPM)

RPM is when a supplier forces or strongly pressures a reseller to stick to a minimum or fixed resale price. This is generally prohibited in the UK. You can recommend prices (an RRP), but you must not coerce compliance or punish discounting.

If you’re a supplier setting guidance for retailers, make sure any RRP is clearly non-binding, and avoid threats, penalties or incentives that effectively enforce a floor. Enforcing minimum resale prices can lead to significant fines and publicity orders.

Exclusivity, MFNs And Loyalty Rebates

Exclusivity clauses (where a distributor must only sell your brand), “most favoured nation” (MFN) clauses (promising you the best terms), and loyalty rebates can be lawful in some settings. However, they can restrict market access or foreclose rivals, especially if you have market power.

These clauses need careful drafting and assessment under the UK’s Vertical Agreements Block Exemption Order 2022 (VABEO). As your market share grows, conditions that were once low-risk can become problematic.

Information Sharing With Competitors

Swapping competitively sensitive information (prices, customer lists, detailed sales figures, capacity plans) with competitors can reduce uncertainty and dampen competition. Public, aggregated data is lower risk; current or future, company-specific data is high risk.

If you participate in trade bodies or benchmarking clubs, be cautious about agendas and outputs, and ensure any data is sufficiently aggregated and historic.

Abuse Of A Dominant Position

Dominance isn’t just about being huge nationwide; you can be dominant in a local area or narrow product niche. Abusive practices include unfair pricing, refusal to supply without objective justification, tying/bundling to squeeze rivals, and exclusionary loyalty schemes.

Below-cost strategies aimed at eliminating rivals are particularly risky. If your pricing strategy might be viewed as exclusionary, take advice before implementing - allegations of predatory pricing can be very costly to fight.

Everyday Scenarios Small Businesses Should Sanity-Check

Competition issues often arise in ordinary commercial decisions. Here are practical examples of where to pause and consider your compliance position.

Setting Prices For Your Retailers Or Franchisees

You can provide non-binding guidance, but don’t mandate minimum resale prices, and avoid sanctions for discounting. If you need brand consistency, consider non-price tools (like recommended merchandising standards) rather than price controls.

When appointing channel partners, use a tailored Distribution Agreement or Reseller Agreement that is drafted with VABEO in mind. Off-the-shelf templates often miss critical compliance details around territories, online sales and dual distribution.

Running Promotions And Online Advertising

Promotions that look harmless can trip other legal wires. Misleading offers or hidden terms are risky under consumer protection rules, which the CMA also enforces. Make sure your marketing avoids false advertising and that any claims are substantiated.

If you work with creators, disclose sponsored content and avoid undisclosed paid reviews - failure to do so can trigger CMA action and ASA sanctions, even for smaller brands.

Loyalty Schemes And Bundled Deals

Loyalty programs and bundles are popular and can be pro-competitive, but they still need clear, fair rules and transparency for consumers. Think about the structure, eligibility and clarity of your loyalty programs, and whether any exclusivity or rebates could be seen as locking out competitors if you have strong market power.

Industry Groups, Joint Ventures And Collaboration

Collaborating can reduce costs and open new markets, but build robust guardrails. Have an agenda, record minutes, and avoid competitively sensitive topics in meetings with competitors. Joint ventures should focus on genuine integration and efficiency, not coordination on downstream pricing or customers. If in doubt, restrict information flows and get advice on clean-team arrangements.

Working With Suppliers And Distributors: Getting The Structure Right

Vertical relationships (supplier–distributor–retailer) are common for small businesses. The UK’s VABEO provides a safe harbour for many vertical agreements if both parties’ market shares are below 30% and you avoid hardcore restrictions like RPM.

Territories, Customer Restrictions And Online Sales

It’s usually lawful to give an exclusive territory for active sales and to restrict active poaching into another distributor’s exclusive region. However, restricting passive sales (responding to unsolicited requests, most online sales) is far more limited. Clauses that block a distributor from selling online or using marketplaces can be problematic without strong justification.

Dual Distribution And Platform Sales

If you supply independent retailers and also sell direct-to-consumer, you’re in “dual distribution”. This is permitted under VABEO, but you still must avoid information exchanges that effectively coordinate pricing or strategy between the two channels.

Pricing Policies And RRPs

Be clear that any price guidance is a recommendation only, with no threats, sanctions or incentives tied to compliance. Document this in your contracts and internal policies. Where you issue an RRP, make sure your sales team understands they must not “police” retailer pricing.

How To Build A Simple Competition Law Compliance Program

A lightweight but effective compliance program can drastically reduce risk - and demonstrate a “culture of compliance” if the CMA ever asks questions. Here’s a practical framework for small businesses.

1) Map Your Risk Areas

Identify where you might interact with competitors (events, trade bodies, collaborations), set reseller pricing or incentives, or exchange sensitive information. List the teams involved (sales, marketing, procurement) and the contracts that touch these topics.

2) Put The Right Contracts In Place

Use tailored agreements for your routes to market, with clear, compliant clauses on pricing freedom, territories and online sales. In particular, consider a well-drafted Distribution Agreement or Reseller Agreement to set expectations and reduce ambiguity. Avoid DIY templates - vertical restraints need careful, fact-specific drafting.

3) Adopt Clear Do’s And Don’ts

Train your team on a short code of conduct:

• No discussions with competitors about prices, discounts, customers, output, margins or future plans.
• Leave and report if a competitor tries to talk about sensitive topics.
• RRPs are fine; minimum resale prices and “no discounting” rules are not.
• Be cautious with exclusivity, MFNs and loyalty rebates - escalate for legal review.
• Keep agendas/minutes for any industry meetings; stick to non-sensitive topics.

4) Set Guardrails For Marketing And Promotions

Have an approvals process for comparative claims, time-limited offers and influencer campaigns to avoid misleading practices and CMA/ASA scrutiny. This dovetails with your consumer law compliance - many CMA investigations today span both competition and consumer angles, especially online.

5) Establish An Issues Log And Escalation Path

Give staff a simple way to flag risks early (for example, a shared mailbox). Keep a short log of incidents (like walking away from a sensitive chat at a trade show) - contemporaneous notes can be useful evidence of good behaviour.

6) Refresh Training Annually

Short, role-specific refreshers help maintain awareness as your team changes. Sales, channel and marketing teams should get the most focused training; procurement also benefits where you deal with suppliers who are also competitors.

Investigations, Penalties And What To Do If The CMA Contacts You

Ignoring competition law can be extremely costly. Fines can be up to 10% of worldwide group turnover, agreements can be void, and directors can face disqualification for up to 15 years. Cartel conduct can bring criminal liability, including potential imprisonment for individuals involved.

If the CMA contacts you, or if you discover a potential issue, act quickly and calmly.

Preserve Documents And Pause Risky Conduct

Immediately stop the conduct of concern and issue a document hold to relevant staff. Do not destroy or conceal documents - this can make matters far worse and may itself be an offence.

Seek Legal Advice And Consider Leniency

Get legal support straight away. If you may have been involved in cartel activity, the CMA’s leniency program can offer immunity or reduced penalties to the first to report and cooperate. Time is critical here.

Responding To Information Requests Or Dawn Raids

Authorities can request information or carry out unannounced inspections. Have a short dawn raid protocol so staff know to verify identities, escort officers, contact legal counsel, and cooperate appropriately while preserving confidentiality and legal privilege.

Frequently Asked Questions About UK Competition Law

Are Recommended Retail Prices (RRPs) Allowed?

Yes, you can suggest an RRP, but it must be genuinely non-binding. Don’t threaten delisting, reduced supply, or other penalties if retailers discount. Any pattern of coercion around price can look like RPM, which is prohibited.

Can I Stop My Distributors Selling Online?

Broad online sales bans are high-risk. You can impose proportionate quality standards for online presentation, and you can restrict active targeting of an exclusive territory. But blocking passive online sales or marketplace sales needs careful justification and can be unlawful.

What If I’m A Small Business - Do These Rules Still Apply?

Absolutely. Size doesn’t excuse cartel conduct, and RPM is risky regardless of turnover. Market share can influence the analysis of vertical restraints or dominance, but small firms are regularly investigated where conduct is serious or part of a wider scheme.

Can I Agree With Competitors Not To Poach Customers?

No - non-solicitation arrangements between competitors in the market for the same products/services are typically anti-competitive. If you’re exploring a true collaboration or joint venture, get advice and ringfence sensitive information.

Practical Next Steps To Stay Compliant

Here’s a quick action list you can implement this month:

• Audit any contact with competitors and remove sensitive topics from agendas and chats.
• Review channel arrangements and pricing guidance; replace risky clauses and document that RRPs are optional.
• Put proper contracts in place for your routes to market, like a tailored Distribution Agreement or Reseller Agreement.
• Set a simple “do’s and don’ts” sheet and provide a 30-minute training for sales, marketing and channel teams.
• Introduce a pre-launch review for price promotions, comparative claims and influencer content to avoid false advertising issues.
• Sense-check loyalty or rebate structures so they reward growth without risking exclusionary effects; revisit if your market share increases.

Key Takeaways

• UK competition law (Competition Act 1998, Enterprise Act 2002, and the DMCC Act 2024) applies to businesses of all sizes - the CMA can and does investigate SMEs.
• Avoid “hardcore” infringements: cartels (price fixing, market sharing, bid rigging), unlawful information sharing, and minimum resale prices.
• Vertical agreements need careful design under VABEO - use clear, compliant terms on territories, online sales and pricing freedom in your Distribution Agreement or Reseller Agreement.
• Marketing and promotions should be transparent and evidence-based to avoid CMA/ASA scrutiny for false advertising and similar consumer law breaches.
• Put in place a simple compliance program: risk mapping, staff training, clear do’s and don’ts, and an escalation process. Document your RRPs as non-binding and keep minutes of industry meetings.
• If contacted by the CMA, stop the conduct, preserve documents and seek immediate legal advice. Consider leniency promptly where cartel risks exist.

If you’d like help reviewing your distribution strategy, pricing policies or competition law risks, you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no-obligations chat.