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Consultation on proposed revisions to the OFT's Competition Act 1998 penalties guidance

Start date: 26 October 2011
End date: 26 January 2012

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Summary

The Office of Fair Trading (OFT) has reviewed its current published guidance on the way it sets financial penalties for anti-competitive activities and is seeking views on a number of proposed changes to the guidance.

The OFT may impose financial penalties on undertakings that infringe the prohibitions against anti-competitive agreements and abuse of a dominant position contained in the Competition Act 1998 and in the equivalent European Union competition provisions in Articles 101 and 102 of the Treaty on the Functioning of the European Union. The OFT is obliged to publish guidance as to the appropriate amount of any such penalty (the current guidance is contained in OFT423, OFT's guidance as to the appropriate amount of a penalty, published in December 2004) and to consult on proposed alterations to the guidance. The Secretary of State for Business, Innovation and Skills must approve the OFT's revised guidance before it is published.

The key changes that the OFT is proposing to make to the guidance are designed to ensure that the OFT can set substantial fines that deter companies from engaging in anti-competitive activity, but which are also fair and proportionate, reflecting the individual circumstances of each company. These include:

  • Proposals to clarify certain aspects of the way the OFT sets the starting point for penalties. 
  • A proposal to increase the maximum starting point for penalties to 30 per cent of relevant turnover to provide greater scope to reflect the gravity of competition infringements faced in practice. Such a move would also bring the OFT in line with the approach of the European Commission and several other competition authorities and would take account of a suggestion by the CAT in a recent judgment.
  • Clarifications and additions to aggravating and mitigating factors, including clarification of the OFT's policy on the circumstances in which a party's competition law compliance activities may be treated as a mitigating factor.
  • A clearer proportionality assessment, to ensure that, in a given case, the result of the higher maximum starting point does not lead to disproportionate or excessive fines (the overall statutory cap of 10 per cent of a company's global turnover remains unchanged).

The OFT will consider responses to this consultation and, in light of that, submit revised guidance to the Secretary of State for approval.

Leniency guidance consultation

The OFT is also consulting, in parallel, on a revision to its leniency guidance.

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Relevant documents

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How to respond

If you wish to provide views and/or to suggest additional questions, please send responses by post to:

Marc Braithwaite or Carlos Martínez Rico
Office of Fair Trading
Fleetbank House
2-6 Salisbury Square
London
EC4Y 8JX

Or by email to penalties.review@oft.gsi.gov.uk or marc.braithwaite@oft.gsi.gov.uk or carlos.martinez@oft.gsi.gov.uk 

Please submit responses by 26 January 2012.

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Contacts

Team Leader: Marc Braithwaite (020 7211 8732, marc.braithwaite@oft.gsi.gov.uk)
Project Director: Jackie Holland (020 7211 8447) jackie.holland@oft.gsi.gov.uk
 Senior Responsible Officer: Amelia Fletcher (020 7211 8546) amelia.fletcher@oft.gsi.gov.uk

Media enquiries

Any media enquiries should be directed to a member of our Press Office.




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