Business Law: It’s not only sportsmen who have to play by the rules, warns Dermott Thomas
THE UK has basked in the radiance of a glorious sporting summer following the feats of our athletes and cyclists. Across the water the anti-sporting behaviour of a long time hero Lance Armstrong has cast a shadow.
As in sport, the world of commerce expects certain standards of competitive behaviour and these standards are enshrined in English common law, supplemented by UK and Europe-wide legislation. The basic tenet is that businesses should play fair according to the whims of the market.
A particular area of concern is businesses at the same level of the supply chain getting together in a “cartel” to influence the price of a particular commodity or price fixing.
This is effectively what British Gas and the other gas utilities have been accused of in the last week. The means by which it is alleged it has been done is the rigging of the commodity market by a large number of trades at a particular price at convenient times.
Some unsporting behaviour is indeed less sophisticated.
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In or about 2004 a local school bus operator 2Travel launched a cheap no frills bus service in the Cardiff area to make use of its stock of buses between the school runs. Savings were achieved by not using the local bus stations and avoiding the hefty access fees. The civic owned Cardiff Bus which were already in a dominant position in the Cardiff area launched a White Service in competition which also avoided the bus stations and virtually followed the 2Travel bus routes at similar times eventually forcing 2Travel into liquidation.
Interestingly, in the subsequent legal case brought by the liquidators of 2Travel against Cardiff Bus following findings of foul play by the Office of Fair Trading, a claim for some �20million made as representing the liquidator’s assessment of the real loss to 2Travel, only �93,000 was awarded. It was not clear the business was on a sound footing in the first place.
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Nevertheless the case did make legal history as including exemplary damages as part of the award on the basis that Cardiff Buses’ conduct had been outrageous. Ownership of Cardiff Bus by the council meant the taxpayer would foot the bill.
Where anti-competitive behaviour is found the regulators can and do impose huge penalties although these can be mitigated or avoided by a wrongdoer whistleblowing under leniency procedures.
In 2010 therefore RBS was fined �29million for liaising with Barclays over future pricing of specific loans whereas Barclays escaped a penalty because they informed the regulator of their collusion.
Although making a clean breast of the wrongdoing may have saved Barclays the penalty, admissions made to the regulator will make interesting reading for injured parties considering subsequent damages claims.
: : Dermott Thomas is a partner at law firm Barker Gotelee.