Office of Fair Trading vows to get tough

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OFT to take a tougher stance

A new guidance from the Office of Fair Trading (OFT) is set to triple the amount that businesses can be fined for stepping beyond permitted competition boundaries.

The OFT says that the new law, which has to be ratified by the secretary of state, is coming about due to its experience of applying penalties and recent judgements of the Competition Appeal Tribunal and the Court of Appeal.

If the guidance is approved, the maximum starting point for penalty calculations will increase to 30 per cent of relevant turnover, up from 10 per cent as it now stands.

According to the OFT, the change means it will now have the ability to set penalties which ‘better reflect the gravity of different types of infringements’, in particular those involving ‘hardcore’ cartel activity and ‘serious abuses’ of a dominant position.

The OFT guidance reportedly brings it in to line with the approach of the European Commission and many of the other European competition authorities.

When looking at the calculation of penalties, the OFT will now consider specifically whether a penalty is proportionate. Under current guidelines, proportionality is considered when applying the other stages of the calculation, but the new approach means that penalties will not be disproportionate or excessive.

Jackie Holland, senior director of OFT’s Policy Group, commented, ‘We now have a wider range of starting points for penalties, in order to reflect better the seriousness of different types of infringements and deter anti-competitive activities, while ensuring that penalties are fair and proportionate”

“The changes reflect our experience in applying the guidance in a series of cases, as well as recent court judgements. They also incorporate international best practice. We hope that they will give businesses and their advisors even greater clarity and transparency about our approach to setting penalties.”

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