Competition Act - Chapter II prohibition

Competition Act - Chapter II prohibition

Contents

The Chapter II prohibition bans conduct that amounts to abuse of a dominant position in the relevant market and affects trade within the UK.

Generally, a company is unlikely to be considered dominant if it has a market share of less than 40%. However, other factors will also be relevant when assessing dominance. The Act gives specific examples of types of conduct that are likely to be considered an abuse. These include:

  • Charging excessive prices
  • Forcing buyers of one product to buy another product from you by 'tying' the products
  • Charging prices that are artificially low to prevent competitors from being able to enter or continue in the market
  • Refusing to supply products to another business, preventing that business from competing in another market.

A business found breaching the Chapter II prohibition can be fined up to 10% of worldwide turnover. They can be investigated by the Competition and Markets Authority (CMA) and ordered to stop their illegal behaviour. There are no exemptions from a breach of the Chapter II prohibition. However, there is limited immunity for conduct of minor significance. The CMA won't fine an undertaking with a turnover of less than £50 million per year.

Article 102

Article 102 of the Treaty of the Functioning of the EU (TFEU) is similar to the Chapter II prohibition, but applies in an EU context. It bans an abuse of a dominant market position affecting trade between member states of the EU. The same examples of conduct considered abusive for Chapter II apply equally to Article 102. The same consequences apply to a breach of Article 102 as to the Chapter II prohibition, except that there's no limited immunity for conduct of minor significance for a breach of Article 102.