Anyone who runs a business providing goods or services in Jersey must comply with the Competition Law, which aims to promote competition in Jersey.
Competitive markets help to keep prices down and ensure that the quality of goods and services remain high. Competition also helps to ensure that consumers have a range of choices, and firms have the incentive to innovate, invest and operate efficiently. Anti-competitive behaviour can jeopardise this, as well as a company’s ability to win new customers.
It is important that businesses are aware of what they can and cannot do when talking to their competitors. The Competition Law prohibits anti-competitive arrangements between firms, such as agreements to fix prices, allocate markets or restrict output.
It is also important for those purchasing goods and services to be aware of the rules around anti-competitive conduct so they can help detect illegal behaviour, such as bid-rigging. This type of anti-competitive conduct prevents open and effective competition and means those purchasing goods or services are unlikely to achieve best value for money for their business, customers and in some cases, taxpayers.
We can take enforcement action against businesses which breach the Competition Law and significant penalties can be imposed.
Businesses should seek independent legal advice to ensure they are not at risk of breaching the Competition Law.
The Authority’s role in dealing with anti-competitive behaviour
One of our key aims is to protect and promote competition in Jersey. To achieve this, it is important people and businesses understand our role and the ways in which we exercise our powers and functions.
Investigations into anti-competitive conduct under the Competition Law can be complex and time-consuming. The key factors which must be determined will be whether any anti-competitive conduct has occurred and also the extent of its impact or potential impact on a market. There may be far reaching consequences in distorting markets and disadvantaging consumers through higher prices or reduced quality.
To help businesses and consumers better understand investigation process, we have issued Guidelines:
- Read our Investigations guidelines
- Read our Leniency guidelines
- Read our Financial penalties guidelines
What is a competitor?
Competitors are other businesses who can offer the same or similar goods and services to your customers.
Your competitors are not just those you are currently competing with. They also include any potential competitors who may choose to compete in your market in the future. This could involve a competitor from a different geographic location expanding into your area or a competitor deciding to expand its offering to target a different part of the market.
If you are in doubt about whether you are in competition with other businesses and you are considering making an agreement with them that could affect your fees or prices, you should seek legal advice.
What is a Cartel?
A cartel is where two or more businesses agree not to compete with each other. This conduct can take many forms, including price fixing, sharing markets, rigging bids or by restricting output of goods and services.
Cartel conduct can result in higher prices and a reduction of choice and quality for consumers. Businesses can face large fines if they have been part of a cartel or attempted to be part of a cartel.
Read our guideline on Cartels
Read our Leniency policy guidelines
Arrangements that substantially lessen competition
Agreements between businesses are a normal and important part of how markets work. But some agreements harm competition, resulting in higher prices, fewer choices and lower quality of goods and services for consumers.
Arrangements that substantially lessen competition are illegal under Article 8 of the Competition Law. These arrangements could be in the form of a written contract or an informal understanding. Whether an agreement is deliberately anti-competitive or not, if it has the purpose, effect, or likely effect of substantially lessening competition in a market is illegal. Even if the agreement is not put into practice, the act of reaching (or attempting to reach) an anti-competitive agreement is also illegal.
The Authority can authorise an anti-competitive arrangement where it is satisfied that the benefits to consumers outweigh the competitive harm of the arrangement. An exemption may be granted where the Authority is satisfied that it:
- Is likely to improve the production or distribution of goods or services, or to promote technical or economic progress in the production or distribution of goods or services
- Will allow consumers of those goods or services a fair share of any benefit resulting from the agreement or arrangement
- Does not impose on the businesses concerned terms that are not indispensable to attainment of the objectives mentioned in the points above; and
- Does not afford the businesses concerned the ability to eliminate competition in respect of a substantial part of the goods or services in question
Further information on making an application for an Individual Exemption can be found here.
The competition law in Jersey allows the Minister to exempt classes of arrangements from this area of the law. At this time, no such ‘block exemptions’ are in place in Jersey. However this is the subject of on-going discussion, with a recommendation due to be made to the Minister later in 2022.
Taking Advantage of Market Power
Some businesses have a dominant position in a market. This in itself is not illegal, however, under the Competition Law it is illegal to abuse that dominant position in a market.
A dominant business can take advantage of its market power to drive a competitor out of business or to prevent new competitors from starting up. This can reduce or eliminate competition from a market, harming consumers and the wider economy by increasing prices, and reducing choice and quality.
There are various types of behaviour that are illegal under Article 16 of the Competition Law. It is often difficult to distinguish anti-competitive behaviour from aggressive, but legal competitive behaviour that benefits consumers. For example, cutting prices to win customers is usually a sign of competition, but in some circumstances can harm it.
Likewise, aggressive rivalry by large businesses may not be illegal as large businesses also have a right to compete. However, they are not allowed to take advantage of their market power to prevent others from competing effectively.
What is a dominant position?
A business is dominant when its actions are not constrained by competition. For example, a dominant business can profitably hold prices above competitive levels for a sustained period of time. Such a price rise will only be profitable in the business does not face effective competition from rivals or entrants in the same market.
When assessing whether a business is dominant, the Authority will consider existing and potential competition, as well as other factors such as how much power buyers have.
What does abusing a dominant position mean?
To decide if a business is taking advantage of its market power, the Authority will ask whether the business would have behaved in the same way if it did not have a dominant position.
Examples of abuse of dominant position
Abuse of a dominant position may, in particular, consist of:
- Directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions
- Limiting production, market or technical development to the prejudice of consumers
- Applying dissimilar conditions in equivalent transactions with other trading parties and thereby placing them at a competitive advantage
- Making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations that by their nature or according to commercial usage have no connection with the subject of the contracts.
- A failure or refusal to do something
This does not protect businesses from facing vigorous or even aggressive competition.