New guidance on competition law considerations in joint ventures

    16 April 2018 | Rianda Markram

    New guidance on competition law considerations in joint ventures

    The Competition and Markets Authority (CMA) published a new, short guide for businesses in relation to joint ventures and compliance with competition law. This publication, issued on 12 April 2018, is likely in response to the CMA's December 2017 decision to fine two suppliers of laundry services a total of £1.71 million for agreeing to share the market under the cover of a joint venture agreement. This was in breach of the Chapter I prohibition of the Competition Act 1998.

    The guide provides a list of "dos and don'ts" and is aimed at businesses that are already in, or are considering entering into, joint ventures or other forms of collaboration with another business. 

    The CMA states that businesses should: 

    • Define the true purpose of the collaboration; 

    • Be clear about the pro-competitive goals and its limits;  

    • Assess how the proposed innovation will directly benefit customers;

    • Be sure that this could not be achieved by the collaborating businesses acting alone;

    • Check whether the collaboration would reduce or get rid of existing competition between them;

    • Ensure that any reduction in competition brought about by the collaboration is no more than is absolutely necessary to achieve its goals;

    • Regularly check the joint venture arrangements to ensure they are compliant with the law.

    The CMA warns businesses that collaborative arrangements which try to mask what is otherwise price-fixing, market-sharing or bid-rigging will not escape detection and fines. 

    The guidance further clarifies that using an intellectual property licence as a framework for collaboration (or simply calling it a joint venture) will not provide protection. It also warns that any sales restrictions are likely to be seen as a market-sharing arrangement and could attract significant fines. 

    In conclusion, the CMA warns businesses not to share sensitive information that relates to business matters not covered by the joint venture.

    This feature was written in collaboration with the lawyers at Markel Law, who regularly comment on SME related matters. You can stay up to date with the latest legal changes on the Markel Law Blog, written in plain English, so that you understand the implications that is has for you as a small business owner.

    For media enquiries, please contact: Marketing via email