There's something under my bed...

19 January 2017

Three companies that supply drawer parts to bed and other furniture retailers have admitted breaching competition law by sharing commercially sensitive information, agreeing not to undercut each other and sharing out their customers. One of the companies avoided paying a fine under the CMA’s leniency policy, but the other two companies have agreed to pay fines totalling £2.8 million.

In March 2016, the UK Competition and Markets Authority (CMA) opened an investigation into the supply of products to the furniture industry. Shortly afterwards, one of the companies being investigated sang like a canary and assisted the CMA with its investigation.

The CMA has now announced settlement with the parties concerned. The fine payable will be a significant discount on what the CMA might have been able to levy; fines can be as high as 10% of group turnover. In the case of one of the businesses that have agreed to pay a fine, this meant an upper limit for the fine of over £13 million.

The CMA has not gone into detail on what the companies are alleged to have done. However, it appears to have been classic cartel behaviour, i.e. agreeing what to charge customers, agreeing not to poach customers from each other, and exchanging commercially sensitive information.

This case is part of a long line of cases where the UK’s CMA and other EU competition authorities have been cracking down on this type of behaviour. Businesses should bear in mind that it is unlawful to (among other things) do any of the following:

Fixing prices will be charged to customers
Rigging tendering processes
Market-sharing
Exchanging commercially sensitive information (especially pricing information)

Any businesses that have infringed competition law can be subject to significant fines and follow on damages actions. In this case, the CMA has specifically mentioned UK bed supplier, Silentnight, who will now be working out if they have been overcharged and whether they could be entitled to damages. This is far from the end of the story for the businesses involved.

If you have any questions about compliance with competition law, please get in touch.