CMA investigation highlights breaching risks in catering sector

By Melodie Michel contact

- Last updated on GMT

It could be easier than expected to breach competition rules in the catering sector
It could be easier than expected to breach competition rules in the catering sector

Related tags: Competition

The Competition and Markets Authority (CMA) has launched an investigation into competition practices in the commercial catering sector.

The case is only at an early stage and the CMA has not yet released details of the suspected infringement or which companies are involved in it, but a preliminary investigation has been launched and the decision to issue a statement of objections will be made by December 2014.

Risky business

According to Catriona Munro, a partner and member of Maclay Murray & Spens LLP's food and drink group, it is easier than expected to breach competition laws in the catering industry.

“When catering companies bid for jobs of considerable sizes under a tender process what seems like a friendly chat can in fact be seriously illegal if it relates to the price at or other terms upon which the parties will bid.

“Even if they don’t agree on it, discussing pricing in any way or the other terms on which they will bid, which might include the quality of the service or staffing levels, would be anti-competitive,” she said.

She added that in an industry where staff move around from company to company, it is common for them to keep in touch with people at their previous employer’s, potentially leading them to inadvertently disclose information.

“It’s really important to understand that it doesn’t need to be a two-way exchange of information, it’s sufficient if one party discloses information to another for the rules to be breached.”

Anti-competitive agreement

The current case appears to have been brought under civil provisions, therefore targeting companies, not individuals.

“An anti-competitive agreement can cover a whole range of things, including at the most serious end, cartel agreements where parties are accused of price fixing or market sharing, and at the other end of the spectrum, information sharing about pricing or any market-sensitive information between competitors, which companies often don’t appreciate is illegal and regarded as serious conduct,” Munro explained.

According to her, if the CMA decides to go ahead with a formal investigation in December, it will cause companies involved to inspect their practices and put a competition compliance programme into place, forcing them to look into other areas of the business that might not yet be under scrutiny.

“It’s always possible that the investigation could widen out from the initial focus to a wider investigation, and it could certainly cause repercussions for the whole industry; not just for the companies that are initially under scrutiny,” she said.

Related topics: Legislation

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