Competition Compliance
The NBF is committed to free, fair and open competition and our policy is to comply fully with all aspects of UK competition law as well as, where applicable, EU and Irish competition law.
Breach of these laws can have severe consequences for the Federation, its members and the individuals who represent them. These include significant fines, damaging publicity, disqualification of company directors and even, in the case of involvement in cartel activity, criminal penalties, including imprisonment.
All NBF members and their representatives are required to comply with this policy, and with competition law, whenever they meet in connection with NBF business. Failure to do so may result in membership being withdrawn. The guidelines that accompany this policy statement provide practical guidance on avoiding the pitfalls. Should you have any queries or concerns about dealing with a particular situation, or need to report a possible past or ongoing breach of the law, please contact Tristine Hargreaves, either in person or by telephone on 01756 799950.
The NBF is proud to be the recognised trade association representing UK manufacturers of beds and mattresses, and their suppliers. As such, we strive to maintain the highest standards and to take a positive and proactive stance towards any issue affecting our industry. A key part of this is full compliance with relevant legislation. This includes competition law, which is very important as our work, by its nature, brings competitors together. Competition law can potentially apply to almost any of our activities. It can cover informal and/or purely social discussions between members, as well as the formal business of the Federation.
This means the NBF and all members need to work together to build a culture of compliance with competition law. The guidelines that accompany this policy statement are designed to help with this. These should be used as a guide when acting under the umbrella of the NBF, including when members meet on an informal or social footing before, during or after Federation meetings. This will help to ensure we operate, and are seen to operate, pro-competitively and in accordance with the law.
National Bed Federation (NBF) – Competition Law Compliance Guidelines
Introduction
The NBF Competition Law Compliance Policy states that members must comply fully with competition law, when meeting in connection with Federation business. These guidelines accompany the policy and set out some general “Dos and Don’ts” which should help both the NBF, and our members, avoid the serious consequences of falling foul of competition law.
Overview of UK Competition Law
The Competition Act 1998 (“the Competition Act”) prohibits commercial agreements that restrict competition and affect trade in the UK (or a part of it), to an “appreciable” extent. Agreements can be “saved” from this prohibition if they benefit from a “block” exemption (an exemption which covers a certain category of agreements), or meet certain criteria against which individual agreements can be assessed.
Agreements or understandings that amount to serious breaches of the law (such as price-fixing) can always be viewed as “appreciable” and are unlikely to be capable of being “saved”. Furthermore, the Enterprise Act 2002 makes it a criminal offence to engage in certain forms of anti-competitive cartel, where this is done “dishonestly”.
The Competition Act also prohibits abuse of a dominant position in the market. As this is not a real concern for the NBF, these guidelines focus on the ban on restrictive agreements.
To be caught by the Competition Act, an “agreement” does not have to be in writing and can even be implied from conduct. This means that sharing commercial information directly with competitors can create an anticompetitive agreement and is generally unacceptable. It also means that it is possible to breach the law simply through a casual conversation, and subsequent conduct – not just written agreements are caught.
Practical Dos and Don’ts
Contact with competitors is inherently risky from a competition law point of view. Set out below are some dos and don’ts relating to key areas of concern for the NBF.
DON’T:
- Enter into any agreement or understanding with a competitor about the prices you will charge, the discounts/rebates you offer, or the timing of any price increase announcements.
- Discuss retailers’ pricing with your competitor, except in very general “state of the industry” terms. Above all, do not discuss any strategy or proposed action designed to slow or stop a decline in retail prices.
- Agree not to compete for certain customer accounts or contracts.
- Agree not to enter, or to withdraw from, certain industry sectors or geographic markets; or to stick to your “home” market.
- Agree to “take turns” with competitors in relation to customers or contracts.
- Discuss any commercially sensitive information (e.g. relating to pricing, timing for price increases, strategy) with a competitor, even where such information could easily be obtained from a customer or is, or will shortly become, public knowledge.
- Form any agreement or understanding with a competitor about the terms you will offer to customers, the customers you will or will not sell to, or the types of products you will/will not supply.
DO
- Be wary of contact with fellow NBF members, who are your competitors, in informal situations e.g. at The Bed Show or in the bar after a Forum meeting: competition law still applies!
- Remember that, while some NBF members are your suppliers or customers, they are each others’ competitors and this may affect the round-table discussions it is possible to have, bearing competition law issues in mind.
- You can discuss the economic climate or state of the industry, in general terms, provided you do not share sensitive commercial information on your own strategy to meet challenges facing the industry.
- Participate in legitimate NBF business such as discussing proposed new industry standards or lobbying activity, provided you do not share sensitive commercial information beyond what the Board has confirmed is necessary and compliant from a competition law perspective.
- Submit data for “state of trade” surveys: these are produced in a way that is competition-compliant.
- Remember that acting under the NBF umbrella does not “legitimise” behaviour or discussions that raise serious competition concerns, such as discussions with competitors about your pricing.
- Ask customers what prices they are paying to your competitors, where you are trying to win their business, or accept information, such as competitor price lists, where this is volunteered by customers or obtained as a “mystery shopper”, for the purposes of helping you compete. This is competition working well, and is okay.
- You can, within limits, answer questions about the creditworthiness or payment history of a customer. Answers should be restricted to basic statements of fact e.g. “Customer A generally pays on time”, “We consider Customer B to be a poor credit risk”. Do not, however, give any indication of the terms you offer the customer, or of your likely future strategy regarding the customer, e.g. “If I were you, I would not supply Customer X”, “We only offer them credit of £N”. Be wary of reaching an agreement with a competitor about whether it is sensible to supply or not supply any customer – that is for them to decide.
- Competition law is complex and no list of dos and don’ts can be exhaustive. If you are in any doubt about how to deal with a particular situation, please contact Tristine Hargreaves.
Further Reading
Regulations & Standards
Guidance for all the relevant regulations and standards you might need to consider.
Sales Incentive Guide
The NBF encourages ethical behaviour to protect the public’s trust and confidence in our members and their products.