UKHCA Guidance
UK competition law issues
July 2014
Prepared for UKHCA by:
Emma Young, Senior Associate, Anthony Collins Solicitors LLP
United Kingdom Homecare Association Ltd
Sutton Business Centre
Restmor Way
Wallington
SM6 7AH
Telephone: 020 8661 8188
E-mail: policy@ukhca.co.uk
Website: www.ukhca.co.uk
Twitter: @ukhca
Registered in England. No 3083104
Table of Contents
Guidance on UK competition law issues ............................................... 3
Introduction .................................................................................. 3
What arrangements to avoid ........................................................... 3
Abuse of a dominant position ....................................................... 3
Anti-competitive agreements ........................................................ 4
Practical Application ....................................................................... 5
Turning to some practical examples of dos and don’ts: .................... 5
Who polices the market? .............................................................. 6
Enforcement and Penalties ........................................................... 6
Local Authorities ......................................................................... 7
Disclaimer
Whilst every effort has been made to ensure the accuracy of this guidance, it is a
summary, rather than a definitive statement of the law; advice should be taken
before action is implemented or refrained from in specific cases. No responsibility
can be accepted for action taken or refrained from solely by reference to the
contents of this guidance.
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©United Kingdom Homecare Association Ltd, 2014
Guidance to UKHCA members on UK Competition law issues
Guidance on UK competition law issues
Introduction
Given the nature of the homecare market, it is understandable why
providers have found both comfort and strength in forming associations
and local provider forums. These groups have been found to effect
positive change (for example, by collectively improving quality standards).
However, members must be aware of UK competition law so as to ensure
that they are not unwittingly infringing it through their group activities.
The aim of this guidance is not to discourage providers from forming
associations with one another that can be of mutual benefit whilst
operating within the law - we are simply explaining what types of
agreement or behaviour are prohibited by UK legislation and which are
generally acceptable in practice.
What arrangements to avoid
Under EU and national competition law there are two basic prohibitions:
one stops parties entering into anticompetitive agreement (known as a
Chapter I prohibition, referring to the Competition Act 1998 and the
Enterprise Act 2002 which govern competition law in the UK); and the
other prevents abuses of a single or collective dominant position (known
as a Chapter II prohibition, likewise) which we will consider first.
Abuse of a dominant position
Examples of possible abuse of dominance include:

Imposing excessive or discriminatory terms on customers or
suppliers.

Offering below-cost prices with a view to excluding competitors
from the market.

Limiting production or technical development.

Making supplies of a product a customer needs dependent on the
purchase of a product or service that the customer does not want
(tying).
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Guidance to UKHCA members on UK Competition law issues
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UKHCA members are unlikely to fall foul of holding a dominant position
because the generally accepted threshold is where one party holds 40% of
the market or a group (acting together) of four or less providers hold an
80% share. We will therefore focus on anti-competitive agreements.
Anti-competitive agreements
The following activities may infringe the ban on anti-competitive
agreements:

Price-fixing, including the co-ordination of price ranges, discounts or
any other element of pricing.

Market partitioning, such as the allocation of customer groups or
territories between competitors, or bid rigging.

The exchange of competitively sensitive information, for instance,
on business plans, customer relations or ongoing or planned bids.

Joint negotiations, joint selling or (except after legal review) joint
buying, unless through an approved consortium.

Any other agreement restricting competition such as, for instance, a
collective boycott or joint action to exclude competitors or new
entrants.
To be prohibited by competition law, an agreement need not be written
down or binding. A verbal exchange or an informal arrangement can be
an infringement even if it is merely a “gentleman’s agreement”.
Examples of agreements between homecare providers that have the
potential to be anti-competitive include:

Criteria for membership of a local provider forum means that an
otherwise qualified homecare provider is precluded from becoming
a member because they operate on the “same patch” as an existing
member;

An association of providers which exchange commercially sensitive
information allowing each other to gauge the prices that are being
charged;

Codes of practice between members of an association that in
essence are an agreement not to compete with one another;
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©United Kingdom Homecare Association Ltd, 2014
Guidance to UKHCA members on UK Competition law issues

An agreement between providers, however informal, to assist one
provider in winning a tender;

Two or more homecare providers agreeing to limit the hours that
their services will be available with the aim of driving up prices.
Members who belong to a local forum or have formed an association with
other providers should be particularly careful that they refrain from
sharing commercially sensitive information with one another. These
agreements have the potential to blunt competition and, depending on the
nature of the information being shared, may constitute a cartel bearing
the risk to the provider of the most severe penalties being imposed by the
Competition and Markets Authority (see below).
Practical Application
Turning to some practical examples of dos and don’ts:
Don’t :

discuss pricing or other payment terms other than publicly available
information such as hourly rates contained in a tender;

collude around allocation of customers, contracts, sites, regional
areas and/or types of services;

share any company-specific business plans, marketing initiatives,
market share data or any other confidential information;

accept written non-public information or agree to the exchange of
oral non-public information with members who market competing
products;

engage in joint negotiations, joint sales or joint buying without legal
advice;

exclude competitors or engage in collective boycotts.
You can discuss the following:

pricing information in the public domain such as bands of hourly
rates being offered by commissioners, travel allowances or limits on
the length of visits;
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Guidance to UKHCA members on UK Competition law issues
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
regulatory changes and compliance;

government or European policy;

industry lobbying and promotion initiatives;

health and safety information;

industry employment and training issues;

research and development; and/or

other information about the market in general that is not
commercially sensitive or company specific.
Who polices the market?
The Competition and Markets Authority (CMA) came into being in
December 2013 and in April 2014 took on the roles formerly exercised by
the Office of Fair Trading (OFT) and the Competition Commission.
Enforcement and Penalties
The Competition and Markets Authority may conduct an investigation if it
has “reasonable grounds for suspecting” the infringement of one of the
prohibitions described in “What arrangements to avoid”, above.
A successful challenge, finding an infringement of one of the prohibitions,
could result in:

financial penalties of up to 10% of turnover (or members’ UK
turnover where a trade association has been found to be anticompetitive);

agreements involved being unenforceable;

civil action from those who have suffered damage as a consequence
of action;

reputational damage to undertakings and individuals;

director disqualification orders against infringing directors; and

criminal convictions against those involved in a cartel.
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©United Kingdom Homecare Association Ltd, 2014
Guidance to UKHCA members on UK Competition law issues
Local Authorities
There may be instances in which UKHCA members wish to challenge the
anti-competitive behaviour of others. In particular, there have been
instances in which UKHCA and its members have felt that local authorities
have abused their dominant market position with the effect of distorting
market competition. Such behaviour would be a breach of the Chapter II
prohibition if local authorities are considered an “undertaking” for the
purposes of competition law.
Unfortunately the position on this is ambiguous, with case law both in the
UK and in the EU seemingly contradicting one another on this issue. As a
result of these cases, the (former) OFT in the UK has set out its policy in
the context of public bodies. Its policy conclusions are that:

Public bodies will be an “undertaking” when they carry out an
“economic activity”.

An economic activity is the supplying of a good or service that is
commercial in nature.
Whether or not a local authority’s purchasing or provision of homecare
from external providers would constitute economic activity cannot yet be
definitively answered, however. It will not be economic activity where the
authority’s activity is done to discharge its statutory functions. It is also
unlikely to be an economic activity where it is purchasing the services only
(i.e. it does not itself directly offer those services in that or a related
market).
Despite the uncertainty, the OFT has used its guidance to stress that local
authorities should not consider themselves immune from competition law.
Whilst the chances of a successful challenge from a homecare provider
may be low, local authorities would be ill advised to assume that the Act
does not apply to them at all.
© Anthony Collins Solicitors LLP 2014
© United Kingdom Homecare Association Ltd, 2014
Guidance to UKHCA members on UK Competition law issues
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Anthony Collins Solicitors are UKHCA’s recommended solicitors and have provided
legal advice and services to member organisations for more than 10 years. They
operate a legal helpline for UKHCA members giving a limited amount of free
telephone advice and can supply estimates for more detailed advice. For more,
call the UKHCA member helpline on 020 8661 8188.
If you have particular needs which make
it difficult for you to read this document,
please contact 020 8661 8188 or
accessibility@ukhca.co.uk and we will
try to find a more suitable format for
you.

UKHCA, Sutton Business Centre, Restmor Way, Wallington, SM6 7AH
020 8661 8188 | enquiries@ukhca.co.uk | www.ukhca.co.uk
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©United Kingdom Homecare Association Ltd, 2014
Guidance to UKHCA members on UK Competition law issues