Stand by - the most radical overhaul of UK Competition Law since the introduction of the Restrictive Trades Practices Act 1956 will be brought in on March 1, 2000.

The Competition Act 1998 harmonises UK National Competition Law with European Union Competition Law. This legislation is of significant importance to all UK businesses no matter what their size.

If two or more UK businesses enter into anti-competitive agreements or arrangements or create relationships which take unfair advantage of their dominance in a particular product or service market, then those agreements may be caught by this new legislation.

The Act also has an influence on agreements entered into before this new Act comes into force. Therefore, it is essential for businesses to subject their current agreements to a Competition Act audit before the Act is implemented.

Penalties for entering into a non-approved anti-competitive arrangement mirror those of EC Competitive Law. Fines can be imposed of up to ten per cent of the gross annual turnover of all participating parties. In any one's book this is severe.

Classic anti-competitive behaviour or abuse includes price fixing, prevention of parallel imports, exclusivity, collusive tendering, indirect price effects, limiting or controlling production, sharing markets and sources of supply, limiting production levels, quotas, limiting and controlling investments, cartels of purchasers blacklisting suppliers, dissimilar conditions applying to equivalent transactions, ties, concerted practices, and restrictive information agreements.

The key principle behind the Competition Act 1998 and its EU parent legislation is that the consumer is paramount. If a particular measure has a detrimental effect on the end consumer, it is likely to be deemed anti-competitive.

However, balances have been built into the legislation to protect businesses where reasonable. Certain arrangements, even if anti-competitive, may have little effect on competition because of the size of the participants and their turnover for a given product or service market.

There are also some exemptions for certain types of anti-competitive arrangements. If an arrangement falls within the terms of these then no action will be taken against the participants.

A notification process enables participants to make a case for the need to include anti-competitive provisions. If the case is good then such arrangements can obtain clearance, free from further scrutiny.

So the message is - understand the new Act, appreciate its effects on existing and new agreements, take up the challenge of either obtaining clearance or amending the arrangements to bring them into line and consistently review agreements in the light of the size of the business and its market share.

Leaving it to chance is dangerous. Only one disgruntled supplier, customer, competitor or employee needs to report an anti-competitive arrangement to initiate an investigation.

Converted for the new archive on 30 June 2000. Some images and formatting may have been lost in the conversion.