"The "If it's not broke, don't fix it" mindset quite simply won't work any more. Practices once considered acceptable might not pass muster now. Anti-competitive behaviour is a case in point. Inevitably, it is US cases that have hit the headlines over the last few years because of the size of the awards. For example, in 1999, Roche Holding and BASF were made to pay record fines of $725 million for conspiring to fix global vitamin prices. At the time, not surprisingly, Roche's share prices hit a five month low. In contrast, in the same year, when the UK Office of Fair Trading found Volvo guilty of supporting secret arrangements to fix British car prices, in what the OFTs director general described as a "disgraceful case", it was forced to accept a promise of good future behaviour. The law as it was then did not allow for more robust action.
European competition legislation, enforced by the UK Competition Act which came into force in March 2000, has changed the situation. A fine of up to 10% of turnover from the relevant activity for each of the previous three years is a powerful disincentive to abuse a dominant market position. And the OFT has begun flexing its muscles. Following announcement last year of a US lawsuit against five major music groups, alleging a CD price-fixing conspiracy, the OFT announced its own CD inquiry in February. This involves seven major record companies and should take six months. The OFT is also conducting a Competition Act enquiry into BSkyB's activities and, in particular, its supply of wholesale pay-TV. Anticompetition cases in the US can send the share prices of the companies involved tumbling. Will the higher potential penalties in the UK have the same effect?
In cases like these, the company practices complained about have often been in place for several years. That does not necessarily make them acceptable.