It is a delicate balance between healthy competition and anti-competitive behaviour. Even the slightest tilt towards the latter can result in significant reputational damage and financial penalties for your company.
If you're interested in earlier penalties, see Competition Law Fines 2020, Highest Competition Fines of 2021 and the biggest Competition Law Fines of 2022.
Biggest competition law fines in 2023
- Illumina - $400m - Anti-competitive practices
- Apple & Amazon - €194m - Collusion
- British American Tobacco - $110m - Market dominance abuse
- Construction firms - £59.3m - Collusion
- Copart - £2.5m - Failure to comply
- Leicester City FC - £880k - Anti-competitive agreement
- Interactive Brokers - $538k - Failure to identify suspicious trades
- Asda - £60k - Failure to cooperate with fuel pricing probe
Anti-competitive behaviour has been at the root of the penalties dished out this year. Global regulatory bodies, including the Competition & Markets Authority (CMA), have not held back when issuing fines with a record-breaking fine in the biotechnology sector.
Biggest competition law fines of 2023 in detail
1. Illumina - $476m fine
A coalition of global regulatory bodies has issued a record-breaking fine to the leading provider of DNA sequencing technology, Illumina, for breaching fair trade regulations. Illumina's anti-competitive behaviour hindered innovation and had a negative impact on fair market competition.
The company used different tactics to maintain its dominant position, which included exclusive contracts with suppliers and strategically acquiring potential rivals. Furthermore, it was found that Illumina engaged in pricing schemes that both limited consumer choice and disadvantaged smaller companies in the market.
2. Apple & Amazon - €194m fine
Spain's Markets and Competition Commission (CNMC) has fined both Apple and Amazon for engaging in anti-competitive practices. The fine was broken down into €143.6m for Apple and €50.5m for Amazon.
The CNMC found that the 2018 agreement between the companies contained anti-competitive clauses that disadvantaged competition for electronic products in the Spanish online market.
Upon investigation, the Spanish watchdog found that the tech giants were colluding to exclude competitors by favouring Apple products from Amazon. Essentially, the agreement between Apple and Amazon restricted Amazon's ability to direct advertising towards Apple product customers or offer them products from competing electronic makers.
3. British American Tobacco - $110m fine
The Nigerian Competition Commission has mandated British American Tobacco (BAT) to pay a $110 million fine for alleged abuse of market dominance and violation of public health regulations.
The Federal Competition & Consumer Protection Commission (FCCPC) accused BAT, known for Lucky Strike and Dunhill cigarettes, of penalising retailers for providing equal platforms to competitors.
The FCCPC initiated an investigation in 2020, obtained a court order to search multiple BAT sites, and found evidence of multiple competition law violations. BAT will be monitored for 24 months to ensure compliance with competition laws and tobacco control efforts.
4. Construction firms - £59.3m fine
The Competition and Markets Authority (CMA) has fined 10 construction companies in the UK nearly £60m in total for colluding on prices through illegal cartel agreements and rigging bids relating to 19 contracts worth £150m. Each of the firms fined was involved in at least one of the bids that were rigged.
In addition to the fines issued, the CMA has also ensured the disqualification of four company directors who were involved in illegal cartel behaviour. The bids were rigged by way of the construction companies agreeing to submit bids that were deliberately priced to lose their tender.
'Cover bidding' leads to customers paying higher prices or being on the receiving end of lower-quality services. Upon investigation, the CMA also uncovered that at least five of the firms, on at least one occasion, were involved in agreements where the designated 'losers' in the contracts were compensated by the 'winner'.
This illegal collusion took place over a five-year period, affecting private and public sector contracts for demolition work in London. Some of the contracts impacted include the development of the Metropolitan Police training centre in Hendon, Selfridges (London), and properties belonging to Oxford and Coventry Universities.
5. Copart - £2.5m - Failure to comply
The CMA has imposed a £2.5 million fine on Copart, a supplier of vehicle salvage services, for violating an initial enforcement order (IEO) during the CMA's investigation into Copart's acquisition of Hills Motors.
The IEO mandated the businesses to operate separately until the investigation's conclusion, which determined in July that the merger did not raise competition concerns.
However, Copart breached the IEO by submitting joint proposals with Hills Motors elements to three insurers for salvage services, continuing negotiations during the specified period. The violations led to the imposed fine.
6. Leicester City FC - £880k fine
Leicester City FC has been fined £880k for colluding with JD Sports, which limited competition in the sale of club-branded clothing in the UK, including replica kit, for three football seasons. The club and its parent companies have agreed to pay the watchdog's maximum fine amount while JD Sports avoids a fine after reporting the illegal activity.
"The fine that Leicester City FC and its parent companies have agreed to pay sends a clear message to them and other businesses that anti-competitive collusion will not be tolerated."
7. Interactive Brokers - $538k fine
Interactive Brokers paid AUD$ 832k ($538k) for failing to identify suspicious trades by one of its clients.
According to the Australian Securities Investments Commission (ASIC), the regulatory body in Australia, Interactive Brokers allegedly enabled a trader to place orders without the intention of carrying them out, a practice referred to as spoofing. Surprisingly, even after the watchdog expressed concerns, Interactive Brokers allowed further suspicious activity to take place.
The disciplinary panel accused Interactive Brokers of allowing their client to manipulate the closing price of OCC shares, sending false signals to trick competitors and move the market. Despite warnings and 44 ‘marking the close’ alerts on its surveillance systems, the firm failed to intervene.
Market participants play an important gatekeeper role in detecting and preventing suspicious trading. They must have effective controls and adequate resources to identify and disrupt potential market misconduct efficiently, and they need to respond quickly to concerns.
8. Asda - £60k fine
The CMA has issued a fine totalling £60k to Asda for failure to comply with its fuel inquiry. This fine consists of two £30k fines for failing to respond to a written request for compulsory information and sending a representative to the CMA who was not equipped to provide evidence on certain topics.
This follows the watchdog's investigation into lower fuel prices for UK consumers. The CMA named both Asda and Morrisons as fuel providers that targeted higher margins on fuel sales during 2022.
Upon investigation, the CMA found that Asda's fuel margin in 2023 was more than three times more than what it was in 2019.
"Drivers buying fuel at supermarkets in 2022 have paid around 6 pence per litre more than they would have done otherwise due to the four major supermarkets increasing their margins. This will have had a greater impact on vulnerable people, particularly those in areas with less choice of fuel stations. We need to reignite competition among fuel retailers."
What can we learn from these fines?
- Refrain from acting to restrict competition in markets where you enjoy a dominant position, such as refusing to supply or limiting the supply of a product.
- Any company subject to an investigation must be fully aware of its obligations and diligent in carrying them out.
- Never discuss or enter into agreements with competitors regarding prices, margins, market shares or production volumes.
- Don't exchange commercially sensitive information with another company without CMA consent, even if the intention is to merge with that company.
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