Starting a new business is undoubtedly an exciting time. Taking an idea and turning it in a living breathing entity is a magical, if exhausting experience. But even the most well thought out business ideas can be put at a disadvantage, or even worse be killed off, by unfair competition.
What does unfair competition look like?
Sometimes start-ups can be sabotaged when bigger, established businesses don’t like a new competitor’s cheaper prices, better products or innovative, more efficient business models. They try to find ways of blocking them from advertising cheaper prices. They stop their customers from using them. Or they use their revenues from other products to fund discounted prices and squeeze their fledgling competitor out of the market – before hiking their prices right back up again.
Sometimes, start-ups are stopped or slowed because the suppliers they use are colluding on prices or dividing up markets. This artificially drives up prices, making a new company pay more than they should for essential services – the last thing they need if they want their business to be a success.
Hindering competition like this is unfair, anti-competitive and illegal. Indeed, healthy competition is the very reason why new businesses launch in the first place. There are serious penalties for businesses and individuals who behave anti-competitively, including fines and prison sentences.
Before embarking on any new business venture, it's vital to know what anti-competitive behaviour looks like. On the one hand, this means that if you become a victim, you know to report it, and that it can be stopped. On the other hand, you need to be able to recognise price-fixing, market-sharing, bid-rigging and resale price maintenance to protect your own business from getting into trouble with competition law.
The good news is that the basic principles behind competition law are quite straightforward. The government have produced free, bite-size materials, including one-minute videos on how competition law protects start-ups. You can view the advice and guidance at https://www.gov.uk/government/collections/competing-fairly-in-business-advice-for-small-businesses