The Office of Fair Trading (OFT), the body which regulates how UK businesses compete with one another, has announced that companies which flout UK competition law could face penalties of up to 30% of their turnover, reports The Financial Times.
The OFT has announced that it will now calculate penalties based on a company's turnover for the most recent year during which competition laws were breached, and that these will be as much as three times higher than previous maximums.
Companies involved in the most serious breaches, including leading a cartel or when there is evidence of senior management involvement, will face fines at the upper end of the possible range.
Jackie Holland is a senior director at the OFT.
"We now have a wider range of starting points for penalties, in order to reflect better the seriousness of different types of infringements and deter anti-competitive activities, while ensuring that penalties are fair and proportionate," she told The Financial Times.
Although the penalties are significantly higher, they still cannot exceed 10% of a group of companies' global turnover.
Companies can enjoy reduced penalties if they can demonstrate that they cooperated with any investigation and took steps to stop anti-competitive behavior once a breach in the law is identified.
Lawyers have welcomed the release of guidance from the OFT, saying that the new rules should give legal clarity.
Chris Hutton is a competition lawyer at Hogan Lovells.
"Guidance on the OFT's approach to early resolution and settlements is overdue, and the lack of guidance should be addressed at the earliest opportunity," he told The Financial Times.
The OFT has had a difficult year, after a record fine against Imperial Tobacco was overturned on appeal. The performance of the regulator was also recently downgraded by the Global Competition Review from 'elite' to 'very good'.
OFT triples penalties for breach of law (The Financial Times - free signup)