Competition law may ensnare UK IT firms

The UK Competition Act will set out stringent regulations on anti-competitive behaviour that could lead to IT companies which break them being fined ten per cent of their revenues.

When the regulations come into force on 1 March, UK firms will be prevented from making anti-competitive agreements and abusing a dominant market position. The law is similar in scope to anti-trust laws in the US.

In a video interview with Silicon.com, Tim Frazer, partner at law firm, Arnold & Porter, said UK IT firms need to look very carefully at their business practices to ensure they aren't breaching the new regulations.

"They firstly need to look at the kind of agreements they already have to see if they are in breach of the new prohibitions... these are things firms need to do now - and 'now' is the watchword," he said.

At present, companies in breach of UK competition laws can only be fined if they are found in contempt of court after a Competition Commission investigation. But, with the new Act, large fines can be imposed and the Office of Fair Trading will have wide-ranging powers to investigate companies - including the right to enter premises and seize documents.

The legislation also means that industry regulators, such as Oftel, will have their powers reinforced. Frazer said the "blast of competition law will blow over the utilities sector".

Telecoms regulator, Oftel, welcomed the legislation as a significant aid to help protect the consumer.

BT, which has been criticised in the past for stifling innovation in the telecoms market, said it wasn't worried by the new regime. A spokesman said: "We accept the reality of regulation and all that implies."

Frazer added that Microsoft was potentially in danger of breaching the anti-competition legislation. "They've been investigated both in the states and in the EU, and they will clearly need to be careful about their trading behaviour to ensure they comply with the new law," he said.

Microsoft was unavailable for comment.

The full interview is available on Silicon.com's IT Law Channel (http://www.silicon.com/a35977 )