The Private Markets Forum (PMF or the Forum)

GUIDELINES IN RESPECT OF COMPETITION LAW

Compliance with these guidelines is essential. PMF, its members, and other participants can be held liable for anti-competitive conduct. Those found in breach of the law may face significant fines, disqualifications, and potential criminal sanctions. In addition, non-compliance can have a detrimental effect on a business or firm’s reputation.

1. Introduction

The purpose of PMF is to advance the private markets industry by fostering collaboration, knowledge sharing, and best practices among key stakeholders by

• responding with a clear voice to the eventuality of PISCES and other ongoing industry changes and trends and
• providing a platform for discussion and engagement on the evolving landscape of private markets, including trends, challenges, and opportunities.

In carrying this out, members and non-member attendees must:

• act with the highest regard for their ethical, legal and professional obligations and the Forum’s purpose, values, and legal interests; and
• follow the principles set out in these guidelines.

2. Competition Law

Competition law in the UK is set out in the Competition Act 1998. Competition law applies to the Forum, as it falls under the definition of an “association of undertakings”^[1].

Everyone involved in the Forum should be aware that breaches of competition law carry with them heavy financial and potentially criminal sanctions for both the firms involved and the relevant individuals, along with additional penalties such as director disqualification.

Governments and regulators in the UK (and elsewhere in the world) understand that groups, similar to PMF, have a legitimate role in seeking to inform and influence public policy for their sector, as well as representing their members. However, regulators are also alert to the possibility that such groups may facilitate anti-competitive agreements or understandings or the exchanged of commercially sensitive information (CSI), both of which may breach competition law.

In recent years, regulators have been particularly vigilant of so called “hub and spoke cartels” where competitors enter into anti-competitive agreements/understandings, or exchange CSI, via a third party (such as a common supplier or trade association), increasing the risk of scrutiny of the role of associations such as PMF.

Regulators and law makers therefore seek to balance the legitimate role in formulating public policy and representing members performed by such groups with the risk of such groups facilitating anti-competitive behaviour.

The general principles of competition law and its application to the Forum are:

Competition law prohibits agreements, decisions or practices which have as their object or effect the prevention, restriction or distortion of competition within the United Kingdom and which:

• in the case of agreements, decisions or practices implemented, or intended to be implemented, may affect trade in the United Kingdom; or
• in any other case, are likely to have an immediate, substantial and foreseeable effect on trade within the United Kingdom.

Agreements, decisions or practices that are prohibited include ones which:

• directly or indirectly fixing purchase or selling prices or any other trading conditions;
• limiting or controlling production, markets, technical development or investment;
• sharing markets or sources of supply;
• applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
• making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

The term “agreement” is very wide and includes written or oral agreements whether they are legally enforceable or not including “gentlemen’s agreements”.

3. Sharing Information

The exchange of CSI between competitors (including via a third party) may infringe competition laws if it reduces the strategic uncertainty in the market and/or if it influences the competitive behaviour of competitors leading to a distortion of competition or a situation that may facilitate collusion.

CSI is strategically useful information that could be used to influence a competitor’s behaviour in respect of supply, pricing, trading or marketing activities. The identification of CSI is case specific and can often be identified by asking the question: if my competitors have this information can it influence their competitive behaviour in the market?

What information can be shared

There are many positive aspects to the Forum and information that can be shared between members can includes:

• non-confidential information that is in the public domain;
• technical industry issues including standards;
• non-strategic technical data that results in consumer benefits;
• industry public relations or lobbying initiatives provided competitively sensitive information is not shared in the process, and advice has been taken if initiatives may exclude market operators;
• industry standards that increase product interoperability, compatibility or safety, provided advice has been taken on the development, transparency, accessibility and potential competitive impact of these standards.

What information cannot be shared

There are certain areas of sensitive commercial information that should never be discussed between our members, either formally or informally, intentionally or inadvertently, directly or indirectly through a third party. These include:

• current or future pricing, or matters affecting prices;
• company-specific sales information;
• company-specific cost information;
• salaries and wages, hiring practices or limitations on hiring a competitor’s employees;
• commercial planning or strategy information including geographic growth and business expansion or contraction plans; and
• key contract terms, such as any matters relating to specific suppliers and customers that are significant to core drivers of market competition, such as key contract.

ALSO, NEVER REACH ANY AGREEMENT OR UNDERSTANDING (INCLUDING TACITLY) WITH ANY OTHER MEMBER ON THE FOLLOWING:

• prices that will be announce or charged to customers (such as companies to be listed on a platform);
• the timing or method of price increases;
• terms of sale or delivery that will be offered to customers;
• allocating product or geographic markets in which parties will sell or not sell;
• allocating companies or customers between platforms or parties;
• bids to any company, including decisions as to whether to bid or not to bid;
• production, capacity, or sales volumes;
• soliciting each other’s employees or employee salaries and benefits.

THESE TYPES OF AGREEMENTS (CARTEL AGREEMENTS) ARE AUTOMATICALLY ILLEGAL. THERE CAN BE NO JUSTIFICATION: THE AGREEMENT ITSELF IS UNLAWFUL.

Any suspected breach of this statement should be reported to the Forum’s Chairman.

4. General Guidance

The Competition and Markets Authority (CMA) (and its predecessor in law the Office of Fair Trading) has published (rather legalistic) guidance on the scope of competition law for “trade associations”. The CMA believes that any decision including any recommendations as to prices and charges (including discounts and allowances) as set put above is likely to have an appreciable effect on competition. Such actions are therefore likely to be illegal.

Detailed guidance should be obtained where there is any doubt as to whether there will be an appreciable effect on competition between members. The circulation of purely historical information or the collation of price trends is, for instance, unlikely to have an appreciable effect on competition.

The CMA also believes that:

• restrictions on advertising, whether relating to the amount, nature of form of advertising have the potential to restrict competition; and
• standard terms and conditions are likely to have the potential to restrict competition, but less likely to do so where members remain free to adopt different conditions.

5. Meetings

The following guidelines apply to all meetings of the Forum including meetings of committees, working parties or other groups:

• meetings organised or attended by members must have a legitimate purpose;
• agendas and papers should be circulated in advance of the meeting;
• matters should not be discussed that go beyond the scope of the agenda;
• minutes of all meetings should be circulated and approved if appropriate;
• competition law obligations extend, beyond discussions during a meeting, to conversations before and after official meeting times and including on journeys to and from meetings;
• meetings of the members, its committees and/or its working parties should be determined in accordance with their relevant terms of reference;
• if, during a meeting, matters are raised or discussed that may be relevant to the prohibition of anti-competitive conduct, the chairman should (or any representative, employee or member should) ask the meeting chairman to terminate or suspend or postpone the discussion to enable legal advice to be obtained; and
• participants should ensure that any objection to the discussion/agreement is noted in the minutes and, if the discussion continues, should remove themselves from the meeting and ask that the other meeting participants note their departure in writing, preferably via the meeting’s minutes. It is not sufficient to continue to participate at the meeting and remain silent.

[1] The Competition Act 1998 does not explicitly define “association of undertakings” but it is understood in the context of that Act to encompass any group of undertakings that collectively make decisions or engage in activities that have an object or effect of restricting competition within the United Kingdom. This includes trade associations, professional bodies, and other organizations where member undertakings cooperate or coordinate their activities.