Competition Law Policy
The MIA recognises the importance of ensuring that it and its members are and remain compliant with competition law, particularly given the recent investigations of the music industry by the Competition and Markets Authority (CMA).
It also wishes to demonstrate to its members, partners and regulators that it encourages competition in the UK music market fairly, lawfully and with integrity at all times.
This policy gives an explanation of the relevant competition law and its underlying principles. The MIA abides by these principles and encourages it members to do so.
UK Competition Law
Competition law in the UK is primarily contained in the Competition Act 1998 and is very similar to the parallel legislation applying in the EU. Other laws apply throughout the world and will apply wherever a member trades.
The Competition Act prohibits:
- agreements which prevent, restrict or distort competition in the UK or part of the UK; and
- the abuse of a dominant position.
Some activity which contravenes the Competition Act is a criminal offence.
An unwritten agreement or behaviour can be sufficient to infringe the Competition Act. For example, the sharing of commercially sensitive information between competitors (which may influence the independent determination of commercial strategies) is often an indication of prohibited co-ordination or a price-fixing cartel.
In addition, actions taken in one country may have an impact in others, which means that some actions can be subject to the laws of more than one country.
The CMA is the main regulator and enforcer of competition law in the UK and investigates potential breaches of competition law and any mergers which may substantially lessen competition in a particular market.
The penalties for breaching competition law are severe, and include:
- fines of up to 10% of worldwide turnover;
- agreements containing unacceptable provisions being void and unenforceable;
- criminal penalties: imprisonment and/or fines;
- disqualification of directors;
- reputational damage; and
- lengthy and costly regulatory investigations.
Regulatory investigations can impact a whole industry as competitors, suppliers, customers and trade associations can be required to assist and input into an investigation into one company.
Accordingly, each member is encouraged to notify the MIA of any behaviour of which it becomes aware which might lead to such an investigation.
Trade Associations and Competition Law
The role of a trade association is by its very nature potentially anti-competitive. Its functions include facilitating the sharing of information and market intelligence between parties that are potentially competitors.
The MIA facilitates meetings and events between members and other organisations involved at each level of the UK music industry in pursuance of its legitimate interests as a representative body of the industry. Discussions at these meetings should be open and conducted in accordance with the Competition Act 1998 and guidance from the CMA from time to time.
Members are reminded that at all times they must not:
- Discuss or share competitively sensitive information which is not in the public domain (including information about pricing, sales, costs, employee terms, customers or output plans);
- Have closed discussions with direct competitors (including discussions about other competitors, suppliers and customers);
- Discuss limiting output or production; allocating markets or customers; collective boycotts or other coordinated measures intended to eliminate competitors; and coordinated measures that either slow technical development or otherwise exploit markets or are intended to do so.
This is particularly important in the context of MIA meetings and events at which MIA’s role is to act as a neutral facilitator of discussions on issues affecting the industry as a whole.
By their nature, exclusive agreements are more likely to prevent, restrict or distort competition than non-exclusive agreements. Accordingly, care should be taken when negotiating and entering into agreements containing provisions relating to exclusivity.
No MIA Validation
The MIA does not take ownership of, or responsibility for, the decision or action of any individual member or collective decisions or actions made and/or agreed between members, whether in attendance at a meeting or event organised by the MIA or otherwise.
Unless expressly confirmed by MIA in writing, any decision made as a result of the discussions at an MIA meeting or event is not condoned or agreed to by the MIA.
Further guidance is available from the CMA:
- Competing Fairly in Business
- Resale price maintenance: advice for retailers
- Influencer marketing: what you need to know
Approved by the MIA Board Chair, 19th February 2021