Guernsey has now followed Jersey's lead by introducing a body of competition laws to the island. The laws came into force on 1 August and will be particularly relevant to businesses that actively trade and conduct business in Guernsey.

Guernsey's competition laws are largely modelled on those already in force in Europe. Findings of anticompetitive behaviour by the European Commission are often headline news. For example, in 2009 Intel was ordered to pay a record EUR1.06 billion after the European Commission found that it had abused a dominant position in the market for computer chips.

In addition, whilst it is relatively rare for the European Commission to block a proposed merger in its entirety, it is prepared to do so if it believes that the merger would hinder effective competition. For instance, earlier this year the European Commission blocked the proposed merger of Deutsche Börse and NYSE Euronext which would have created the world's largest stock exchange operator.

The Regulator

The Guernsey Competition and Regulatory Authority (formerly the Office of Utility and Regulation) is responsible for administering and enforcing Guernsey's competition laws. The Guernsey Regulator coordinates its activities with its Jersey counterpart under the umbrella of the Channel Islands Competition and Regulatory Authority ("CICRA").

The Prohibitions

Guernsey law now prohibits the abuse of a dominant position (including imposing unfair trading conditions and limiting production to the prejudice of consumers) and anti competitive agreements between businesses (such as fixing prices and sharing markets between competitors). Even informal nonbinding agreements are caught by the laws. Cartels are considered to be one of the most serious offences under competition law.

In addition, CICRA must give prior approval to any mergers where:

  • the combined turnover in the Channel Islands of the businesses involved exceeds £5 million; and
  • two or more of the businesses involved each have turnover in Guernsey which exceeds £2 million.

Such mergers will only be approved if CICRA is satisfied that they will not (a) substantially lessen competition and (b) prejudice consumers, the economy of the Bailiwick and the public interest.

Breaches of Competition Laws

CICRA has a wide range of powers and enforcement tools. For example, it can order the payment of fines of up to 10% of annual turnover, that offending behaviour cease and mergers completed without its prior approval be unwound. In addition, once a breach has been found third parties adversely affected by the relevant conduct may be able to claim damages in the Royal Court.

Still Open for Business

The island's new competition laws are specifically concerned with conduct and turnover in Guernsey. International mergers and acquisitions are unlikely to be effected. Considering the wide ranging enforcement tools of CICRA, Guernsey businesses should be well advised to review their current commercial arrangements and talk to a legal adviser if they are in doubt about whether they are in compliance with the new laws.

Originally published in Guernsey Press, Law & Accountancy – September 2012

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