In October 2024, the UK Competition and Markets Authority (CMA) published a ‘heat map‘ showing the geographic spread of warnings sent to businesses in the form of warning and advisory letters.

Key points your business needs to know

What are these letters and why does the CMA send them?

The CMA sends the letters to businesses where there are concerns that their business practices could be harming competition and that they may be in breach of consumer protection or competition law. It is important to understand that the CMA is not – at this point – alleging that the business has breached the law; it is notifying the business of its concerns that it might be.

Both warning and advisory letters set out the CMA’s concerns with a particular business practice and recommend that a self-assessment is undertaken. The difference between an advisory letter and a warning letter is that an advisory letter will request confirmation of receipt, whereas a warning letter will request details of how the business is, or is planning to ensure that it is, complying with the law.

How does the CMA know when to send these letters?

The CMA has said that it typically receives information from intelligence sources, for example complaints, calls to the cartels hotline or applications under the leniency programme. 

How many of these letters are being sent and what issues do they cover?

Between 2018 and 2023, the CMA sent a total of 557 letters to businesses across the UK, covering products such as household goods, clothing and technology. The most common practice about which the CMA writes is resale price maintenance, which is the practice of restricting the ability of retailers to discount products below a certain price.

What should I do if I receive a letter?

The letter should act as an impetus for the recipient, and other businesses in the sector who may be engaging in similar activities, to review their practices to ensure that they are compliant with competition and consumer law. The letter may also contain specific suggestions.

Are there any consequences for not doing anything?

The CMA has no specific legal power to make you respond to a warning or advisory letter. However, the next steps that the CMA will take will very much depend on your response.  It is therefore important to consider your response carefully.

If enforcement action is taken and it is found that the law has been infringed, there can be financial penalties and possibly director disqualifications.

The new Digital Markets, Competition and Consumers Act 2024 will give the CMA direct powers to enforce consumer protection law and boosted powers to enforce competition law breaches. This will mean that the CMA’s cases can be run more quickly, likely resulting in more cases being taken forward for enforcement action. 

In anticipation of the CMA’s new powers taking effect – likely in April 2025 – we recommend that now is the time for all businesses to conduct a risk assessment of their existing practices to mitigate the risk of enforcement action by the CMA. 

Jessica Gardner is a partner in the Regulatory Group, specializing in competition and consumer law, regulatory and ESG. Eleanor Wells a competition and consumer lawyer with experience across a range of sectors and cases.