No, we haven’t been watching too much Narcos (not that Pablito likes to share anything) but in the world of startups, so much is new and shiny and exciting that it’s easy to forget, there is a serious risk that a too-cosy relationship with another company could be illegal.
The Competition and Markets Authority (CMA) defines a cartel as “an agreement between businesses not to compete with each other”, and the consquences of doing so are serious. Jail sentences of up to 5 years are not unheard of, and businesses can be fined 10% of their turnover, with their directors disqualified from acting as company directors.
If this is all making you feel a little hot under the collar (honestly, who knew?) then do not despair, because there is such a thing as “leniency”.
If you inform the CMA before anybody else about a potential cartel, that is not already under investigation, then there are certain benefits. Guaranteed immunity from all fines, guaranteed protection from criminal prosecution for all co-operating employees, and protection from director disqualification.
Is that a bit like welching on your mates? Not if they are in the business of encouraging you to participate in a cartel, it isn’t.
To apply for leniency, according to this handy doc from the CMA, applicants must have a solid reason to suspect the existence of a cartel, and provide relevant information to the CMA.
Oh, and to apply for leniency, you must not have have incited anybody else to participate in a cartel.
We know, you didn’t get into the world of startup businesses to commit crimes! But things can get murky and even if you have the best intentions you could still end up on the wrong side of the law.
The startup ecosystem is not quite a case of “Welcome to the jungle”, but there are plenty of cowboys and cowgirls out there, if you’ll excuse the mixed metaphor.
What would a cowboy be doing in a jungle? Running a cartel, perhaps?