Careless talk costs money… lots of money.

The law has changed and conversations between companies about prices, markets and contracts that were more-or-less legal a decade ago are now under scrutiny like never before.

Gentlemen's agreements between rival firms - what may have seemed like old commonsense understandings about how to compete but not to the point of driving each other out of business - now carry the danger of directors spending an early retirement at Her Majesty's pleasure.

Now the prevailing business climate is more to benefit companies that blow the whistle on attempts by rivals to rig the market.

As Andrew Barnes, managing partner of law firm Howes Percival's Norwich office, explained, the 1998 Competition Act gave what is now the Office of Fair Trading (OFT) the power to fine firms up to 10pc of their turnover if found guilty of anti-competitive behaviour. It brought the UK into line with European competition policy.

The law was bolstered in 2002 with the Enterprise Act, which made it a criminal offence for the first time in the UK to participate in a cartel - carrying the penalty of substantial fines and a maximum prison sentence of five years for executives falling foul of the law.

The change in legislation has reinvigorated the OFT and sparked a series of high-profile investigations into alleged market-rigging across different industries.

The change in the tally of fines levied by the regulator tells the story.

“The annual fines handed out by the OFT have grown rapidly,” said Mr Barnes.

“In 2007, the figure was £237m, a vast increase on the £3.1m in 2006 and £697,000 in 2005.”

Among the OFT's headline-grabbing cases was the £121m fine imposed on British Airways last year for colluding with rival Virgin over fuel surcharges.

More recently, fines totalling £116m have been levied against some supermarket chains and dairies for involvement in price-fixing of dairy products, particularly milk.

Ten companies, including JJB Sports, Umbro Holdings and Manchester United, were fined £16m for fixing the price of replica football kits.

The latest OFT probe has seen the regulator issue “statements of objections” against 112 construction firms - including some major regional players like RG Carter, Balfour Beatty and Kier Regional - for alleged bid-rigging on public-sector building contracts.

More than 40 companies on the list have already admitted price-fixing, a further 37 - including Balfour Beatty subsidiary Mansell - have applied for “leniency”.

RG Carter has denied any malpractice and has declared that, on the basis of its own thorough investigation, there is no case to answer.

The OFT's construction investigation - and its early case against British Airways - underline another quirk of the new legal system.

In the BA case, Virgin escaped a fine from the OFT because it had notified the regulator as soon as it became aware of a possible breach of the law.

Firms can now seek to mitigate possible fines by admitting malpractice - and by blowing the whistle on the other firms involved.

“In the UK, as in the US, the OFT policy dictates that if an organisation involved in anti-competitive practices informs the OFT - that is, whistleblowing - then they will receive a full immunity from financial sanction, provided among other things they were not a ringleader and the OFT has not started an investigation,” explained Mr Barnes.

“Subsequent whistleblowers can also expect some leniency if they satisfy certain criteria: for example, they were not a ringleader and they cease all cartel activity immediately.”

Yet the OFT has also found itself on the wrong side of the courts.

The regulator recently paid £100,000 in compensation to Morrisons after wrongly suggesting in a press release that the supermarket chain was involved in the rigging of milk, cheese and butter prices.

But are those companies yet to feel the touch of the OFT aware of how the law change might affect the way they have done business in the past and the way they conduct their affairs today?

The regulator told the EDP that while it carried out some work to “educate” businesses about the new legal climate, companies had a “responsibility to find out for themselves about these issues”.

“It is not much of a defence to say that you didn't know it was the law,” said an OFT spokesman.

Morten Hviid, professor of competition law at the Norwich Law School and ESRC Centre for Competition Policy at the University of East Anglia, said the change in legal culture had been swift.

“There has been a rapid development in the laws regulating how firms interact with each other and in the powers given to the competition authorities to enforce these,” said Prof Hviid.

“It is not clear whether firms have been keeping up with these developments, for example through training of management and key personnel.”

But could the new system - which promises greater consumer protection against rigged markets and fixed prices - have unintended consquences?

Could the glut of OFT investigations leave consumers with the impression that all companies are on the make and all markets are skewed?

Mr Barnes said: “Recent research has suggested that UK consumer confidence has hit a 13-year low.

“It is questionable whether this public feeling is solely as a result of the issues with Northern Rock, the slowing down of the housing market or more generally the credit crunch, or whether the recent activities of the OFT have also played their part.”

Courtesy of EDP