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PostPosted: Sat Sep 01, 2012 9:20 pm 
retrobike rider
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Any legal chaps here? If so I would like to pick your brains!

One of our main competitors has, for the last few months, being quoting and completing work at below cost price, for labour and products. The company are lucky enough to have a rich benefactor to bankroll them, and their books confirm that they run at a significant loss year on year. Is this legal? It's obvious that their game is to put everyone else out of business, and they are becoming a significant worry to many of the major players in our industry - which is green roofing by the way.

I look forward to hearing from you!


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PostPosted: Sat Sep 01, 2012 9:25 pm 
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I'm no expert but I don't see any reason why it's illegal in itself assuming none of their actual practices are anti competitive.


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PostPosted: Sat Sep 01, 2012 9:46 pm 
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I don't think the Law will be of any assistance here.

As long as they are legit in their operation, whether they choose to run at a loss is up to them.

As shit as that is to bear.


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PostPosted: Sat Sep 01, 2012 9:58 pm 
retrobike rider / Gold Trader
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Again, i'm no expert but i think this is happening a lot in the current highly competitive business world and it is not illegal. Companies are prepared to take on work at a loss in the hope that a) They secure work from the same contacts in the future, and b) Their competitors fall by the wayside in the meantime.
It will work for a firm that can afford to continue without pre-tax profits so long as they are bankrolled by a benefactor....it just means that the benefactor loses out, short-term at least. The benefactor will not be providing capital unless he/she is a)Making a return at some point. b)an idiot with no desire to hold onto financial wealth.

Of course, in time HMRC may want to investigate why the business is running for years without making a profit as it may be suspicious of tax avoidance (See Jimmy Carr) or tax evasion (See Enron).

Hope u can stick with it til times improve or this company plays a little fairer... :?


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PostPosted: Sat Sep 01, 2012 10:12 pm 
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I'm no legal bod but have a little experience (of late)

while what they do may be unethical it is not illegal per se.
As said if they are completing their books paying their due tax etc and posting a loss it is legal.

Loss leading has always been a way to get in and ahead in a market or segment - get customers and slim down the competition then hoik your prices up to your captive market

However if its a a bit of a tax fiddle HMRC may be interested - the investor can either see a good future in green roofing with no competitors or likes signing cheques with a rubber stamp.


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PostPosted: Sat Sep 01, 2012 10:57 pm 
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Why not ask them for a job?
They seem to want to retain their workforce through the present downturn, in expectation of a return to better trading conditions.
I'd imagine it's a pretty competetive sector with excess capacity at the best of times, being green and trendy and that.
If they can weather the storm whilst keeping their workforce in jobs, then hats off to them.


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PostPosted: Sat Sep 01, 2012 11:07 pm 
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Their intention is to wipe out the competition by making them suffer loses that no smaller company could carry. It's standard buisness practice because sometimes it's cheaper to ruin the opposition than buy them out....think local stores vs supermarkets

It also helps them at tax time to have losses

Is it illegal?...I doubt it...is it immoral ? without a shadow of a doubt but that as they say is how the business cookie crumbles :(

leading on from what taff said re hmrc...it might be worth finding out if this is such a big company..if they are taking huge govt incentives through green schemes and perversly using that to subsidise the destruction of it's opposition


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PostPosted: Sun Sep 02, 2012 12:11 am 
retrobike rider / Gold Trader
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suburbanreuben wrote:
I'd imagine it's a pretty competetive sector with excess capacity at the best of times, being green and trendy and that.


I'd suggest that excess capacity in a market would reduce competition as their is less need to fight for market share, but this maybe a moot point...

It can be useful to take advantage of lower tax bands using either carry forward loss relief or current/previous years loss relief. This simply means paying lower rates on as much of future profits as possible. It can get complicated so an accountant is useful here.

Whatever government incentives are being used by your competitor can probably be used by your firm if you are in the same market/industry so look into incentives for green technologies (I'm sure you must have already). It is possible some schemes are only available to firms of a certain size which your competitor may qualify for but you may not. This is usually based on number of employees or turnover. Capital investment in green technologies (possibly including R&D) may be allowable at zero percent as capital allowances. Ie. no tax need be paid on them. Remember this is for incorporated businesses, not sole traders/partnerships, but similar schemes may exist for sole traders to include investment in green technologies as allowable expenses. Always good to speak to a switched on Business Link advisor for details of funding from European grants.


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PostPosted: Sun Sep 02, 2012 1:48 am 
retrobike rider
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I'm no legal, but our competitors lost £1 million last year trying to undercut us. We are still here though


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PostPosted: Sun Sep 02, 2012 8:28 am 
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Drewson wrote:
suburbanreuben wrote:
I'd imagine it's a pretty competetive sector with excess capacity at the best of times, being green and trendy and that.


I'd suggest that excess capacity in a market would reduce competition as their is less need to fight for market share, but this maybe a moot point...

It can be useful to take advantage of lower tax bands using either carry forward loss relief or current/previous years loss relief. This simply means paying lower rates on as much of future profits as possible. It can get complicated so an accountant is useful here.

Whatever government incentives are being used by your competitor can probably be used by your firm if you are in the same market/industry so look into incentives for green technologies (I'm sure you must have already). It is possible some schemes are only available to firms of a certain size which your competitor may qualify for but you may not. This is usually based on number of employees or turnover. Capital investment in green technologies (possibly including R&D) may be allowable at zero percent as capital allowances. Ie. no tax need be paid on them. Remember this is for incorporated businesses, not sole traders/partnerships, but similar schemes may exist for sole traders to include investment in green technologies as allowable expenses. Always good to speak to a switched on Business Link advisor for details of funding from European grants.


You may be thinking about it too much. It's not rocket science.
By overcapacity I mean there are too many contractors chasing too few clients. There is a recession on, even in the South East! If this has passed you by, then you're very lucky! In such circumstances it is often necessary to cut prices to the consumer just to stay afloat. As I've already said, if a company has pockets deep enough to run at a loss temporarily and still stay afloat without laying off staff, then good for them. It would be all too easy for the bosses to lay of the workforce until the good times were established again. You may find the bosses have taken substantial personal losses to stay afloat, maybe even ceding control of "their" company to attract the necessary investment.
It's up to the OP's company to find it's own way to survive. This is pretty basic stuff. Why does everyone assume it may be illegal, immoral or underhand?
The title of the thread is "Anti Competetive Info". What exactly is "anti competetive" about what the other Co is doing? I would say it's exactly the opposite; highly competetive. Running crying to momma isn't going to help.


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