Companies collaborating for public good risk breaking law
New draft EU guidelines on horizontal co-operation agreements between competitors are expected before the end of the year. These have serious implications for both trade associations and government initiatives on industry collaboration relating to the food supply chain.
What may seem like an innocent exchange of information between parties, could in fact be illegal, said Ros Kellaway, head of the competition law group at legal firm Eversheds. "This has important implications for many trade associations in the sector," she warned.
One of the most high profile cases in recent years has been the Office of Fair Trading (OFT) investigation into the dairy sector. While this began originally in 2003, it has yet to complete its deliberations. But it has already resulted in fines of over £70M.
The case centred on collaboration between milk processors and retailers in an effort to support farmers during a particularly difficult period for them. Many dairy farmers were at the time going bust because the milk prices they were receiving were insufficient to sustain their businesses.
However, the action was seen by the competition authorities to be anticompetitive and was the first example of a cartel settlement decision, said Kellaway.
What all this means for government initiatives in areas such as fat, salt and sugar reduction and portion control sizing, designed to improve consumer health, is not yet clear. But they could fall under the spotlight of competition law if they are seen to involve the exchange of commercially sensitive information.
"Sharing information as a result of a government initiative does not, in general, exempt participants from operation of the competition laws," warned Kellaway. "You would be well advised to steer away from initiatives that haven't had Competition Commission clearance."
She reported that John Fingleton, chief executive of the Office of Fair Trading (OFT), which is being merged with the Competition Commission under changes announced by the government last month, had highlighted numerous government initiatives that infringed competition rules.
