Zenith CC&P Current Awareness

UK food industry asks government to relax competition rules in no deal scenario

8 August 2019

Prof. Suzanne Rab

Zenith's Suzanne Rab writes: 

The Food and Drink Federation has asked the government to permit companies to cooperate to address food shortages after the UK leaves the EU.

The Federation’s members include Bird’s Eye, Cadbury’s, Coca-Cola, Danone, Haribo, Kelloggs and Nestlé.

The Competition Act 1998 allows the secretary of state for “exceptional and compelling reasons of public policy” to issue an order not to comply with competition law.  If used, this would give a defence to companies engaging in forms of cooperation with competitors that would otherwise violate competition law.

The provision has been used three times in relation to the defence industry and for the supply of oil and petroleum in 2012 at a time of fuel crisis.

The Federation says the waiver should be in place now, subject to renewal on a three monthly basis until industry and government can be confident that supply chains are operating efficiently.

Although around 30% of UK food supplies come from the EU, the situation should not require a complete suspension of competition law for the relevant companies, it should be temporary and only in so far as necessary to allow for the cooperation that is needed to avoid any essential supply chain issues. Clear guidelines would be needed on its scope to avoid mixed messages about what businesses can and cannot do to plan for and deal with the aftermath of a no deal Brexit.

The CMA has said that “this is a matter for government”.  A blanket waiver across the entire industry would represent a significant departure from government policy to date.

Current Awareness

By the CC&P team