Antitrust compliance in tough times: Crisis cartels and waivers

Video | October 2019 | 05:14

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Antitrust compliance in tough times: Crisis cartels and waivers
Mark Simpson  Hi Richard, good to see you again. Today I thought we might talk about competition waivers and state compulsion. Now, this has come up very recently in the context of Brexit. The Food and Drink Federation have been releasing statements saying that they would very much like a competition waiver from the UK Government. What's this all about in the context of Brexit?
Richard Whish QC
Well, I imagine in the context of Brexit, and if you think of a sector such as that, I suppose their anxiety is that there may be problems on 1 November, lorries coming through the ports in Dover and Immingham and so on, and I suppose the anxiety is there might be a shortfall of particular products and then what happens in those circumstances. Specifically, would it be possible for competitors to get together and to reach some kind of agreement which possibly might infringe competition law?
Mark Simpson
What are the options there? I mean, I would have thought that it would be for businesses to think about how they can make commercial arrangements and self-assessing whether competition law is applied, and whether there are pro-competitive reasons for them doing things that otherwise might be restrictions.
Richard Whish QC
Yes, of course, and we live in a world of self-assessment and we have done ever since Regulation 1/2003 and one sits down with legal advisors and sometimes with economics advisors, and might this agreement restrict competition, if it does in some sense may it nevertheless produce benefits, including benefits to the distribution of goods? And normally one would self-assess. But I think the problem would be that some of the arrangements that they might want to enter into might frankly amount to the abandonment of competition to deal with the immediate problems of disruption caused by Brexit, and I guess the anxiety is that they might go too far and therefore infringe competition law.
Mark Simpson
Right, and so the waiver, in terms of the application of the Competition Act, it's granted by the minister?
Richard Whish QC
Well, it's interesting this, because not just related to Brexit but going back over many years when the financial crisis happened, it was quite normal for undertakings in an industry to sit down with the minister and talk about the benefits of cooperation, for maybe a limited period of time, and the minister might say, yes, that's a good idea, I don't have a problem with that. But that doesn't in itself give you any dispensation from competition law because you are still supposed to make your own decisions as long as you are autonomously able to do so. So I think there's a danger in, as it were, just taking the consent of the minister, one really needs to go further. That's where the Competition Act can come in. I think it's Schedule 3, paragraph 7 says that the minister can make an order when there are "exceptional and compelling reasons of public policy", I think is the phrase, then he or she can make an order suspending competition law for a particular set of facts or a period of time or whatever. But since the Competition Act came into force in 2000, that has been done on four occasions and three of them were very special circumstances in the defence sector, which is not what we are talking about here.
Mark Simpson
And the other one, what was that in? It was to do with petrol I believe in…
Richard Whish QC
Fuel crisis and the risk of scarcity of fuel and an agreement that certain priority customers, hospitals or whatever, would be supplied.
Mark Simpson So a similar type of crisis if we are talking about a "no deal" Brexit, one might imagine?
Richard Whish QC
Well, you know, food running out in shops does sound somewhat worrying. So I could imagine circumstances in which something cataclysmic might happen after Brexit that would give rise to that exception being available, but you would still have to do it with the minister. I would be very, very worried about going it alone without an official imprimatur from the minister.
Mark Simpson
Well, so far, the Government's response seems to be we are working with all industries to ensure there is sufficient planning for every eventuality, so it does seem at least publicly that they are not entertaining a waiver. But with the Government… the Food and Drink Federation may have actually gone to see the minister with a suggestion that the Government supports them, is that enough to defend against a possible liability finding for market sharing or anything of that nature?
Richard Whish QC To have a complete defence, there would have to be a ministerial order.  Nothing else would be good enough.
Mark Simpson
OK, that's very interesting Richard. Thanks very much.