UK government guidelines on voluntary agreements – ‘a chilling effect’

Government publications in the UK context make limited reference to reasonably supportive guidance & jurisprudence on voluntary agreements from the EU.  BERR (now BIS) Advice for officials of Government and devolved administrations: ‘Competition law: issues which arise for business when the government or lobby groups seek to encourage businesses to work together to deliver desired policy outcomes’ (2008)  states:

“Recently businesses in various sectors, including retail, have shown concern over pressure being applied to them to enter into voluntary agreements or concerted practices to deliver public policy outcomes. This is often in response to a particular issue that maybe in the public eye through high profile media campaigns. Examples of such engagement include the delivery of environmental or public health policy objectives.

“…Agreements are generally considered bad for consumers and productivity because they undermine the need for businesses to reduce their costs and increase their quality to succeed. Hence, if evidence shows there is a valid reason to phase out a product or behaviour, then it is best to consider whether other proportionate, but not illegal, options are available. This may include an appropriate legislative vehicle. This may seem disproportionate to the issue that is being addressed but will give legal certainty and may, in the final analysis, be less costly for business.”

Competing fairly – An introduction to the laws on anti-competitive behaviour (OFT, 2005)  states in its opening:

“These laws prohibit anti-competitive agreements between businesses…”

Yet it goes onto acknowledge:
“Competition law may not apply to some categories of agreement and conduct. Agreements or conduct may be excluded from investigation under the Act or Articles 81 or 82 of the EC Treaty because they are instead subject to examination under other laws.”

We believe all this this is having a chilling effect and reflects a generally oversimplified analysis of the value and risks inherent in voluntary agreements neglecting the earlier work of the Better Regulation Task Force (2003 and 2004), as well as the ‘EU Guidelines on horizontal cooperation agreements’ (2007)  which are fairly positive with regards to collaborative agreements/standards:

“Agreements on standards – Standardisation agreements have as their primary objective the definition of technical or quality requirements with which products, production processes or production methods must comply. From the competition viewpoint, it is necessary to check that agreements of this type are not used for other purposes, i.e. to restrict competition on the market.”

On environmental agreements, the EU summary guidance states:
“Environmental agreements – Environmental agreements are agreements by which the parties undertake to reduce pollution, as defined in environmental law, or to achieve environmental objectives. In general, the Commission is favourably disposed towards the use of agreements of this type to achieve environmental aims. However, where cooperation does not truly concern environmental objectives but serves to conceal anti-competitive practices, the competition rules apply.”

The 2007 EU guidance has now been replaced with 2011 guidelines on Horizontal agreements.