The Cooperatition Incubator

The Cooperatition Incubator has today welcomed the UK Office of Fair Trading’s (OFT) announcement that it is establishing a ‘Short-form Opinions’ process.  The first Short-form opinion was issued (27 April 2010) on questions raised by Makro Self-Service Wholesalers Limited and Palmer & Harvey McLane Limited in relation to their proposed joint purchasing co-operation agreement.

In March 2010 Philip Collin, Chairman of the UK Office of Fair Trading announced that the OFT will offer ‘Short-form Opinions’ (SFO). Introducing the new process the OFT acknowledged:

“Concerns have been expressed that uncertainty about how competition law in particular might be applied has led to some forms of potentially beneficial collaborative work between businesses not going ahead. In some cases, it may not be clear how the competition rules may be applied to collaborative conduct, for example with regard to some government-led initiatives.

“As a result, we are proposing to trial a ‘short-form’ opinion procedure. This would allow us, in a limited number of cases, to provide prompt guidance where there is a novel or unresolved issue of wider interest arising in the context of a specific prospective collaborative initiative. We would like to hear from you and your members about issues that you or they think would benefit from clarification through means of such a ‘short-form’ opinion.”

In April 2010 – when they published their first SFO – the UK Office of Fair Trading added:

“During its analysis, the OFT identified a concern that certain exchanges of information between the firms could potentially lead to a reduction in competition. However following OFT advice, the parties have agreed to ensure the data they supply to each other is general and aggregated, preventing either company from extrapolating specific or sensitive information.

“The new process is being trialled in response to feedback from business that some potentially beneficial collaboration between companies is not proceeding due to concerns about infringing competition law, which carries civil and in some circumstances criminal sanctions.”

Andrew Dakers commented:

“The OFT’s Short-form Opinions process represents a significant step towards addressing the concerns that we have been raising over the past few years that companies are not engaging in collaborative agreements that would deliver public benefit, due to competition law risks.  This new process will help companies mitigate the risks and is a key milestone in our push for a co-regulating, responsible economy.”

Source: FT.com

Tesco, Britain’s biggest retailer, and smaller rival Wm Morrison insisted on Thursday they would not give up their fight against allegations that they fixed the price of milk.

The Office of Fair Trading said that only Tesco and Morrison were continuing to contest the provisional findings of its investigation into alleged price fixing in the UK dairy market, which accused a number of dairies and supermarkets of colluding to raise prices artificially in 2002 and 2003.

Other parties investigated by the OFT, including Asda, The Cheese Company, Dairy Crest, J Sainsbury and Robert Wiseman Dairies, have all settled with the OFT. Arla Foods is being spared a fine for its role after co-operating with the OFT.

The OFT sent out further evidence on Thursday that its claims support its findings of alleged collusion to all the parties involved in the investigation.

“At this stage it should not be assumed that the law has been broken,” the competition watchdog said, adding that it would “carefully consider any representations, and the evidence as a whole, before reaching any final conclusion.”

Tesco said it would continue to mount a strong defence against the OFT’s allegations.

“We have made it clear that we did not collude with anyone and that remains the position,” said Lucy Neville-Rolfe, director of corporate and legal affairs at Tesco.

She said Tesco did not believe that the nature of communications with suppliers, at the heart of the investigation, went beyond permissible discussions under competition law.

She added: “We will of course look carefully at any new evidence the OFT sends to us relating to events that took place in 2002 and 2003. We will, however, continue to defend our position strongly.”

Morrison will also continue to contest the allegations.

It said in its own statement: “We wait to read the document in detail; however, our initial view is that nothing has changed since the original statement issued two years ago.

“It remains our firm belief that there are no reasonable grounds for the OFT’s allegations against us and no evidence to suggest our involvement, therefore we are continuing to contest the provisional findings and make strong representations that Morrisons should not be part of this inquiry.”

It is continuing to fight as it does not believe it was involved in fixing prices, and does not see that there is compelling evidence to suggest that it was.

It has also only been accused in one of the particular instances of alleged price fixing.

The OFT said Tesco and Morrison would now have an opportunity to make written and oral representations in response to the additional evidence.