The Cooperatition Incubator welcomes new OFT Short-form opinions process

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:

“Under the Short-form Opinion process the OFT aims to provide guidance, within a prompt timetable, to businesses seeking clarity on how the law applies to prospective collaboration agreements between competitors which raise novel or unresolved competition issues….

“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.”

“The OFT and Department for Business, Innovation and Skills (BIS) must now set out how the benefits of this change can be independently assessed; how the new process can be communicated across the business community; the extent to which it will enable voluntary horizontal agreements that pass price increases onto the consumer, whilst delivering social/ environmental benefits; and whether there is the necessary capacity in the OFT for resource constraints to not be a barrier to the issuing Short-form opinions.”

Details of the OFT’s new approach can be found here:

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