Guidance for UK farmers on competition law

Back to top

Summary

The OFT has updated its guidance to UK farmers on competition law. As noted in August 2011, competition law has developed since 2004, when the guidance was first published, and we believe it is timely to reflect these developments in the updated guidance. We also wanted to ensure that the guidance is clear and tackles questions that are relevant to farmers today.

We have consulted with farmers' unions and representatives, Defra and other interested parties in the farming sector. The aim was to find out the sorts of issues on which farmers and their representatives would most benefit from guidance. We are grateful to those who gave us their views during the consultation.

In addition to noting developments in the law, the new document adds more detail on:

• How the OFT defines markets and estimates market power.
• How the OFT determines whether there are competition problems in a market.
• Where collaborative activities are most and least likely to breach the law.

The FAQs form part of the OFT's ongoing commitment to provide guidance to businesses and consumers about competition and consumer legislation. It should be noted, though, that they are not intended to provide a substitute for independent legal advice on potential co-operation arrangements. For example, we have not been able to provide guidance on or assessments of detailed hypothetical arrangements or situations.

Back to top

Relevant documents

• Updated guidance: How competition law applies to co-operation between farming businesses: frequently asked questions:
  
  Interactive Word version (299kb)
  PDF version for downloading (297kb)
• Press release OFT answers farmers' questions on competition law, 30 July 2004
• 2004 FAQs: Frequently asked questions: how does co-operation between farm businesses fit in with competition law? (pdf 223kb)

Back to top

The dairy industry voluntary code of practice

The OFT is aware of concerns about dairy prices and understands that a dairy industry voluntary code of practice, aimed at ensuring contractual best practice between UK producers and processors of dairy products ('the Code'), has now been agreed.

While the OFT does not generally provide views in response to requests asking whether specific arrangements between businesses comply with competition law, it provided informal views on an earlier draft of the Code to DEFRA and the authors of the Code given the exceptional circumstances in the UK dairy industry. The OFT provided its informal views to assist the dairy industry assess its own arrangements under competition law.

The OFT considers that it should be possible for producers and processors to adhere to the Code without raising competition law concerns. However, the OFT identified a small number of points in relation to competition law that the parties might wish to consider further. Generally, they should ensure that they do not fix prices (outside of the regulatory framework that the EU Dairy Package allows for through Producer Organisations), share markets or exchange commercially sensitive information with competitors.

Separately, the OFT was asked to consider a distinct voluntary code of practice on contractual relations between producers and milk purchasers that we understand certain Northern Ireland dairy industry representatives have agreed ('the NI Code', and together with the Code 'the Codes'). For the same exceptional reasons set out above in relation to the Code, the OFT provided views on the NI Code to the Northern Ireland Government and the authors of the NI Code. The OFT's informal views on the NI Code - which is written in substantially the same terms as the Code - were essentially the same as set out in the previous paragraph in relation to the Code.

The OFT's informal views on the Codes should not be seen as an approval or endorsement. It is the responsibility of individual businesses to satisfy themselves that their arrangements and conduct arising from either of the Codes do not infringe competition law.

Any business which has competition concerns arising from the operation of either of the Codes should consider seeking legal advice. Additionally, if someone has concerns that others may be infringing competition law, they should bring this to the OFT's attention.

Related documents

1. Under Regulation EU 261/2012, commonly known as the EU Dairy Package, producers are allowed to negotiate contract terms, including prices, jointly where they are represented by a recognised producer organisation (PO) as long as the PO does not represent more than 33 per cent of national milk production or 3.5 per cent of EU milk production. That regulation came into force on 2 April 2012 and domestic legislation to facilitate its operation is scheduled for spring 2013. See www.defra.gov.uk/food-farm/food/food-industry/milk-industry and http://ec.europa.eu/agriculture/milk/index_en.htm for further information.
2. Under its Short-form Opinion tool the OFT can provide an opinion on proposed collaboration between competitors that raises novel or unresolved issues of competition law to help parties' self-assessment. See further details of this tool. The OFT was not asked to provide a Short-form Opinion on the Code
3. See further general information about compliance with competition law  

Back to top

Feedback

We would be interested in receiving your feedback on the revised FAQs and, in particular, whether you find them helpful. Any comments should be sent to:

Enquiries Unit
Farming collaboration FAQs
Office of Fair Trading
2-6 Salisbury Square
London
EC4Y 8JX

Back to: Competition Act and cartels