A new law aimed at helping UK companies do business while maintaining strong protections for consumers was announced by the government yesterday.
Currently, the UK retains EU rules that exempt businesses from competition law in certain circumstances. However, the UK’s Competition and Markets Authority (CMA) has developed a new, bespoke competition law exemption for the UK that will replace the retained EU rules which expire on 31 May 2022.
The new rules aim to ensure competition law does not impose unnecessary burdens, encouraging so-called ‘vertical agreements’ which are agreements between companies at different levels of the supply chain, such as farmers and grocers.
These vertical agreements are claimed to benefit consumers by encouraging efficiencies, investment and innovation. Benefits of the new UK system include:
- Removing wide retail parity obligations from the exemptions. These obligations specify that a product or service may not be offered on better terms on any other indirect sales channels, including through intermediaries, such as other distributors or online platforms. For example, currently a travel agent might require a hotel not to offer its rooms on any other sales channel at a better price or on better terms and conditions, limiting the incentives for travel agents to compete.
- Creating a more level playing field for high streets and bricks & mortar retailers by expanding the exemptions to cover agreements that treat online and offline sales differently. This includes charging the same distributor a higher price for products intended to be resold online than for products intended to be sold offline.
- More flexibility for businesses to design their distribution systems. For example, by allowing a business to combine distribution rights by allowing multiple retailers of its product in one geographical area while having an exclusive arrangement with another retailer in another area.
The government said it was currently consulting on the legal wording of the exemption. The CMA is expected to publish further guidance to accompany the legislation in due course.
NAM Implications:
- As always the key is ensuring compliance without overburdening re ‘paperwork’/checking.
- i.e. say a retailer operating online and offline buying thru the most advantageous channel, and selling through both…
