Competition Law Enforcement in the U.K. Grocery and Food Sectors and at the EU Level

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Mark Jones, Jun 30, 2014

In recent years the U.K. grocery and food industries have been among the most scrutinized sectors by the U.K. competition authorities. This article reports on competition law enforcement activity in the United Kingdom under the antitrust rules and also the so-called market investigation regime (merger control is outside its scope). It ends with a brief review of initiatives in these sectors at the EU level.

Enforcement activity in the United Kingdom has focused mainly on grocery markets rather than upstream food markets, although the U.K. competition authorities have issued guidance on the application of competition law to farming co-operatives as well as informal views on two dairy industry codes of practice. They have also promoted the competition agenda in the development and reform of EU farming regulation under the EU Common Agricultural Policy and the EU Dairy Package Regulation.

The U.K. antitrust rules prohibit cartels and other anticompetitive arrangements, and also the abuse of a dominant market position. There have been several significant investigations under the cartel rules, but the prohibition on abuse of dominance has not been applied in these sectors since even the largest of the four major U.K. supermarket chains has a national market share below the level at which a dominant position is normally established. There have been two major sector-wide investigations under the market investigation regime, which allows for review of whole markets where competition is perceived not to be working well in order to assess whether there are market features-in terms of structure or conduct-which adversely affect competition, with the possibility of a wide range of remedies aimed at market participants generally rather than sanctions on individual firms.

This enforcement activity has been shared between the U.K.’s two principal competition agencies, the Office of Fair Trading—responsible for cartel enforcement and initial or phase I merger and market reviews-and the Competition Commission—responsible for in-depth or phase II market investigations reviews following reference from the OFT. (As of April 1, 2014, the two authorities merged into a single agency, the Competition and Markets Authority, although the separation of phase I and II activities has been retained within this new organization.)

It is worth noting that a number of the issues addressed in the United Kingdom, including the effects of perceived buyer power on the part of the larger supermarket chains and the indirect exchange of competitively sensitive information between retailers via their suppliers, have subsequently been picked up by agencies in other jurisdictions and so the U.K. experience is instructive in that respect.