Food industry asks for no-deal competition waiver

The UK food industry has asked for aspects of competition law to be set aside to allow firms to co-ordinate and direct supplies with each other in the event of a no-deal Brexit.

Currently this practice is illegal, and companies risk being fined by the Competition and Markets Authority.

The Food and Drink Federation (FDF) said: “We asked for these reassurances at the end of last year. But we’re still waiting.”

One retailer told the BBC that October 31 “is about the worst day you can pick”, as due to Christmas stockpiling, warehouse capacity is at 105% in November, versus 75%-80% in March.

The UK would reportedly need 30 huge empty warehouses to store just one week’s extra food supply.

FDF’s chief operating officer Tim Rycroft said: “Competition law is important, but in the event of no-deal disruption, if the government wants the food supply chain to work together to tackle likely shortages – to decide where to prioritise shipments – they will have to provide cast-iron written reassurances that competition law will not be strictly applied to those discussions. Without such assurances, any such collaboration would risk incurring large fines from the CMA – up to 10% of turnover.

“We asked for these reassurances at the end of last year and, despite support from Defra, we’re still waiting.  Hopefully, now that Michael Gove is in charge of all no-deal planning, we can make progress.”

Another retailer  told the BBC: “At the extreme, people like me and people from government will have to decide where lorries go to keep food supply chains going. And in that scenario we’d have to work with competitors, and the Government would have to suspend competition laws.”

The FDF has a list of 40 questions for the government on its website, divided into areas such as transports and logistics, imports, exports and financial consequences.

John Perry, managing director of SCALA, a supply chain and logistics consultancy, said: “A no-deal Brexit is going to cause extremely damaging supply issues for food and drink businesses – that’s almost a given. Considering this, the potential softening of constraints around anti-competitive behaviour has to be seen as a valuable move, which would mutually benefit all parties and, ultimately, the end customer.

“That said, while the benefits of relaxing competition laws are potentially significant, they will be extremely difficult to achieve without the help of a trusted neutral third party to manage the process, maintaining confidentiality and anonymity amongst all parties.

“Whether the government listens to the industry’s latest plea to mitigate the potentially disastrous effects of no-deal or not, we would advise businesses to prepare themselves as thoroughly as possible for all outcomes, which means looking beyond stockpiling to put in place effective, long-term risk-reduction strategies. At the very least, food and drink businesses should be undertaking a full assessment of their supply chains in order to prepare themselves for the uncertainty that still lies ahead.”

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