Schedule 2: Recognised organisations: Competition exclusions
- Paragraph 1 of Schedule 2 amends Schedule 3 of the Competition Act 1998, in order to domesticate exclusions from competition law that are currently available to recognised POs in the CMO Regulation.
- Paragraph 2(1) amends paragraph 9 of Schedule 3 to the Competition Act, in relation to general exclusions for agricultural products.
- Paragraph 2(2) replaces paragraph 9(1) of Schedule 3 to the Competition Act, which gives domestic effect to the EU exemptions with a new subparagraph setting out the conditions of derogations under the new regime. That is, the Chapter 1 prohibitions (the general prohibition of anti-competitive behaviour) is not applicable to agreements between the members of a recognised PO, or members of an APO, who collectively carry out planning production, optimisation of production costs, product placing on the market or negotiation of supply contracts (or any combination thereof). This exclusion is referred to as the "RPO exclusion". The paragraph introduces two conditions, upon which the application of the RPO exclusion is dependent.
- Condition A is that a PO must concentrate the supply of produce, and place said produce on the market. These actions must occur whether or not there is a transfer of ownership of the products to the PO. This is so that the PO can administer contracts and transactions on behalf of its members without the additional necessity of purchasing the actual products. Subsection (b) sets out that the same conditions apply to APOs. APOs must concentrate the supply of its PO members’ products, and place those products on the market, whether or not a transfer of ownership occurs.
- Condition B sets out that a member of a PO (representing a certain sector) cannot be a member of another PO that operates in the same sector. Subsection (b) sets out that the same conditions apply to the constituent PO members of an APO; they cannot be members of another APO from the same agricultural sector.
- Sub-paragraph (1E) provides that the Secretary of State may decide that the RPO exclusion may still apply, even if condition B is not met, where a producer has production units located in different parts of the country. It further states that the Secretary of State is empowered to decide that the RPO exclusion applies in other circumstances, where Condition B is not met, but the application of the exclusion is appropriate.
- Paragraphs 2(3), (4) and (5) make operational changes to the Competition Act to account for the UK’s withdrawal from the EU.
- Paragraph 3 inserts paragraph 10 in Schedule 3 to the Competition Act which establishes the competition law exemptions that are available to recognised IBOs. IBOs operate vertically along the supply-chain (i.e. are comprised of members involved in other activities beyond primary production, such as processing or manufacturing).
- Sub-paragraph (2) of paragraph 10 in Schedule 3 to the Competition Act establishes a further condition which sets out that the competition exclusion available for recognised IBOs ("the RIBO exclusion") is dependent on notifying the Competition and Markets Authority (CMA) of the agreement and receiving notice that the CMA is satisfied that application of the RIBO exclusion is appropriate. Subparagraph (3) sets out that the CMA must consider, in deciding the above, whether the benefit of the RIBO exclusion outweighs any potential impact on fair competition in the UK.
- Sub-paragraph (4) of paragraph 10 in Schedule 3 to the Competition Act empowers the CMA to decide, at any time, that a RIBO exclusion for a particular agreement is no longer in effect.
- Sub-paragraph (5) of paragraph 10 in Schedule 3 to the Competition Act sets out that the existing conditions in sub-paragraphs (4)-(8) of paragraph 9 of Schedule 3 of the Competition Act , which set out that further information, could be requested to inform a decision on a general agricultural exclusion, are replicated for the Secretary of State when deciding whether to grant a RIBO exclusion.
