COVID-19: Orders excluding certain agreements relating to health services, groceries and Solent maritime crossings from Chapter I prohibition published

Practical Law UK Legal Update w-024-7306 (Approx. 9 pages)

COVID-19: Orders excluding certain agreements relating to health services, groceries and Solent maritime crossings from Chapter I prohibition published

by Practical Law Competition

Background

Under paragraph 7(1) of Schedule 3 of the Competition Act 1998, if the Secretary of State is satisfied that there are exceptional and compelling reasons of public policy why the Chapter I prohibition ought not to apply to:

A particular agreement, or
Any agreement of a particular description,

they may by order exclude the agreement, or agreements of that description, from the Chapter I prohibition.

Such an order may make provision for the exclusion of the agreement or agreements to which the order applies, or of such of them as may be specified, only in specified circumstances (paragraph 7(2) of Schedule 3). Such an order may also provide that the Chapter I prohibition is to be deemed never to have applied in relation to the agreement or agreements, or in relation to such of them as may be specified (paragraph 7(3) of Schedule 3).

In the context of the 2019 novel coronavirus disease outbreak (COVID-19), the Secretary of State has exercised these powers to make the following three orders, which came into effect on 27 March 2020.

The Competition Act 1998 (Health Services for Patients in England) (Coronavirus) (Public Policy Exclusion) Order 2020

This Order applies to agreements, the purpose of which is to assist the NHS in addressing the effects or likely effects of coronavirus on the provision of health services to patients in England.

The spread of coronavirus is expected to place a significant burden on the NHS, requiring additional capacity to be created to treat both COVID-19 patients and others. As part of the response to this, NHS England has commissioned independent healthcare providers to provide extra capacity for treatment of patients. These arrangements are likely to require providers to work together to meet local needs, including sharing potentially sensitive information.

Co-operation of this kind is likely to be essential in responding to coronavirus. However to operate effectively, it will require providers to engage in agreements or practices which would ordinarily be considered anti-competitive. For example, they may need to reach agreements to share staff or facilities, or to discuss division of healthcare services locally. In order to protect providers from the risk of legal action for their work in supporting the NHS at this time.

The Secretary of State is, therefore, satisfied that there are exceptional and compelling reasons of public policy why the prohibition contained in Chapter I of the Competition Act 1998 ought not to apply to, or ought to be deemed never to have applied in relation to, the agreements specified in the Order.

The Order provides that the Chapter I prohibition does not apply to an agreement which:

Is between:
- The National Health Service Commissioning Board (the Board) and one or more independent providers (any person (other than an NHS body) that provides health services for the purposes of the NHS) or an association of independent providers.
- One or more NHS bodies (other than the Board) and one or more independent providers; or
- Two or more independent providers.
Relates to one of the following qualifying activities carried out during the "healthcare care disruption period", which began on 1 March 2020 and will end when notified by the Secretary of State:
- Information sharing in relation to capacity for providing health services of a particular kind, including information regarding staff and facilities.
- Coordination as regards the deployment of staff between NHS bodies and independent providers or between independent providers.
- The sharing or loan of facilities for the provision of health services.
- The joint purchasing of goods, materials, vehicles, plant, apparatus, facilities or services (including the services of staff), for the purpose of the provision of health services.
- Coordination as regards the provision of health services which involves agreement that one or more independent providers or NHS bodies are to undertake a particular activity or type of activity either generally or within a particular geographical area, including agreement to limit or expand the scale or range of health services to be or being supplied by one or more independent providers or NHS bodies.
These activities must be for the purpose of assisting the NHS in addressing the effects or likely effects of coronavirus on the provision of health services to patients in England and they must not involve the sharing between independent providers of any information regarding costs or pricing.
Is notified to the Secretary of State by providing in writing within 14 days of the relevant date (the date of this Order if the agreement is already made or the date the agreement is made) details of the names of the parties to the agreement, a description of the nature of the agreement, the date of the agreement and the health services to which it relates. The Secretary of State must main a register of notified agreements.
Meets the following conditions:
- The purpose of the agreement is to assist the NHS in addressing the effects or likely effects of coronavirus on the provision of health services to patients in England; and
- The agreement does not have as its object or effect the prevention, restriction or distortion of competition within the UK, except in relation to qualifying activities in a market for the provision of health services to patients in England that is affected by coronavirus.

In addition, the prohibition contained in Chapter I is to be deemed never to have applied in relation to such an agreement which was made during the period beginning on 1 March 2020 and ending on the day before the day on which this Order came into force.

The Order provides that when the Secretary of State considers that there is no longer a significant disruption or a threat of significant disruption to the provision of health services to patients in England as a result of coronavirus, the Secretary of State must publish a notice to that effect specifying the date on which the healthcare disruption period is to end. This date must not be less than 28 days after the date on which the notice is published.

The Competition Act 1998 (Groceries) (Coronavirus) (Public Policy Exclusion) Order 2020

On 19 March 2020, the government announced that, as part of a package of measures to allow supermarkets to work together to feed the nation during the 2019 novel coronavirus disease outbreak (COVID-19), elements of competition law would be temporarily relaxed for the food sector (see Legal update, COVID-19: temporary relaxation of competition law to allow supermarkets to work together and CMA statement on approach to essential business cooperation ).

The COVID-19 outbreak has placed significant strain on the groceries supply chain in the UK. An effective response to the outbreak for this sector requires coordination between different parts of the supply-chain. For example, groceries suppliers (supermarkets and the businesses that supply to them) may need to work together and agree to limit the sale of particular groceries or to simplify product specifications through the supply-chain so that consumers can continue to purchase essential items; or to agree to share staff in the event of severe spikes in demand for products or widespread absence of staff due to illness. Businesses from other areas of food supply that would not normally supply to retailers but now wish to do so to support the coronavirus response may also seek to work together and with retailers to increase the supply of groceries to consumers.

It is equally important that those businesses that provide essential logistical services to groceries suppliers (such as haulage companies or other support services) can continue their normal operations, without which groceries suppliers would not be able to provide essential goods to consumers. For example, logistic service providers may need to agree to share staff or information relating to the available storage capacity of their warehouses. Such coordination would ordinarily breach domestic competition rules.

The Secretary of State is satisfied that there are exceptional and compelling reasons of public policy why the prohibition contained in Chapter I of the Competition Act 1998 ought not to apply to, or ought to be deemed never to have applied in relation to, certain agreements relating to activities by groceries chain providers and logistics services providers.

The Order provides that the Chapter I prohibition of the Competition Act does not apply to an agreement which:

Is between two or more groceries-chain suppliers (a retailer or supplier) or is between two or more logistics service providers.
In relation to groceries-chain suppliers relates to one of the following qualifying activities during the "groceries supply disruption period", which began on 1 March 2020 and will end when notified by the Secretary of State:
- Coordination on limiting purchases by consumers of particular groceries.
- Sharing of labour or facilities or coordination of the deployment of labour from other industries into the groceries-chain supplier workforce.
- Coordination on the range of groceries to be or being supplied by suppliers or retailers, which may include simplifying the supply chain and product specifications;
- Sharing information on the day to day stock position and shortages of groceries within any part of the UK.
- Sharing information on services provided by logistics service providers.
- Coordination on assistance for particular groups of consumers, including critical workers, the most clinically vulnerable and socially isolated groups, such as prioritising deliveries or opening stores at specific times to these groups or otherwise providing assistance to them.
- Coordination as regards the temporary closure of stores or opening hours of stores.
- Coordination on supplying groceries to consumers in areas of the UK that are particularly vulnerable to shortages of groceries.
The qualifying activity must be for the purposes of preventing or mitigating disruption to the supply of groceries to consumers in any part of the UK caused by a reason relating to coronavirus and must not involve the sharing between groceries-chain suppliers of any information regarding costs or pricing.
In relation to logistics service providers relates to one of the following qualifying activities during the groceries supply disruption period:
- Sharing information on labour availability.
- Sharing of labour or facilities or coordination of the deployment of labour.
- Sharing information on storage capacity, including ambient, chilled and frozen warehouse capacity for groceries
- Sharing information on storage or warehouse services which are intended or available for groceries.
- Sharing information on delivery vehicle capacity and the size, type or destination of delivery vehicles.
The qualifying activity must be for the purposes of preventing or mitigating disruption to the supply of groceries to consumers in any part of the UK caused by a reason relating to coronavirus and must not involve the sharing between logistics service providers of any information regarding costs or pricing.
Is notified to the Secretary of State by providing within 14 days (of this Order or the agreement) details of the parties, the date of the agreement, the nature of the agreement and the groceries to which it relates. The Secretary of State must maintain a register of notified agreements.
Meets the following conditions:
- The purpose of the agreement is to prevent or mitigate disruption to the supply of groceries to consumers in any part of the UK caused by a reason relating to coronavirus.
- The agreement does not have as its object or effect the prevention, restriction or distortion of competition within the UK, except in relation to the above qualifying activities in a market for the provision of groceries to consumers in any part of the UK affected by a disruption caused by a reason relating to coronavirus.

In addition, the prohibition contained in Chapter I of the Competition Act 1998 is to be deemed never to have applied in relation to such an agreement which was made in the period beginning on 1 March 2020 and ending the day before the day on which this Order came into force.

The Order provides that when the Secretary of State considers that there is no longer a significant disruption or a threat of significant disruption to the supply of groceries to consumers in the UK caused by a reason relating to coronavirus, the Secretary of State must publish a notice to that effect specifying the date on which the healthcare disruption period is to end. This date must not be less than 28 days after the date on which the notice is published.

The Competition Act 1998 (Solent Maritime Crossings) (Coronavirus) (Public Policy Exclusion) Order 2020

On 27 March 2020, the government announced that elements of competition law will be suspended to allow ferry operators in the Isle of Wight to work together during the COVID-19 outbreak (see Legal update, COVID-19: competition law to be suspended to support Isle of Wight ferry routes ).

Hovertravel, Wightlink, Red Funnel and their associated subsidiaries and sister companies (the Solent crossing operators) each provide maritime transportation across the Solent between the Isle of Wight and ports in mainland UK. These three businesses provide the only means by which passengers, freight and services flow between the island and the mainland. This includes essential "lifeline services", such as the transportation of medical supplies to the Isle of Wight resident or the transportation of the residents themselves to the mainland for essential healthcare.

The COVID-19 outbreak has significantly reduced demand for the services provided by the Solent operators. There is a significant risk that, in conjunction with the likely increase in staff absence due to illness or self-isolation, the Solent operators will be unable to continue to provide lifeline services to Isle of Wight residents. An effective response by the Solent crossing operators to these effects of the coronavirus outbreak requires coordination that would ordinarily breach domestic competition rules. For example, the Solent crossing operators may need to agree an integrated timetable that allows at least a minimal service to continue to operate

The Order provides that the Chapter I prohibition of the Competition Act does not apply to an agreement which:

Is between two or more Solent crossing maritime operators (Hovertravel Limited, Red Funnel Limited, Southampton Isle of Wight and South of England Royal Mail Steam Packet Company Limited, Wightlink Limited and Wightlink (Guernsey) Limited).
Relates to one of the following qualifying activities during the "crossings disruption period", which began on 16 March 2020 and will end when notified by the Secretary of State:
- Co-ordination as regards timetables to be operated.
- Co-ordination regarding the routes to be operated by any Solent crossing maritime operator.
- Co-ordination on the sharing of labour or facilities.
The qualifying activity must be for the purposes of preventing or mitigating disruption to the provision of Solent crossings caused by a reason relating to coronavirus and must not involve the sharing by Solent crossing maritime operators of any information regarding costs or pricing.
Is notified to the Secretary of State providing within 14 days (of the date of the Order or date of the agreement) details of the parties, the nature of the agreement and its date. The Secretary of State must maintain a register of such agreements.
Meets the following conditions:
- The purpose of the agreement is to prevent or mitigate disruption to the provision of Solent crossings caused by a reason relating to coronavirus.
- The agreement does not have as its object or effect the prevention, restriction or distortion of competition within the UK, except in relation to qualifying activities in a market for the provision of Solent crossing services affected by a disruption caused by a reason relating to coronavirus.

In addition, the prohibition contained in Chapter I of the Competition Act is to be deemed never to have applied in relation to such an agreement which was made in the period beginning on 16 March 2020 and ending on the day before the day on which this Order comes into force.

The Order provides that when the Secretary of State considers that there is no longer a significant disruption or a threat of significant disruption to the operation of Solent maritime crossings caused by a reason relating to coronavirus, the Secretary of State must publish a notice to that effect specifying the date on which the healthcare disruption period is to end. This date must not be less than 28 days after the date on which the notice is published.

COVID-19: Orders excluding certain agreements relating to health services, groceries and Solent maritime crossings from Chapter I prohibition published | Practical Law