Over-zealous OFT is thwarting collaboration in the industry, warns Co-op Group

Fear of inadvertently breaching competition law is thwarting the progress of important collaborative initiatives in the food industry, retail bosses have complained.

Speaking at the Guardian​ newspaper’s climate change summit last week, Co-op Group head of sustainable development Paul Monaghan said that many food retailers and manufacturers were now so wary of breaching competition rules that lawyers were going through the minutes of meetings to ensure that no one had stepped out of line.

He said: “Everyone talks about the importance of collaboration to improve efficiency in the supply chain, or to tackle climate change, but in practice, people are incredibly wary of sharing information about anything with their competitors because the OFT [Office of Fair Trading] is breathing down their necks all the time. Look at what happened with the dairy companies [some of whom were recently fined substantial sums for allegedly colluding to raise the price of milk in 2002].”He added: “It’s getting ridiculous. We’ve got to the point now where it’s leading to inertia. We’ve got lawyers going through the minutes of meetings. No one wants to start some collaborative initiative and then discover that they are going to be landed with a massive fine three years later.”

His comments were echoed recently by Godfrey Rowland, chairman of the Food and Drink Federation’s (FDF’s) biscuit, cake, chocolate and confectionery sub-sector group, who said the current climate of rising commodity prices had brought this issue to the fore. “You sometimes feel like you ought to bring your lawyer along with you to sector group meetings just in case. The OFT is actively encouraging whistleblowers.”

Susan Singleton, a solicitor at law firm Singleton’s, told Food Manufacture​: “There is definitely a real concern in the industry about what is and isn’t appropriate information to share. I am regularly asked to sit in on meetings or go through PowerPoint presentations for clients to ensure that they have not put something up there that they shouldn’t.

“People are also being much more careful about what information they include in emails. The OFT is offering whistle-blowers up to £100,000 to inform on illegal cartels, so you can see why people are being over-cautious.”

John Gollaglee, a partner at law firm Pannone, said trade associations that facilitated interaction between companies often in direct competition with each other were regarded with “interest and suspicion” by the OFT.

He added: “There is an atmosphere of fear in the industry because of recent events. But the only solution is to make your staff aware of the legislation so that no one is in any doubt about what is and isn’t acceptable when it comes to sharing information with competitors.”

And this didn’t simply mean not leaving a paper trail or incriminating emails, he said. “Investigations can be triggered if the OFT sees signs of market manipulation. They don’t need a whistleblower, or hard proof of a breach in order to start looking.”

The FDF said: “In the light of the current and recent investigations by the OFT, we are very mindful of the fact that the food sector has come under scrutiny, and we have internal guidelines as to what is appropriate and what isn’t in discussions within the industry.

“Clearly, we want our members to be able to work together, but within competition rules. For example, we sought legal advice before we embarked on the recent transport collaboration initiative.”