The Oil and Gas Authority (OGA) has recently published a paper titled Competition & Collaboration which provides guidance on the competition law considerations of the MER UK Strategy. The OGA has been tasked with implementing the Strategy, which came into force on 18 March 2016, in response to the downturn in the Oil and Gas sector.
The Strategy places a number of obligations on licence holders and operators. In particular, they are required to seek out opportunities to collaborate and cooperate with other industry participants where this can improve recovery of petroleum or reduce costs.
As covered in our previous article on the MER UK Strategy (available here), the Competition and Markets Authority (CMA) has raised concerns that the Strategy’s emphasis on collaboration could potentially lead to infringements of competition law.
In this guidance paper, the OGA addresses the concerns raised by the CMA and seeks to reassure industry participants that not all types of cooperation and information sharing are unlawful. The guidance reflects the OGA’s concern that competition law may have a ‘chilling effect’ on its efforts to promote legitimate collaboration and cooperation in the Oil and Gas sector.
Notably, the paper stresses that industry participants should not use competition law as an “excuse” not to comply with their MER UK obligations.
The paper highlights a number of considerations, such as pro-competitive effects, and potential exemptions, such as de minimis, which mean that not every form of collaboration or information sharing will necessarily fall foul of competition law.
The guidance paper also seeks to reassure industry participants that the OGA “has actioned the recommendations made by the CMA”. No further detail is provided on this.
This guidance is useful not only because it provides a helpful summary of the key competition law issues, but also because it clarifies the OGA’s understanding of those issues.
However, it is important to bear in mind that it is ultimately for industry participants to make their own assessment as to whether any action they take complies with competition law. The fact that an agreement to cooperate or to share information has been sanctioned by the OGA will not automatically mean that it is compliant. While this guidance provides an overview of the key competition law provisions, it is no substitute for detailed legal advice on whether a specific agreement or exchange of information is lawful.
The OGA’s guidance can be found here.
You might also be interested in reading our briefing paper Maximising Economic Recovery of the UK Continental Shelf (MER UK): Competition Law Update.