OFT issues competition advice under new "Short-form Opinion" process

On 27 April 2010, the OFT issued its first advice under a new process which allows it to give firms clarity on certain competition law issues.

Under the Short-form Opinion process, the OFT aims to provide guidance to businesses seeking clarity on how the law applies to prospective collaboration agreements between competitors which raise “novel or unresolved” competition issues. The process involves parties submitting a statement of facts which is agreed between them and which the OFT does not verify for accuracy or completeness. The OFT does not carry out any market testing and instead bases its opinion on the submitted “assumed facts”.

In the first trial use of the process, grocery wholesalers Makro-Self Service and Palmer & Harvey requested clarification on the competition implications of a proposed joint purchasing agreement. The OFT identified that certain exchanges of information between the firms could potentially lead to a reduction in competition. However following the OFT’s advice, the parties have agreed to ensure the data they supply to each other is general and aggregated, preventing either company from extrapolating specific or sensitive information.

Even though the OFT aims to provide wider guidance to a range of businesses or sectors, the Short-form Opinion process will only likely be available for a limited number of cases per year and the OFT will choose these cases by applying its usual prioritisation principles.