In brief:
- The CMA has released updated guidance on how businesses can collaborate without breaching competition law.
- The guidance outlines when collaborations, such as joint research or purchasing, may be permitted under section 9 of the Competition Act 1998 and relevant block exemptions.
- Businesses should seek specialist advice before collaborating to ensure compliance and make the most of opportunities.
The Competition and Markets Authority ("CMA") has recently published updated guidance on how businesses can collaborate in a way that does not fall foul of competition law.
Competition law prohibits agreements between businesses that have the object or effect of distorting or limiting competition in a market. Such agreements are typically described as "horizontal" (i.e., between businesses that currently or are likely to soon operate at the same level of the supply chain in a market) or "vertical" (i.e., between businesses at different levels of the supply chain). Each type of relationship can give rise to competition concerns, but the CMA recognises that collaboration between businesses can also enhance competition through, for example, encouraging innovation or increasing efficiency.
The CMA's recent guidance summarises the mechanisms by which common forms of collaboration between competitors, such as research and development or joint purchasing, may be allowed under competition law, either because they do not limit competition, or the resulting efficiencies outweigh the potential harm to competition.
These mechanisms can be found in section 9 of the Competition Act 1998, which provides for a general exemption to the prohibition against anti-competitive agreements where certain conditions are met, and the various block exemptions that apply to specific categories of agreements which the CMA considers would be likely to satisfy the section 9 exemption and are therefore automatically exempt.
If you are considering collaboration with another business, it is essential to seek specialist advice to ensure that you make the most of opportunities for your business while mitigating any risks of breaching competition law.
We encourage you to contact our team to discuss what you are trying to achieve and how we can help.