Pro-active OFT innovation in competition law

News that UK farmers are to be told by the OFT that they can join forces to get better prices from supermarkets and other customers represents a breakthrough in the application of competition law not only for farmers but also for suppliers and retailers in other categories.

Whilst farmers now need to identify partners both legal and commercial that can help them to optimise their new freedom, all suppliers and retailers need to reassess their application of competition law.

Essentially, because of a combination of limited knowledge and an over-zealous application of the law some suppliers may become over-cautious in their dealings with major customers. In effect they confine themselves to the middle of the ball-park while their competitors, with a more pragmatic approach (and possibly the advantage of risk-neutral/risk-seeking inhouse lawyers) enjoy the freedom of operating up to the legal edge, without risk…

In doing so, it is vital that suppliers assess the risk–profiles of their own organisation (risk-averse, risk-neutral or risk-seeking), their internal and external legal advisers, and their major customers in order to ensure that al decisions do not net down to risk-avoidance, and thus compromise commercial opportunities.

In an unprecedented era where every little helps, it is vital that suppliers and retailers develop robust legal-commercial strategies that allow them to work to the legal limits, and give them the freedom to negotiate on a fair-share basis..