The coronavirus pandemic has placed immense pressure on businesses and supply chains throughout the UK. To help alleviate some of that pressure, the UK Government has relaxed aspects of the competition rules that usually apply – including for the milk supply chain.

The closure of cafes and restaurants resulted in demand shifting almost entirely to retailers, and in an oversupply of milk. Processors have reduced prices and, in some instances, have refused to accept continued supply from farms.

UK competition law ordinarily prohibits co-ordination of commercial behaviour or business practices between competitors.

However, to help match the supply of milk to the unexpected changes in demand, the UK Government has suspended some of the usual rules so that competitors in the supply chain can work together. Similar measures have been introduced for supermarkets and their suppliers.

The exemption applies across the dairy supply chain.

Milk producers and processors will be temporarily allowed to collect and share information on milk quantities and customer demand, and to coordinate the processing and storage of surplus milk and the temporary reduction of milk production.

Logistics firms supporting the dairy supply chain can share information on vehicle capacity and delivery destinations. All parts of the supply chain can coordinate on labour issues and share available facilities.

This relaxation of competition rules is subject to some important caveats. To be protected, any agreement must be limited to the qualifying types of conduct, and must maximise supply chain efficiency and storage capacity and/or reduce the need to dispose of surplus milk.

It must not involve any sharing of information around costs and pricing.

Importantly, within 14 days of making an agreement, businesses must notify the Secretary of State, who will then publish the agreement on a register.

This transparency will facilitate scrutiny of agreements, including by the Competition and Markets Authority, to guard against abuse of this temporary relaxation of the rules. Less scrupulous businesses are much less likely to try to take advantage of the exception if they know their agreement will have to be published.

The measures described above are temporary, applying from agreements entered into from 1 April 2020 and subject to an expiration date that is being kept under review (with a current 'backstop' date of 2 August).

The CMA will scrutinise the use made of the exceptional rules introduced during the period of crisis, with a special task force monitoring market developments.

It is also likely to be even stricter in its enforcement once the crisis has passed, to ensure the 'normal' rules take hold again. Agriculture – and dairy in particular – has a poor track record with competition regulators, so may well be a particular focus of that post-crisis spotlight.

Any business that wants to rely on the temporary exception, or is unsure about its competition law obligations generally, should therefore seek legal advice.

This article originally appeared in the Scottish Farmer.