Brexit fears prompt calls for competition law exemption

posted by Charlie Hart
7 August 2019

The food industry is urging the UK government to set aside aspects of competition law to allow suppliers and retailers to work closer together to tackle food shortages in the event of a no-deal Brexit.

The Food and Drink Federation (FDF) has repeatedly asked the government for clarity on issues such as how firms should direct supplies in a no-deal scenario, it said today.

Current rules do not allow suppliers and retailers to discuss supply or pricing. If businesses are found guilty of anti-competitive behaviour, they can be fined by the Competition and Markets Authority.

Tim Rycroft, chief operating officer of the FDF, warned the BBC there would be “selective shortages” of food which could go on for “weeks or months” if no-deal is reached.

"It may be the government is going to come to us and say, 'can't you guys work together to ensure that remote communities or the elderly or children - at risk groups - don't suffer from these shortages'," he said.

Rycroft added the industry would be happy to help in such a situation, but only if “cast iron reassurances” were given that competition law would not be applied.

The industry had asked for these reassurances at the end of last year, but they were still waiting for answers, he said.

This comes amid mounting concerns over food shortages in the event of a no-deal Brexit. Yesterday it emerged that Domino's Pizza has spent £7m on stockpiling imported ingredients such as tomato sauce for its pizza bases and toppings such as frozen chicken, tuna and pineapple.

In an earnings statement, the company said: “A potential no-deal Brexit carries the increased risk of disruption to raw material supplies into the UK and foreign exchange volatility which could increase food costs.”

And earlier this week, Tim Lang, professor at City University London's Centre for Food Policy, warned of disruption and shortages of fruit, vegetables and short shelf-life food supplies that rely on imports.

Writing in The Lancet, he said: “Most UK fresh food imports come from within the EU - 19% of fruit and vegetables from Spain alone - and even sources outside the EU such as Morocco or Egypt are via EU trade deals.”

He predicted that food prices “are likely” to rise by more than 10% and warned: “Disruption to just-in-time logistics would be compounded by a fall in the value of sterling.”

Meanwhile, it emerged this week that only 741 companies have applied for government grants from an £8m training fund announced last December to help them cope with a possible no-deal Brexit customs system.

This is a tiny fraction of the 240,000 British businesses that currently trade with the EU.

Mike Spicer, director of policy at the British Chambers of Commerce, commented: “Such a low number of firms applying for grant-funding is concerning and signals the need for much greater levels of awareness among affected firms to ensure they are prepared."

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