The UK formally relaxes competition law rules to facilitate Covid-19 response

The UK government made an Order which partially exempts some independent healthcare providers from existing competition law rules.

Chapter 1 of the Competition Act 1998 prohibits organisations from making agreements and certain decisions which have the “object or effect” of restricting competition in the UK. If such agreements are made, under the 1998 Act, they are void, and organisations can be fined significant amounts for breach of competition law. Amongst other things, the prohibition normally prevents organisations from sharing business sensitive information such as information about supply chains and pricing.

The Competition Act 1998 (Health Services for Patients in England) (Coronavirus) (Public Policy Exclusion) Order 2020 was made as part of the government’s COVID-19 response, and excludes some agreements from the usual Chapter 1 prohibition. It came into force on 27 March 2020. According to the Explanatory Memorandum, its purpose is “to ensure that independent healthcare providers are able to support the NHS through expanding its capacity to respond to the spread of [coronavirus] in England”

The Order does not act as a catch-all exclusion of the Chapter 1 prohibition. Only certain types of agreements which meet certain conditions are exempt. Ultimately, the Order allows healthcare providers to enter into certain types agreements which may otherwise have been prohibited under UK competition law, if the purpose of those agreements is to facilitate and improve the NHS’s response to COVID-19 in England.

To fall within the exemptions, the agreement must:

• Be between designated providers. This includes agreements between NHS England and non NHS providers; between NHS bodies and independent providers; and between independent providers.

• Relate to one of the following qualifying activities (provided it does not involve the sharing between independent providers of any information regarding costs or pricing).
  1. information sharing relating to capacity for providing health services;
  2. co-ordination to deploy staff between NHS and independent providers, or between two or more independent providers;
  3. sharing / loaning facilities;
  4. joint purchase of goods, materials, vehicles, plant, apparatus, facilities or services;
  5. co-ordinating health service provision.

• Be notified to the secretary of state within 14 days of the agreement being made. For each relevant agreement, the secretary of state needs to be told the names of the parties, the date, the nature of it and the health services it relates to. The secretary of state must keep a public register of these notified agreements.

• Meet both of the following additional requirements:
  1. The purpose of the agreement must be to assist the NHS in dealing with the effects (or likely effects) of coronavirus in England; and
  2. The object or effect of the agreement must not be to prevent, restrict or distort competition within the UK, except in relation to qualifying activities in a market for the provision of health services to patients in England that is affected by coronavirus.

Providers should tread carefully if they wish to rely on the Order to enter agreements which may previously have been prohibited under the 1998 Act. The exemptions in the Order are not absolute, and there are a number of other considerations which are likely to be relevant to providers in the circumstances, which include the following:

• This Order only applies to dealing the effects of coronavirus in England. It may not be relied on where it applies to dealing with the effects of coronavirus in other UK countries.
• The requirement to be for the purposes of assisting the NHS deal with coronavirus means that it may not always apply to agreements between independent healthcare providers, unless it is clear from the agreement that this is in fact the purpose.
• Agreements to share certain sensitive commercial information remain void (and in breach of the law). In other words, the Chapter 1 prohibition has not fallen away entirely and any agreements made under the Order should still be carefully constructed so as to ensure they do not include certain information, such as pricing information.
• The Order has retrospective effect and applies to agreements made from 1 March 2020. This is likely to catch most agreements which were a response to COVID-19, but agreements made before this date would not be caught by it.
• The Order is reactive and is limited to agreements which relate to the COVID-19 response only. It will not, for example, provide any exemption for the sharing of information or collusion on future business planning even if that may – in practical terms – appear relevant to the COVID-19 response.
• The Order is intended to be temporary and should only have force so long as the Secretary of State considers there to be a “a significant disruption or a threat of significant disruption to the provision of health services in England as a result of coronavirus”. Once that is no longer the case (expected to be less than 12 months from the Order being made), a notice must be published and the Order will be suspended on a date specified in the Notice. If providers are seeking to rely on the Order, they should keep an eye out for the relevant Notice(s) so they are aware when it is no longer applicable. Providers may need to terminate agreements, or amend them, so that they do not fall foul of the law after that date.
• Some organisations may be subject to the equivalent EU laws on competition law as well as the Chapter 1 prohibition. Article 101 TFEU provides an equivalent prohibition to the Chapter 1 provision where trade between EU member states may be affected (as opposed to just trade in the UK). Whilst the EU Commission has confirmed it is taking a supportive stance to facilitate an effective COVID-19 response, it does expect organisations to operate within EU competition laws.

If providers are unclear about their competition law obligations or require any assistance or advice on how competition law may apply to their business in response to COVID-19 or more generally, please contact Ridouts on 0207 317 0340.