Does suspending competition law to deal with the petrol shortage set a poor precedent?

Early signs of petrol shortages in the UK appeared in September 2021 and have only begun to recede over the past fortnight. Disruptions across the production line, along with a stream of panic buying, have compelled the UK government to waive competition laws and sanctions to allow for exchange of data both horizontally and vertically. This process comprised the so-called ‘Downstream Oil Protocol’. 

According to the Cabinet Office, the government needed an overarching approach to temper the crisis on two fronts; namely, to end panic buying and hoarding, and to ensure smooth distribution of supplies from oil refineries to haulage companies to consumers. The government needed emergency rationing plans and cooperation from businesses. To this end, the Cabinet Office decided that the sacrifice of competition rules for a specific and limited period would prevent pumps from running dry.

Prior to the suspension of competition law, horizontal exchange of information was prohibited in the UK by both Article 101 TFEU and the Competition Act 1998. Even a single exchange of information or data on market activity could lead to astronomical fines. The underlying idea behind the regulation is the desire to avoid excluding new competition, and a subsequent oligopolistic market, where consumers suffer a restricted range of products at higher prices. 

Surprisingly, the suspension of competition law is not a rare phenomenon in the UK — particularly since Brexit and the catastrophe of the COVID-19 pandemic. Similar emergency measures were introduced as a lifeline in the wake of food supply shortages and disruption to Isle of Wight ferry routes in the course of the last year or so. It must be noted that not all competition law was suspended, but only that which pertained to data exchange and needed to facilitate critical cooperation (and temporarily, at that). Yet the pattern the government has followed is concerning. 

A poor precedent is set by the frequency of such suspensions of competition law. It is not uncommon for laws and rules to be bent and halted in times of national crisis, but the law needs to represent a reliable avenue for the protection of the people. The three such suspensions in the space of two years might have helped alleviate the respective crises, but this took place at the cost of presenting the law as malleable and frail. This is not a desirable result in the aftermath of a pandemic, nor a shaky withdrawal from the European Union.

With a return to normality, the source of the exchanged data will be cut, but the data can still be utilised.

The petrol crisis effected a red alert in the UK. The information exchanged between refineries and local petrol stations initially targeted those areas where the threat to consumers was imminent. Petrol stations exchanged their data on stock levels and demand with haulage companies and downstream distributors, with oil distributed selectively as a result. While cooperation was intended to only be temporary, the data exchanged now may facilitate future, under-the-radar cooperation. Another worry is the effect of geographic disparity in resource targeting; namely, uneven pricing across the country, which could pose a challenge for consumers in certain regions. 

However, it is important to view the crisis and the suspension solution holistically. The TFEU provisions, Competition Act 1998, and modern market theory have the protection of consumers and the public as a common denominator. The Cabinet Office implemented emergency measures for the same purpose. When a rule does not serve its end purpose, albeit for a specific and relatively brief amount of time, change is desirable. Had the government not enacted the suspension, the petrol crisis would still be looming over our heads.

It only remains to be seen whether consecutive suspensions were a fast-track solution to a more profound issue. There is no denial that the crisis was dire and everyday life was impacted yet again within the space of a couple of years. As far as problematic precedent is concerned, however,  competition rules on information exchange and the cooperation of competitors have appeared fragile and ineffective in this time of national crisis.