Competition Act to apply to councils

Local authorities and other public sector bodies must act more
carefully when they outsource services, following a judgement by
the Competition Commission Appeal Tribunal last week.

The Competition Act 1998 prevents businesses from entering into
anti-competitive agreements or from abusing their position if they
have significant market power. Businesses that breach the rules
risk investigation by the Office of Fair Trading and possible fines
as well as being sued by third parties affected by their
actions.

Local authorities were previously considered exempt from these
competition rules. However, last week’s judgement from the appeal
tribunal stated that a health and social services trust buying
places from care homes was acting as a business as the contracts
for purchasing the beds were business transactions.

Jeremy Scholes, head of competition law at legal firm Walker
Morris, said that public sector bodies would need to take the
Competition Act into account far more, particularly when they were
outsourcing the provision of services.

“The easy defence in these situations of simply saying ‘we are
not a business, we are public sector, the competition rules cannot
apply to us for that reason alone’ won’t work any more,” he
said.

– Bettercare Group Ltd v director general of fair trading from

www.competition-commission.org.uk/appeals/judge14.pdf