9.6 Competition law is likely to apply to a JV regardless of its classification, as it will be engaged in commercial or economic activities and thus is likely to come under the definition of "undertaking" in both UK and EC competition law.75
9.7 Public sector bodies wishing to establish JV entities should not see competition law as a barrier, especially if their activities are aimed at increasing competition in a market. However, this is an area where many public sector bodies will be less familiar.
9.8 Annex K provides information on the two main aspects of competition law to be considered when setting up the JV, namely:
● merger control (under the 2002 Enterprise Act and the EC Merger Regulation); and
● anti-competitive agreements (the Section I prohibition of the 1998 Competition Act, and Article 81 of the EC Treaty).
9.9 A further aspect of competition law, abuse of a dominant position in a market, may also be relevant after the JV has been set up, particularly if the activities of the JV are in a niche or uncompetitive area.
9.10 The public sector body and private sector participant engaged in the JV should determine whether or not they are compliant with the Competition Act 1998 (or other competition laws) in conjunction with their legal advisers. The Office of Fair Trading (OFT) has provided guidance to explain how the various competition laws apply.76 It can also provide informal advice to help in the determination of such issues.
9.11 Consideration also needs to be given at the outset to the application of procurement rules and competition law post formation of the JV. For example, the ability, or otherwise, of a public sector body to award works or services to the JV or any associated body should be planned and included within the original competition strategy and JV arrangements.
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75 See Public Sector Bodies and the Competition Act 1998, Office of Fair Trading.(www.oft.gov.uk/shared_oft/business_leaflets/ca98_mini_guides/oft443.pdf).
76 Available from the OFT website: www.oft.gov.uk/shared_oft/business_leaflets/ca98_mini_guides/oft443.pdf.