Britain’s food and drinks industry has asked the government to suspend competition law in the event of a no-deal Brexit so that firms can work together to avert food shortages without facing large fines for collusion.

Collaboration between large companies is controlled to prevent cartels harming consumers’ interests. The Food and Drink Federation (FDF) told the BBC the government had not yet confirmed whether companies would be able to work together to direct food supplies to the areas of greatest need if there were delays as a result of crashing out of the EU.

Q&A What does a no-deal or WTO-rules Brexit mean? Show Hide If the UK leaves the EU without a deal it would by default, become a “third country”, with no overarching post-Brexit plan in place and no transition period. The UK would no longer be paying into the EU budget, nor would it hand over the £39bn divorce payment. The UK would drop out of countless arrangements, pacts and treaties, covering everything from tariffs to the movement of people, foodstuffs, other goods and data, to numerous specific deals on things such as aviation, and policing and security. Without an overall withdrawal agreement each element would need to be agreed. In the immediate aftermath, without a deal the UK would trade with the EU on the default terms of the World Trade Organization (WTO), including tariffs on agricultural goods. The UK government has already indicated that it will set low or no tariffs on goods coming into the country. This would lower the price of imports – making it harder for British manufacturers to compete with foreign goods. If the UK sets the tariffs to zero on goods coming in from the EU, under WTO “most favoured nation” rules it must also offer the same zero tariffs to other countries.

WTO rules only cover goods – they do not apply to financial services, a significant part of the UK’s economy. Trading under WTO rules will also require border checks, which could cause delays at ports, and a severe challenge to the peace process in Ireland without alternative arrangements in place to avoid a hard border.

Some no-deal supporters have claimed that the UK can use article XXIV of the General Agreement on Tariffs and Trade (Gatt) to force the EU to accept a period of up to 10 years where there are no tariffs while a free trade agreement is negotiated. However, the UK cannot invoke article XXIV unilaterally – the EU would have to agree to it. In previous cases where the article has been used, the two sides had a deal in place, and it has never been used to replicate something of the scale and complexity of the EU and the UK’s trading relationship. The director general of the WTO, Roberto Azevêdo, has told Prospect magazine that “in simple factual terms in this scenario, you could expect to see the application of tariffs between the UK and EU where currently there are none”. Until some agreements are in place, a no-deal scenario will place extra overheads on UK businesses – eg the current government advice is that all drivers, including lorries and commercial vehicles, will require extra documentation to be able to drive in Europeif there is no deal. Those arguing for a “managed” no deal envisage that a range of smaller, sector-by-sector, bilateral agreements could be quickly put into place as mutual self-interest between the UK and EU to avoid introducing or to rapidly remove this kind of bureaucracy. Martin Belam

Many trade experts, from the government’s own analysts to the Bank of England, expect a no-deal Brexit to cause severe disruption at ports, potentially delaying food imports. Boris Johnson has committed to leaving the EU on 31 October whatever the implications, and has put Michael Gove in charge of preparing to exit without a deal.

FDF members, including large companies such as Associated British Foods, Mondelēz and Nestlé, risked incurring large fines from the Competition and Markets Authority (CMA) if they collaborated, the industry body said.

“Competition law is important, but in the event of no-deal disruption, if the government wants the food supply chain to work together to tackle likely shortages – to decide where to prioritise shipments – they will have to provide cast-iron written reassurances that competition law will not be strictly applied to those discussions,” FDF’s chief operating officer, Tim Rycroft, said.

The CMA could be legally obliged to fine manufacturers if they work together. The competition regulator does not have the power to decide to waive the fines, but the government can order their suspension under exceptional circumstances. The government has used this power four times before, including to protect petrol supplies during the 2012 fuel crisis.

Andrew Tyrie, the former Conservative MP who leads the CMA, said: “This is a matter for government as the secretary of state can exempt certain agreements from competition law in the public interest. The CMA stands ready to advise government as necessary in its preparations for a no-deal exit.”

Rycroft said the food industry was still waiting for the government to guarantee that this would happen. “We asked for these reassurances at the end of last year and, despite support from Defra, we’re still waiting. Hopefully, now that Michael Gove is in charge of all no-deal planning, we can make progress,” he said.

The Guardian understands that the British Retail Consortium has raised similar issues with the government, and the Department for Environment, Food and Rural Affairs (Defra) asked for concrete examples of why competition law would need to change.

Major food and drink brands and producers declined to comment on the FDF’s demands and the potential impact on their businesses and for consumers.

A spokesperson for the Co-op convenience chain said: “We are extremely concerned that our customers will be hit by the impact of a no-deal Brexit. There are risks to maintaining the levels of choice that shoppers expect, and there will be inevitable pressure from the additional tariff costs or transportation delays we could experience.

“We continue to work closely with our suppliers on contingency plans but it is not possible to mitigate all the risks to our supply chain and we fear significant disruption in the short term if there is no Brexit deal.”

The food and drink industry is Britain’s biggest manufacturing sector, ahead of automotive and aerospace. It employs 4 million people.

Tim Lang, a professor of food policy at City University in London, who this week wrote a highly critical article in the Lancet accusing the government of being “secretive” over the public health dangers of a no-deal Brexit, said: “This is an institutional crisis of the government’s own making through its lack of leadership. The food industry, rightly, does not want to be blamed for the likely shortages and has been trying for two years to warn the Government, while consumers are left in the dark. This also drives a coach and horses through national advice on nutrition and health.”

Helen Browning, an organic farmer and chief executive of the Soil Association, said: “This shows the desperate situation that faces food and drink producers in a no-deal Brexit scenario. If we crash out of the EU without a deal, we are putting businesses and farmers who rely on imports and exports at huge risk of financial catastrophe, with major implications for wider society too.”

A spokeswoman at the Department for Business, Energy and Industrial Strategy said the UK produced half of the food British people eat.

“The UK will be leaving the EU on 31 October and our top priority is supporting consumers and businesses in their preparations for Brexit. We are working closely with the food industry to support preparations as we leave the EU,” she said.