Part 13: General Schedule 2: Exempted contracts Part 1 - Counterparty Exempted Contracts Horizontal arrangements
Paragraph 3 exempts contracts between two or more contracting authorities that cooperate to deliver a service, i.e. where the association between the contracting authorities is "horizontal". An example may be a contractual arrangement between the authorities aimed at the joint performance of a common task related to delivery of their collective waste disposal functions.
	Sub-paragraph (2) sets out the tests to ascertain whether there is a "horizontal arrangement". These tests include a requirement that no more than 20% of the proposed activities to be carried out under the arrangement are carried out for purposes other than the authorities’ public functions. The purpose being to limit the use of the exemption to activities that are substantially within the public interest and public functions of the authority.
	Sub-paragraph (3) provides for an appropriate authority to make regulations that set out how to calculate the percentage of activities intended to be carried out under the arrangement for the purpose of sub-paragraph (2)(b).
	Sub-paragraph (4) explains that the exemption does not apply to public undertakings or private utilities. (A public undertaking or private utility may instead use the exemption at paragraph 6 of this Schedule.)