COVID-19: Coronavirus and Competition Law - The Current Enforcement Scene
Just as businesses are having to adapt in the current health and economic crisis, the Competition and Markets Authority (the "CMA") and other competition regulators in the UK and across the globe are also having to adjust their working practices and their priorities. Competition law compliance remains an important consideration.
The CMA and other competition regulators are keen to ensure that competition law enforcement concerns do not stand in the way of co-operation between competitors which is necessary in order to deal with the coronavirus crisis and ensure security of supplies of essential products and services. However, the message is that, even in these very difficult times, competition law still applies, and competition regulators will not tolerate unscrupulous businesses exploiting the situation either through illegal collusion under cover of the current crisis or profiteering through charging excessive/unjustifiable prices.
A Summary of Developments:
- Specific temporary exclusions from the application of the UK's Chapter I prohibition for certain agreements
forinvolving the grocery, health services and Solent ferries sectors
- Reassurances and guidance from the CMA that businesses not benefiting from these specific exemptions may co-operate during the crisis without fear of enforcement action where their action:
- is appropriate and necessary to avoid a shortage or ensure security of supply;
- is clearly in the public interest;
- contributes to the benefit or wellbeing of consumers;
- deals with critical issues resulting from the pandemic crisis; and
- lasts no longer than is necessary. (For a more detailed summary of the CMA's guidance, please click here)
- The launch of a CMA task force to monitor sales and pricing practices to ensure that the relaxation of the rules does not give rise to exploitative business practices like excessive pricing for in-demand goods (such as hand sanitiser and face masks)
- The CMA has written an open letter to the pharmaceuticals and food and drinks industries about reports that a minority of companies in these important sectors are charging unjustifiably high prices for essential goods or making misleading claims about their efficacy
- The CMA is continuing with its other investigations and decision-making
- The Financial Conduct Authority and Payment Systems Regulator are supportive of the CMA's guidance and will adopt a consistent approach in their enforcement activities
- The European Competition Network has confirmed that it will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply, but it will take enforcement action against companies exploiting the current situation "by cartelising or abusing their dominant position"
- The European Commission is offering the possibility of further guidance for specific co-operation initiatives in certain circumstances
- UK: The CMA is continuing to meet its statutory deadlines when conducting its merger investigations, but may make use of permitted extensions to the fixed timetables, where necessary. It is understood to be asking that merging parties engage early to discuss timing of notifications as the current crisis may impede its ability to conduct market testing
- EU: The European Commission is actively encouraging merging parties to delay merger notifications originally planned until further notice
- The European Commission has put in place various supporting measures, including issuing guidance and adopting on 19 March 2020 a Temporary Framework for state aid measure to support the economy in the current COVID-19 outbreak
- Although the UK withdrew from the EU on 31 January 2020, it is still subject to the state aid rules during the Transition Period.
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