COVID-19: CMA provides guidance to business on its approach to co-operation in response to the pandemic

01 April 2020. Published by Melanie Musgrave, Of Counsel

Businesses, which do not benefit from the specific competition law exemptions granted by the Secretary of State (in the groceries, Solent Ferries and healthcare services sectors), may co-operate without fear of enforcement action by the Competition and Markets Authority (the "CMA"), provided that this co-operation is undertaken "solely to address concerns arising from the current crisis and does not go further or last longer than what is necessary".

The CMA has published its promised guidance on its approach to co-operation in response to COVID-19; its driver is an acknowledgement that competition law enforcement concerns may impede business co-operation which is necessary in order to deal with the current crisis and ensure the security of supply of essential products and services.

What can businesses do?

They can coordinate action on a temporary basis where this 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.

On this basis, provided that the co-ordination does not go beyond what is necessary, there is unlikely to be a competition law concern arising from co-ordinated action to:

  • avoid a shortage or ensure security of supply;
  • ensure a fair distribution of scarce products;
  • continue essential services; or
  • provide new services, such as food deliveries to vulnerable consumers.

What must they not do?

They should not exploit the current situation either through using the crisis as cover for illegal collusion or by profiteering and charging inflated prices, as has been seen with much sought-after hand sanitisers; as previously reported, the CMA has set up a task force to monitor developments.

Specifically, the CMA has made it clear that business should not:

  • exchange commercially sensitive information about future pricing or business strategies;
  • exclude smaller rivals from efforts to co-operate/collaborate to ensure security of supply or denying rivals access to supplies/services;
  • collude to keep prices artificially high in order to mitigate falling demand; or
  • co-ordinate beyond the scope of what is necessary.

What about businesses in the financial services sector?

The Financial Conduct Authority and the Payment Systems Regulator, as concurrent competition regulators with the CMA, have confirmed that they are supportive of the CMA's guidance and will take a consistent approach to their competition law enforcement activities in the financial services sector.

Need further guidance on whether your initiatives comply with UK or EU competition law?

The CMA intends to keep its guidance under review and update it, if necessary. It has also indicated a willingness to provide additional, informal guidance (subject to resourcing constraints) where, despite the guidance, businesses and their legal advisors remain 'genuinely uncertain' about the legality of proposed actions and the matter is 'of critical importance'.

The European Commission has also announced that it has set up a dedicated mailbox for companies seeking informal guidance on the compatibility of their specific co-operation initiatives with EU competition law.

To read more, click the link below.

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