COVID-19: not an excuse to avoid competition law

Although some targeted relaxation of the antitrust rules may be expected, the Covid-19 pandemic is not an invitation or an opportunity for companies to collude in a way that ignores competition law prohibitions.

The spread of Covid-19 was declared a pandemic on 11 March 2020 by the World Health Organisation. Governments around the world have pledged to do what is necessary in order to support their economies. The European Commission has already proposed a framework to allow governments to grant direct aid to companies harmed by the pandemic.

However, without specific dispensation, the general rules on competition law still apply. Therefore, it is still prohibited for two companies to agree to take action which restricts competition as between them (which includes them exchanging non-public competitively sensitive and strategic information). While in a case of exceptional disruption causing risk to health greater cooperation between competitors may ultimately be justified where there are real efficiency benefits, such arguments are finely balanced and by no means straightforward to bring.

Governments and competition authorities may provide for specific dispensations from the rules in times of crisis. In relation to Covid-19, we have already seen the following:

• The Norwegian government granted the Norwegian transportation sector a three month temporary exception from the prohibition on anticompetitive agreements and practices. The rationale for the exception is to help maintain transportation of passenger and goods in Norway in order to secure the access of the population to goods and services.
• Some governments and competition authorities in Europe have been indicating that, given the exceptional circumstances, they may be prepared to waive normal competition rules to allow retailers to cooperate and share information on supplies and arranging deliveries. . On 19 March 2020, the UK government confirmed that it is temporarily relaxing competition law to allow supermarkets to “work together to feed the nation”. This will permit retailers to exchange information on stock levels and allow a level of cooperation to keep stores open, share distribution depots and delivery vans; and even going as far as pooling staff, if that is necessary to help meet demand. This will be done through legislation (to amend temporarily elements of the Competition Act 1998) which will be laid before the UK Parliament shortly. The UK Competition and Markets Authority issued a statement on the same day saying that it welcomes the UK government’s announcement; that the CMA does not intend to take enforcement action against businesses which are cooperating or rationing products where this is done to protect consumers; but that it will not tolerate “unscrupulous businesses exploiting the crisis as a cover for non-essential collusion”. The CMA also promised further guidance on this was on its way.

In each case, any exception will not go further than what is strictly necessary in order to achieve its aim, including being limited in time. Also, to the extent that a national exception could have cross-border impact, that will offer no protection from enforcement under either the EU or a neighbouring country’s regime.

Further, an exception or relaxation of the competition rules in one area cannot be seen as an invitation or opportunity to ignore those rules in areas – of the economy or other geographies - where no such exception or relaxation applies. Companies being approached by their peers with invitations – or even pressure - to cooperate more closely given the exceptional circumstances brought on by the Covid-19 pandemic should be wary of acting without first considering the risks and determining where are the boundaries between what is permitted and what is still illegal. Otherwise, rash decisions now may come back to bite when the dust has settled.

If this note raises any questions and/or if you would like to discuss what cooperation with competing firms may be possible, please get in contact with one of our team across Europe.