COVID-19 update: Commission adopts Antitrust Temporary Framework

In addition to its increasing flexibility in appraising State aid relating to the COVID-19 crisis (see our articles of 20 March, 30 March and 6 April in this respect), the European Commission also issued on 8 April a Temporary Framework relating to business cooperation in response to situations of urgency stemming from the COVID-19 outbreak. The same day, the European Commission also issued Guidelines on the optimal and rational supply of medicines to avoid shortages during the COVID-19 outbreak.

This Temporary Framework follows an earlier announcement in which the European Commission and national competition authorities jointly indicated to continue to apply antitrust rules, but not to actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply.

In its Temporary Framework, the European Commission indicates that in the health sector the following cooperation through trade associations is generally not problematic to the extent that sufficient safeguards against anticompetitive exchanges of information are put in place:

• Coordinating joint transport for input materials;
• Contributing to identifying those essential medicines for which, in
  view of forecasted production, there are risks of shortages;
• Aggregating production and capacity information, without exchanging
  individual company information;
• Working on a model to predict demand on a Member State level, and
  identifying supply gaps; and
• Sharing aggregate supply gap information, and request participating
  undertakings, on an individual basis and without sharing that
  information with competitors, to indicate whether they can fill the
  supply gap to meet demand (either through existing stocks or increase
  of production).

Further, the European Commission acknowledges that cooperation might even go further such as the coordination of the reorganisation of production with a view to increasing and optimising output. While such cooperation may require exchange of information that would normally be problematic from a competition law point of view, the European Commission indicates that such measures may be acceptable to the extent that they are (i) designed and objectively necessary to actually increase output in the most efficient way, (ii) temporary in nature and (iii) proportional.

Undertakings are however required to document all exchanges and agreements between them and make them available to the European Commission on request.

In addition, the European Commission adds that the fact that cooperation is encouraged/coordinated by a public authority would be taken into account for the antitrust assessment and that such cooperation would not concern an enforcement priority of the European Commission. Moreover, if such cooperation would result from an imperative request from public authorities, it would in any event not constitute an antitrust infringement.

Finally, the European Commission indicates that undertakings may obtain prior guidance at the European Commission’s own discretion (whereas undertakings are normally required to make an antitrust assessment at their own risk).

The European Commission has in this respect already provided such comfort letter to Medicines for Europe, formerly the European Generic Medicines Association, concerning a voluntary cooperation project among pharmaceutical producers – both members and non-members of the association –that targets the risk of shortage of critical hospital medicines for the treatment of coronavirus patients.

While the abovementioned Guidelines do not concern antitrust, it may be useful to read them in conjunction with the Temporary Framework as both texts aim to prevent shortages of supply and ensure the optimal and rational supply of medicines.

We continue to closely monitor the situation. We have a dedicated group of antitrust experts in our offices able to guide companies through the applicable antitrust rules. Should you need assistance, have any further questions regarding this client alert or antitrust generally, please do not hesitate to contact any of the individuals listed.