Reed Smith Client Alerts

The spread of the coronavirus (COVID-19) is massively disrupting businesses, creating volatility in the stock markets and causing major concerns in the population. Even in times of crisis, businesses are required to respect competition law rules to avoid fines and damages, and violations could easily backfire once the COVID-19 outbreak is stopped. Competition regulators in Europe, including the UK, Poland, Greece and Iceland, have now started addressing COVID-19-related antitrust issues. While, at first sight, this situation concerns medical equipment and personal health products, there are significant concerns also for all other sectors that will be affected by the disruptions caused by the COVID-19 spread. Some countries (e.g., Norway and the UK) are – on a temporary basis - willing to exempt certain industry sectors from the strict application of competition law rules to ensure access to necessary goods and services. However, these measures are narrow exceptions to the rule that even in times of crisis, competition law continues to apply fully. Therefore, unless one of the exceptions applies, business must continue to respect competition law rules.

Authors: Christian Filippitsch Geert Goeteyn Isabelle Rahman Max Seuster

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Practical implications for businesses

  • As a matter of principle, despite COVID-19, competition law continues to apply fully.
  • Competition law continues to prohibit anticompetitive behaviour. This prohibition could apply to many situations, particularly where companies seek to jointly react to COVID-19-related disruptions aiming to compensate losses (e.g. by fixing prices, jointly boycotting suppliers, etc.).
  • Where companies seek to cooperate with competitors, they need to put the necessary safeguards in place to ensure compliance with competition law. This might include, for example, joint activities to overcome disruptions in the supply chain and to ensure security of supply (e.g. retailers), as well as R&D and/or joint production of emergency supplies, and/or lobbying activities through trade associations or sector bodies. Indeed, on 23 March 2020, EU antitrust authorities have issued a joint statement reassuring companies that they will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply. We can assist your business in assessing whether and to what extent that is the case.
  • Companies must not assume that the COVID-19 crisis as such shields them from the prohibition to engage in anticompetitive behaviour – in fact, it does not!
  • The European Commission (EC) and national competition authorities will not tolerate actions by companies with market power – even where such market power is only temporary and due to the emergency situation – that seek to exploit their position, for example, by significantly raising prices. EU antitrust authorities have also emphasised this point in their joint statement of 23 March 2010.
  • We can assist companies in seeking redress if they have been victim of such actions, or advise market players in a strong market position on how to ensure business strategies adopted in response to the emergency are compatible with competition law.
  • Some countries are willing to exempt certain industry sectors from the strict application of the competition rules that apply to cooperation between competitors to ensure access to necessary goods and services. (For instance, most recently, Norway and the UK are introducing possibilities for exemptions in relation to the transport and food retail sectors, respectively). The EC appears to be more reluctant to give such general COVID-19 crisis exemptions from the competition rules. We will keep you up to date on any new developments in this respect.