Reed Smith Client Alerts

  • Whilst competition law has continued to apply throughout the COVID-19 crisis, competition authorities introduced a number of changes to processes in order to be flexible in the manner in which they exercised their powers.
  • The uncertainty surrounding the COVID-19 pandemic and the changes it will bring, make it difficult to forecast the long-term impact of the crisis on competition law and enforcement.
  • A number of cases this year have highlighted the difficulties of carrying out a forward-looking analysis against a background where the future state of markets is not clear.

On 25 November 2020, the UK Chancellor of the Exchequer, Rishi Sunak, delivered a one-year Spending Review for the UK economy, setting out the economic and financial impact of the COVID crisis on UK public finances. It is clear that the economic repercussions of the crisis will be long-lasting, with the economy not expected to return to pre-COVID levels until the end of 2022. From a competition law perspective, the disruption brought about by the COVID crisis led to a number of changes to processes, together with flexibility in the application of competition law to accommodate this difficult situation. An important question to be considered now is what the long-term impact of the COVID crisis will be on competition law and enforcement. How long will it take to return to pre-COVID levels, or will a new post-COVID regulatory regime emerge?

At the beginning of the crisis, businesses and regulators were faced with a large number of challenges, many of which required flexibility and quick action:

  • Panic buying and supply chain issues led to concerns over shortages in particular critical areas, which prompted the government to issue a number of Exclusion Orders in sectors from groceries to private hospitals, temporarily relaxing some aspects of the competition rules to allow discussions between competitors to address those issues.
  • Procedural difficulties, both within regulators adapting to new demands and home-working, and within businesses with remote working, crisis management and furlough made responding to information requests more difficult, leading to the CMA offering longer deadlines and more accommodation in its information requests.
  • A surge in consumer law complaints (the CMA receiving thousands of complaints a week), raising concerns over refunds arising from cancellations and price gouging. From the CMA’s perspective, this served to highlight a standing request to the government for enhanced consumer law powers from its then Chair.
  • Where the CMA found competition law concerns, the uncertainty arising from COVID has necessitated a degree of flexibility with regard to timescales for remedies to address those concerns. In Hunter Douglas N.V. / 247 Home Furnishings Ltd, the CMA granted at least nine months (longer than the typical six months) to allow for divestment to take place. In Germany, the six months given by the German competition authorities to Vue Group (CinemaxX) and Cinestar to divest cinemas in six locations could not be complied with, at least in part, due to the severe disruption caused by the pandemic to the cinema industry.