The EU Council supports in a virtual meeting the State aid framework that allows Member States to provide relief to the companies and citizens

EU competition law and the COVID-19 pandemic - a consumer perspective*

We are living through unprecedented challenges in Europe and around the world. Despite the efforts of the European Union and its Member States to contain the spread of the Sars-CoV-2 virus, infection rates are on the rise. At the same time economic uncertainty persists and grows. The European Central Bank has quickly adopted a new Pandemic Emergency Purchase Programme injecting €750 billion to maintain the Euro afloat [1]. For its part, the European Commission presented a coordinated response to counter the economic impact of the new coronavirus [2], including the adoption of a flexible state aid framework to allow Member States to provide relief to the companies and citizens affected by the current situation, which has been supported by the European Council at the occasion of its (virtual) meeting of 26 March [3].

This crisis affects consumers and companies but also almost every public policy - and competition law is no exception. Many companies are asking governments and agencies to free them from the constraints of complying with the competition rulebook. The UK Competition and Markets Authority (CMA) has indicated that it would allow a certain level of essential coordination between supermarkets to guarantee the supply of products such as groceries to the population [4]. Similar approaches were outlined by the Greek [5] and German authorities [6] amongst others.

Does this mean that competition law should not apply in times of a pandemic outbreak? Absolutely not, for two main reasons.

First, EU competition law is flexible enough to adapt to the current circumstances because the wellbeing of consumers lies at the heart of its implementation and enforcement. Article 101(3) of the Treaty on the Functioning of the European Union is crystal clear - agreements between companies that seek to contribute to improving the production or distribution of goods or to promoting technical or economic progress can be allowed, in derogation from the ban on cartels and other forms of collusion, but only if they are proportionate and if consumers get a fair share of the benefits. And what is a “fair share” is something that needs to be assessed in the light of certain given circumstances. Thus, coordination between companies in times of COVID-19 might be desirable and even necessary to ensure that food reaches shops, and that medical equipment is available in our hospitals to protect those that are protecting us. And this is tolerated under competition law when it takes place within the boundaries of the law.

Secondly, the current state of health emergency does not invalidate EU law, including competition law. No general emergency powers have been adopted to limit the application of EU law. Thus, primary and secondary EU law remains fully binding and applicable to market actors and governments insofar as such legal provisions have not been derogated from by the ordinary legislative procedures or their non-application is already foreseen in a legal act of identical or higher hierarchical legal value.

In a similar vein, the European Competition Network highlighted in a joint communication that competition law “remains relevant also in a period when companies and the economy as a whole suffer from crisis conditions” [7]. And rightly so. While flexibility and a certain level of discretion in prosecution might be necessary to guaranteeing the supply of goods and essential equipment, the opposite can be true when opportunism and the temptation to profiteer are on the rise. That is why no carte-blanche can be granted to particular economic sectors and why authorities must remain more vigilant than ever, so as to ensure that exceptional businesses cooperation practices are temporary and only take place if they are necessary to deal with specific supply chain problems.

Weakening competition law is therefore not the solution. Quite the contrary, we need the European Commission and national competition authorities to remain vigilant, providing certainty to those that want to make things better and enforcing the law against those that want to cheat consumers rather than compete. Good examples of agencies’ measures include the recent actions by the Italian Competition and Consumer Authority (AGCM), supported by the consumer organisation Altroconsumo, against unfair practices around the sale of sanitizers [8] or medical tests [9]. Or, the CMA’s newly formed COVID-19 taskforce to scrutinise market developments to identify harmful sales and pricing practices and detect business practices seeking to exploit the most vulnerable consumers [10].

Finally, we must be vigilant to prevent profiteers from taking advantage of the COVID-19 crisis to demand exorbitant prices for essential goods. While EU competition law can possibly be used against cases of excessive pricing when applied by dominant undertakings, non-dominant players can also engage in these practices. Therefore, national authorities should make use of their entire toolbox to monitor these practices, as the Hellenic competition authority has done with its inquiry into healthcare materials price increases [11].

EU competition policy has served Europeans well for more than 60 years. Thanks to independent competition enforcement, markets work better for consumers and business customers in terms of prices, choice and quality of products. That is why it should continue to apply during this COVID-19 crisis. While competition agencies will have to make some tough choices, these should be guided by their core mission which is to ensure that markets work for all of us.

*Article published on the InformaConnect Blog (click here), republished in e-Competitions with the courtesy of the author. The original title of this article appears below the e-Competitions title. Authors are welcome to write an alternative article on this case/text, provided they have no relationships with a party or related third party. Article will need e-Competitions Board approval before publication.

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Agustin Reyna, The EU Council supports in a virtual meeting the State aid framework that allows Member States to provide relief to the companies and citizens, 26 March 2020, e-Competitions March 2020, Art. N° 94181

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