The European Competition Network and individual EU Member State publishes statements in response to antitrust enforcement due to the COVID-19 outbreak

The European Competition Network of the 27 EU Member State Antitrust Authorities (the ‘ECN’), several individual EU Member State antitrust authorities, the UK’s antitrust authority and Norway’s government have issued statements in response to antitrust enforcement and COVID-19, focusing on three issues:

  • Increased surveillance of antitrust compliance by companies active in economic sectors key to the COVID-19 crisis (such as unjustified price increases for the provision of face masks or sanitizing gel). In some instances, the authorities have opened investigations, or ordered a change in behavior.
  • A flexible application of antitrust rules in some sectors of economic activity (such as retailer cooperation to ensure supply of food).
  • Recalling that suppliers can lawfully impose maximum resale prices (under certain conditions under existing EU law).

This Alert summarizes the main items in that action and offers related links in English where available.

WilmerHale has formed a Coronavirus (COVID-19) Task Force to lead the legal and strategic counselling of clients around the world in response to the outbreak. The task force consists of WilmerHale lawyers in multiple key disciplines. The Crisis Management and Strategic Response Group is also involved in helping clients respond to these challenges.

WilmerHale’s European Antitrust and Competition team is closely following these issues. The lawyers listed below would be happy to answer any follow-up questions that readers may have.

Increased surveillance:

  • The ECN issued a joint statementon March 23, 2020 that its members will not hesitate to take action in case companies use the current situation to create cartels or abuse their dominant position.
  • The Italian Competition Authority (the ‘Italian CA’) opened an investigation into the sale of medical masks, gloves, and hand gels at alleged anti-competitive prices by Amazon and eBay on February 27, 2020.
  • The Italian CA ordered the crowd-funding site GoFundMe to change its commission practices on March 22, 2020. It is reported that GoFundMe advertised that its services for donations to hospitals were free, but actually asked donors to pay a fee.
  • The Greek Competition Authority (the ‘Greek CA’) sent questionnaires to producers and retailers of masks, gloves, gel, and other medical supplies on March 21, 2020 to investigate alleged anti-competitive price increases and availability shortages.
  • The UK Competition and Markets Authority (the ‘UK CMA’) issued an open letter on March 20, 2020 stating that it would use its powers to eliminate non-essential collusion, unjustified price increases, and misleading information on products, in particular by supermarkets, other food and drink retailers, and pharmaceutical companies.
  • The Finnish Competition Authority (the ‘Finnish CA’) announced that it will “resolutely intervene” in cartels between companies, or against abuse of dominant position, which aim to raise prices to the detriment of consumers. [1]
  • The Polish Office of Competition and Consumer Protection (the ‘Polish CA’) initiated proceedings against two wholesalers who allegedly terminated contracts with hospitals for the supply of personal protective equipment.

Flexibility:

  • The ECN indicated in its joint statement that it will not “actively intervene” against “necessary and temporary” cooperation of companies put in place in order to avoid a shortage of supply.
    • The ECN also stated that if companies have doubts about the compatibility of such cooperation initiatives with EU/EEA competition law, they should reach out to the European Commission, the EFTA Surveillance Authority or the EU Member State competition authorities for informal guidance.
  • The Dutch Competition Authority announced that it would allow certain cooperative behavior between retailers. [2]
    • According to PaRR, the Head of the Authority said that supermarkets could inform each other about their stocks and drug wholesalers could inform each other of the quantities of products they sell. Logistical services providers could also cooperate to provide Dutch citizens with vital supplies, while sectors can agree to have a lenient approach towards debtors.
    • He also noted that the unusual times required unusual solutions, but warned companies not to go beyond what is necessary to curtail the crisis.
  • The UK CMA stated on March 19, 2020 that it had “no intention of taking competition law enforcement action against cooperation between businesses or rationing of products to the extent that this is necessary to protect consumers – for example, by ensuring security of supplies”.
    • Then on March 20, 2020 in its open letter the UK CMA stated that it would allow cooperation between supermarkets, other food retailers, and pharmaceutical companies regarding e.g., data on stock levels and delivery vans, opening times, and availability of products in distribution depots.
  • The Finnish CA confirmed in the statement reported above that it will take into account the exceptional circumstances caused by the coronavirus, including the fact that “companies may need to work together to ensure adequate supply or the equal distribution of products to all consumers”, when applying competition rules.
  • The Norwegian Government on March 18, 2020 granted the transportation sector a three-month temporary exception from the prohibition against anticompetitive agreements and practices in the Norwegian Competition Act. The exception does not go further than what is “strictly necessary” and the Norwegian Competition Authority must be notified if the exception is relied on.

Maximum resale prices:

  • The Greek CA announcedon March 16, 2020 that it would not take action against maximum resale prices and recommended prices in supply contracts and distribution agreements for essential products, noting that they would be lawful if in line with the EU Vertical Restraints Antitrust Block Exemption (and offered examples in the crisis context).
  • The ECN also recalled on March 23, 2020 that the existing rules allow manufacturers to set maximum prices for their products, which “could prove useful to limit unjustified price increase at the distribution level”.

Footnotes

[1MLex, March 23, 2020, “Finnish watchdog to ‘resolutely intervene in cartels’ during Covid-19 pandemic”.

[2PaRR, March 19, 2020, “Dutch agency foresees room for COVID-19 company cooperation”, reporting an article in the Financiele Dagblad the same day.

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John Ratliff, Anne Vallery, Christian Duvernoy, Frédéric Louis, Cormac O'Daly, The European Competition Network and individual EU Member State publishes statements in response to antitrust enforcement due to the COVID-19 outbreak, 23 March 2020, e-Competitions March 2020, Art. N° 93893

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