The Caledonian Competition Authority announces pursue competition law enforcement in the context of Covid-19 pandemic

I) Introduction

The coronavirus pandemic has and will have a huge impact on our economy. Undoubtedly, we face the worst crisis in our recent history. A major consequence is serious financial distress for a myriad of undertakings. A phenomenal number of companies are already close to bankruptcy. It is too early to accurately assess the economic damage caused by the Corona crisis. Nevertheless, competition authorities around the world have reacted swiftly to deal with this unprecedented challenge [1]. The crisis affects drastically both consumers and companies. On the one hand, consumers are prisoners of the containment imposed by their Government. They lost their freedom of choice and have to shop at the stores closest to their homes (pharmacies, food retail stores etc.). Thus, a higher price can be charged due to the inelastic demand from consumers. On the other hand, some companies no longer have consumers while others are seeing the demand for their products and services soar. This situation raises serious competition concerns for competition authorities. The main issue is whether competition law should apply or not in pandemic crisis. Most competition authorities answered yes. For example, 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» [2] . In France, the Autorité de la concurrence (Autorité) takes competition issues particularly seriously. Following a report made by a Guianese company to the Autorité on 30 March 2020, the Autorité has opened an initial investigation into exclusive import practices likely to be implemented by companies active in the supply for hospitals of respiratory systems and products intented for patients suffering from respiratory disorders. These respiratory devices are particularly used for patients suffering from Covid-19. In this case, the Autorité suspected a company having recently entrusted the import of its medical products in French Guiana, Guadeloupe and Martinique to the only company located in the United States. Such behavior could have effectively prevented any other alternative from supplying local distributors. On 6 April [3], the Autorité has announced closing its initial investigation and taking note of the decision of the company to clarify the conditions for the distribution of its products in overseas territories in order to strengthen competition. The Autorité indicated its intention to take care that no company can abuse its market power or agree with other companies to the detriment of consumers and the community. What about the New Caledonian Competition Authority?

II) Current reaction

The New Caledonian Competition Authority (NCCA) is a new entrant into the ranks of competition authorities [4]. The Authority was installed in March 2018 [5] on the « Caillou » and celebrated its two years of existence only a few weeks ago. Despite its recent creation, the Authority already has a substantial record of activity. The NCCA has delivered many opinions and examined several merger cases. Recently, the NCCA has opened a sector inquiry in the airline market [6]. Last year, and for the first time in its history, it has fined companies for engaging in exclusive import practices prohibited under competition law in New Caledonia [7] . In its announcement on its priorities for 2020 [8] , the Authority stressed that it will focus its control on the risk of cartels in public procurement. Will these priorities be compromised by the ongoing Covid-19 pandemic? In a press release dated 19 March, the NCCA responded clearly in the negative. The NCCA considers that weakening competition law enforcement is not the way to go. In contrast, the NCCA will pay more attention to the implementation of anticompetitive behaviours. It declares that « in this period of collective efforts, the NCCA will be particularly vigilant in detecting and then punishing anti-competitive practices carried out by companies that would exploit the current situation to the detriment of New Caledonia’s citizens and economy » [9] .

Does that mean that the authority will proceed in the same way as usual? Absolutely not. The NCCA is aware that adaptations have to be mad, due to the containment and the economic effects of the Covid-19 crisis. In this context, it will be more difficult to detect dubious practices in the market. The NCCA states that « given the exceptional situation in New Caledonia and throughout the world, the Authority will take into account any difficulties encountered by companies or third parties in responding to its requests. This may nevertheless have an impact on the time required for the investigation and hearing of cases ». In others words, the NCCA acknowledges, without labouring the point, that it will be difficult to respect the usual timeframes for the treatment of cases. Certainly, merger cases will have a lower priority than antitrust cases because, as the NCCA pointed out, « anticompetitive practices in this context will tend to worsen the situation of families and the economy and will therefore have to be heavily penalised ». For these reasons, the NCCA invites any person or company aware of possible anticompetitive practices to report them. An email address has been created to enable the investigation service to gather the first evidences and react promptly to carry out investigations.

III) What’s next ?

The NCCA is composed of a small team of rapporteurs with one rapporteur general supported by an assistant rapporteur general [10] . Therefore, it will not be easy to carry out investigations as quickly as in France. Indeed, the Autorité de la concurrence in France has several investigation services which work in close collaboration with DGCCRF agents. This is not the case in New Caledonia. That’s why, in the archipelago, it will need to make full use of all tools available to NCCA. For instance, leniency programmes will have to be promoted more than usual. Pursuant to article Lp. 464-2 of the Commercial Code, a company involved in a cartel but cooperating voluntarily with the NCCA by providing critical evidence receives in return immunity from, or a reduction in, fines for its involvement in the cartel. This negociated procedure, which has shown its efficacity in the European Union, could be a powerful instrument to detect anticompetitive practices during the Corona crisis.

The Authority could also be inspired by the French Competition Authority, which has decided to assist companies in the evaluation of their collaboration agreements. Given the size of the island, supply problems will certainly arise in New Caledonia. Consequently, intiatives such as collaborations between companies for manufacturing masks should not be discouraged. As in France, on an informal basis, the NCCA could secure certain agreements.

Finally, the NCCA must be very vigilant to prevent some profiteers from taking advantage off the Corona crisis to demand excessive prices for essential goods. Such behaviour could be qualified as an abuse of dominance.

IV) Conclusion

In New Caledonia, as elsewhere, competition law has not been temporarily shelved due to the Covid-19 crisis. The NCCA will ensure that products considered as essential remain available on the market at competitive prices. This position must be approved because, during this economic and health crisis, the first victims of anticompetitive practices will be the most vulnerable people in our society, such as low-income families and people suffering from severe diseases.

Footnotes

[1For a presentation of the situation in France and in the European Union, see our study : Entre intensification et assouplissement : le droit de la concurrence à l’épreuve des vents contraires du coronavirus, JCP E 2020, No 15-16, p. 31 (only in French).

[2See : Antitrust: Joint statement by the European Competition Network (ECN) on application of competition law during the Corona crisis, 23 March 2020 : https://ec.europa.eu/competition/ecn/202003_joint-statement_ecn_corona-crisis.pdf.

[3See : French Competition Authority, Respiratory assistance equipment in French Guiana and the French West Indies: investigation closed for exclusive imports, Press release, 6 April 2020 : https://www.autoritedelaconcurrence.fr/en/press-release/respiratory-assistance-equipment-french-guiana-and-french-west-indies-investigation.

[4For more information, see : R. Simpson & A. Zoude-Le Berre, New competition kid on the Pacific block : The Competition Authority of New Caledonia (CANC), Concurrences No 4-2018, p. 23.

[5The establishment of the New Caledonian Competition Authority was made possible by the adoption of Caledonian Law No. 2014-12 of 24 April 2014 establishing the New Caledonian Competition Authority and amending Book IV of the legislative part of the Commercial Code applicable in New Caledonia.

[6See : J. Panichi & L. Henning, Response to New Caledonia’s airline probe is expected of the year, top official says, mLex, 2 March 2020.

[7NCCA, 26 December 2019, Decision No 2019-PAC-05 relating to practices implemented by Kone Elevators Ltd, Otis SCS, Socometra SAS and Pacific Ascenseurs SARL in the elevator sector in New Caledonia : Concurrences No 2-2020, L. Martinez Reillo, forthcoming.

[8See : NCCA, Priorities of the New Caledonian Competition Authority in 2020, Press release, 28 January 2020 : https://autorite-concurrence.nc/actualites/28-01-2020/les-priorites-de-lautorite-de-la-concurrence-de-la-nouvelle-caledonie-en-2020.

[9During this period of crisis, the NCCA is also very vigilant in terms of respect for « payment terms ». Since the beginning of the crisis, several reminders to the law have been done.

[10It explains by the fact that the island is small and that the markets are very narrow. There are only a small number of companies that compete with each other.

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Auteur

  • University of Grenoble Alpes

Citation

Walid Chaiehloudj, The Caledonian Competition Authority announces pursue competition law enforcement in the context of Covid-19 pandemic, 19 mars 2020, e-Competitions March 2020, Art. N° 94154

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