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COVID-19 Resources

Impact of COVID-19 on Competition Rules

8 April 2020

Given the impact of COVID-19 outbreak on the economy, competition authorities across European Union jointly decided to relax their assessment with regard to coordination between competitors on the market whose purpose is to avoid shortage or essential products or services and ensure their proper distribution to consumers.

In this context, it is expected that competition authorities should not take enforcement actions where temporary measures to coordinate taken by businesses:

are appropriate and necessary in order to avoid a shortage or ensure security of supply;

are clearly in the public interest;

contribute to the benefit or wellbeing of consumers;

deal with critical issues that arise as a result of the COVID-19 pandemic; and

last no longer than is necessary to deal with these critical issues.

Overall, the types of coordinated actions that, in the exceptional circumstances of the COVID-19 pandemic:

avoid a shortage or ensure security of supply;

ensure a fair distribution of scarce products;

continue essential services; or

provide new services such as food delivery to vulnerable consumers;

are most likely to be unproblematic from a competition law perspective, if they do not go further than what can reasonably be considered necessary.

Competition rules do not change. Even before the COVID-19 crisis, agreements regarding reasonable measures that had also served a social interest (“benefit of the consumer”) and were necessary in order to overcome a certain limitation were likely to be outside the scope of the enforcement. The statements of the ECN and the NCAs however can be welcome, as they bring additional comfort.

In a recent online workshop organized by the Universul Juridic magazine (see related post here), RCC President Bogdan Chiritoiu advised companies and associations to seek RCC’s advice when the proposed measures risk being misinterpreted. The authority is available to work with them to give as much clarity as possible in a rapid manner.

We include below examples of types of coordination actions which may be undertaken by companies, in several key sectors, such as consumer goods retail, pharma, travel or insurance.

Coordination in the retail sector

In order to face the increased demand of basic goods of consumers, as well as the shift to online sales & home deliveries in anticipation of quarantining and social distancing measures, competitors in the retail sectors may consider:

cooperation between retailers to keep shops open, in order to ensure access to essential products;

sharing of distribution depots and delivery vans between retailers in order to ensure supply of essential products;

coordination between retailers of home deliveries for high risk persons.

In doing so, retailers should avoid actions which could lead, for example, to collusion on prices, exchange of information on commercial policies, exclusion of competitors from the market or elimination of products from the market.

In our view, coordination seeking merely the benefit of the parties to it, leaving aside a social benefit, could be less likely to be viewed through the “relaxed” lenses.

Coordination in the pharmaceutical sector

In order to ensure effective access to face masks, hand sanitisers, medical equipment and other essential products to consumers during the COVID-19 outbreak, as well as to identify proper medical solutions, the following may be considered:

collaboration between manufacturers of medical equipment to ensure the supply of hospital and other emergency equipment;

joint logistics and distribution to address blockage in supply, so as to ensure security of supply of essential medical products;

R&D collaborations with respect to treatment and development of vaccinations for COVID-19.

In doing so, competitors in the pharmaceutical sector should however avoid exchange of information on prices or commercial policies, coordination of conduct on the market with regard to clients or territories, restrictions which exclude the possibility for the companies involved in R&D collaboration to commercialise the results of the joint research independently, or elimination of products from the market.

Coordination in the travel and accommodation sector

The measures undertaken by authorities in order to deal with the spread of COVID-19, affected a significant number of leisure and corporate travels, context in which competitors may consider, for example:

coordination of policies on the cancellation of travel services;

coordination of conditions for reimbursement to customers;

coordination of routes by competitors in order to ensure access to travel services, as well as transportation of essential products;

In doing so, undertakings should avoid actions which could lead, for example, to collusion in order to increase prices, exchange of information on commercial policies or exclusion of competitors from the market.

Coordination in the insurance sector

In the context of COVID-19 outbreak, insurers may be faced with an increased number of claims in relation to heath or travel insurance. Given the circumstances, insurers may consider:

coordination of responses to claims under existing policies;

coordination in view of standardisation of terms of conditions of policies in relation to COVID-19;

In doing so, insurers should avoid actions which could lead, for example, to collusion in order to increase prices, exchange of information on commercial policies or exclusion of competitors from the market.

it is advisable that any form of coordination between competitors in the context of COVID-19 pandemic is consulted with the representatives of the Romanian Competition Council, in order to ensure that proper safeguards are taken.

Companies should bear in mind that relaxation of competition rules is not of a general nature. Many competition authorities, including the Romanian Competition Council, have declared that they will monitor the market in order to ensure that economic operators do not take advantage of this difficult period in order to collude on price increases or other measures which harm competition or consumers.