Coronavirus – European Commission sets up dedicated mailbox on cooperation initiatives - Europe

• United Kingdom

• Coronavirus - Competition issues
• Coronavirus - Country overview

01-04-2020

Executive summary

On 30 March 2020 the European Commission created a new section on its website entitled “Antitrust rules and coronavirus”.  The website states that the Commission has set up a new dedicated mailbox for companies and their advisors to use to seek informal guidance on whether cooperation initiatives intended to help tackle the coronavirus pandemic are compatible with EU competition law. 

This follows a series of press releases by the Commission and a number of National Competition Authorities over the last few weeks (see our previous briefings below) in which they have explicitly recognised that the current crisis may trigger the need for companies to cooperate in order to ensure the fair supply and distribution of scarce products to all consumers (for example face masks and antibacterial gel).  The authorities have also confirmed that they will not actively intervene against these cooperation measures in this very specific context, where those measures are necessary and temporary.

Read our previous briefings on the response to COVID-19:

• Coronavirus - Competition, co-operation and COVID-19 - Europe
• Coronavirus – Competition authorities announce they will not intervene against companies co-operating to avoid supply shortages - Europe
• Coronavirus - CMA guidance on company cooperation - UK

Obtaining informal guidance

The dedicated mailbox can be used to obtain informal, and confidential, guidance on whether the proposed cooperation initiatives are compatible with EU Competition Law[1]. The Commission advises that, in order to “facilitate a swift follow-up”, companies should include as much detail as possible on the cooperation initiatives in their emails to the mailbox.  Specifically, they should detail:

i) the firm(s), product(s) or service(s) concerned;

ii) the scope and set-up of the cooperation;

iii) the aspects that may raise concerns under EU antitrust law; and

iv) the benefits that the cooperation seeks to achieve, and an explanation of why the cooperation is necessary and proportionate to achieve those benefits in the current circumstances.

The Commission has not provided specific guidance on, or examples of, what types of cooperation initiative might be considered necessary and proportionate in these circumstances.  However, the UK’s Competition & Markets Authority has issued detailed guidance on where this might be the case in respect of UK (i.e. national) competition law, which might be informative in this context. The CMA has confirmed in its guidance that it will not take action where companies’ coordination measures:

• 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. 

(Read our previous briefing on this guidance by the CMA.)

As with previous announcements in respect of cooperation initiatives in the coronavirus crisis, the Commission has made clear that whilst it recognises that certain cooperation is necessary and indeed beneficial in this current context, the Commission will take action against companies that take advantage of the current situation to breach EU competition law.  Previous announcements have referred to “price gouging” as an example of such unlawful conduct.  However, there is a question mark as to the extent to which competition law (as opposed to consumer law, for example) can be used to prevent price gouging, as unless the party charging the excessively high price was doing so in coordination with another party (i.e. price fixing in breach of the rule against anticompetitive agreements) or doing so (unilaterally) from a position of market dominance (i.e. breaching the rule against abusing a dominant position) it is difficult to see how competition law would apply. Perhaps recognising this, the European Competition Network, and various member authorities, have been issuing reminders in their press releases that it is lawful under EU competition law for suppliers to impose maximum resale prices on their resellers, to prevent the resellers from taking advantage of the current crisis by charging consumers considerably more than they have paid for the products.

Concluding Note

The Commission has created a helpful tool for businesses assessing their competition law risk in coordinating with competitors for the good of consumers in the current crisis. However, it is clear that the Commission is focusing on cooperation initiatives specifically focused on helping to tackle issues caused by the coronavirus pandemic, and in particular on ensuring the fair supply and distribution of scarce products to consumers.  Therefore companies should not take from this that the European competition authorities are relaxing the application of European and national competition laws more generally.

Additionally, given that any advice obtained through the mailbox is “informal”, and in any event applies only to EU, and not national competition law (which is enforced by the relevant Member State competition authorities) the onus remains very much on the companies themselves when undertaking the analysis as to whether conduct that would ordinarily be a serious breach of competition law could be exempted in the current circumstances.

It is also important to note that whilst the Commission and various national competition authorities are offering informal guidance, and reassurance that they will not take enforcement action against certain measures during the crisis, this is not to say that third parties affected by the conduct would not bring claims in court for damages.  Accordingly, companies seeking to cooperate with competitors should seek legal advice to understand the full implications and risks of doing so.

As we have stated previously, the current crisis presents a fast moving set of challenges and therefore the Commission’s, and national competition authorities’, responses will necessarily evolve over time.  Accordingly, companies will need to keep a close on further guidance or sector specific relaxations of the rules over the coming weeks and months.

[1] The Commission has made clear that the mailbox, and associated guidance, are only relevant for the application of EU competition law and therefore questions on other areas including consumer protection, or indeed national competition law, need to be dealt with separately by the relevant authority.