European Commission launches website on application of competition law during COVID-19

European Commission launches website on application of competition law during COVID-19

On 30 March 2020 the European Commission launched a dedicated website to give guidance on the application of competition law in the context of the coronavirus outbreak.

The Commission accepts that business cooperation may be critical to ensure fair distribution of essential goods and services and reduce the economic and social effects of the pandemic.  It points to a joint statement by the ECN published last week on the approach of the European competition authorities to the crisis.

The Commission has also set up a dedicated mailbox COMP-COVID-ANTITRUST@ec.europa.eu that can be used to seek informal guidance on specific initiatives with an EU dimension.

Companies seeking guidance must provide as much detail as possible on the initiative (the firm(s), product(s) or service(s) concerned; the scope and set-up of the cooperation; the aspects that may raise competition concerns; and an explanation of the benefits of the cooperation, and why it is necessary and proportionate).

The Commission can only provide guidance on the compatibility of business initiatives with EU competition law and not consumer protection law.

https://ec.europa.eu/competition/antitrust/coronavirus.html

COVID-19 relaxation of competition law for Isle of Wight Ferries

COVID-19 relaxation of competition law for Isle of Wight Ferries

The Department for Business, Energy and Industrial Strategy (BEIS) and the Department for Transport (DfT) have announced the suspension of certain aspects of competition law to allow Isle of Wight ferry operators to collaborate in the face of the coronavirus outbreak (COVID-19).

The measures are based on paragraph 7 of Schedule 3 of the Competition Act which provides that where the Secretary of State is satisfied that there are ‘exceptional and compelling reasons’ in the public interest why the Chapter I prohibition ought not to apply to an agreement or any agreement of a particular description, they may exclude them from the prohibition.

Ferry operators in the Isle of Wight will be able to work together to allow for essential food, freight and medical supplies to be transported between the Isle of Wight and the mainland.

The measure follows a similar announcement last week that elements of competition law will be temporarily relaxed for the food sector to allow for essential business cooperation.

Commission approves Italian scheme to protect SMEs affected by Coronavirus outbreak

Commission approves Italian scheme to protect SMEs affected by Coronavirus outbreak

On 25 March the European Commission announced its decision to approve under the state aid rules, an Italian state debt moratorium scheme available to small and medium-sized enterprises (SMEs) affected by the coronavirus (COVID-19) outbreak.

The announcement follows the Commission’s 19 March Temporary Framework to support the economy in the context of COVID-19 based on Article 107(3)(b) of the TFEU.

The Italian scheme covers the postponement of repayments of overdraft facilities, bank advances, ‘bullet loans’, mortgages and leasing operations.

The Commission found that the guarantee aimed to provide liquidity for SMEs will contribute to managing the economic impact of the coronavirus outbreak in Italy.   It concluded that the measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a member state, in line with Article 107(3)(b) of the TFEU and the Temporary Framework.

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_530

ECN Joint Statement on application of competition law in Coronavirus Crisis

ECN Joint Statement on application of competition law in Coronavirus Crisis

The European Competition Network (ECN) has issued a joint statement setting out how competition law should be applied in the context of the ongoing COVID-19 outbreak.

A few points are noteworthy:

·         The ECN it is fully aware of the social and economic consequences of the COVID-19 outbreak in the EU/EEA.

·         Competition rules ensure a level playing field between companies. This objective remains relevant also in a period when companies and the economy as a whole suffer from crisis conditions.

·         The ECN understands that this extraordinary situation may trigger the need for companies to cooperate to ensure the supply and fair distribution of scarce products to all consumers.  In the current circumstances, such measures are unlikely to be problematic, since they would either not amount to a restriction of competition under Article 101 of the TFEU or generate efficiencies that would most likely outweigh any such restriction.

·         If companies have doubts about the compatibility of such cooperation initiatives with EU competition law, they can reach out to the Commission, the EFTA Surveillance Authority or the national competition authority concerned any time for informal guidance.

·         At the same time, it is of utmost importance to ensure that products considered essential to protect the health of consumers (such as face masks and sanitising gel) remain available at competitive prices.

·         The existing rules allow manufacturers to set maximum prices for their products. This could prove useful to limit unjustified price increase at the distribution level.

https://ec.europa.eu/competition/ecn/202003_joint-statement_ecn_corona-crisis.pdf

Special EU merger filing arrangements for COVID-19

Special EU merger filing arrangements for COVID-19



The European Commission has urged companies to postpone merger notifications in response to the coronavirus situation.

The Commission points to “complexities and disruptions” and asks businesses to delay making filings until further notice and where this is possible.

The Commission has adopted remote working for most staff and put in person meetings on hold.  It also expects to face problems when collecting information about mergers from third parties including customers, suppliers and competitors. 

The Commission remains open to dealing with urgent notifications.

The measures are understandable in the wake of the pandemic. However, a concern is that the current hiatus will slow down deal activity which in turn will hamper economic recovery.

https://ec.europa.eu/competition/mergers/news.html

European Commission approves Danish Covid-19 compensation scheme under State aid rules

European Commission approves Danish Covid-19 compensation scheme under State aid rules

The Commission has found that a EUR 12 million Danish scheme to compensate organisers of large events who have suffered losses as a result of cancellation due to the Covid-19 outbreak is compatible with EU State aid rules.

This decision is noteworthy for a number of reasons.   It represents the first measure notified to the Commission as a result of the outbreak – no doubt many more will follow.  Second, it was approved within 24 hours showing a rapid response by the Commission in a manner not really seen in recent times since the 2008 financial crisis.  Third, the Commission used article 107(2)(b) TFEU which allows Member States to compensate specific companies or sectors for the damage directly caused by exceptional occurrences.  It appears the occurrence cannot be treated as a “natural disaster” under the GBER, making an individual notification necessary.

This raises a question of how many more measures will be notified and when?  Further, with some uncertainty over the precise scope of the UK’s own bespoke State aid regime following Brexit, it may be asked whether the UK’s subsidy control regime will be in a position to move with similar agility faced with unprecedented measures in unprecedented times.

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_454

Competition and Coronavirus

Competition and Coronavirus

I will not be so crass as to suggest that COVID-19 has competition law dimensions.  But competition authorities around the world are already using their powers to fight the threat.

The Polish Office of Competition and Consumer Protection is investigating whether suppliers of medical equipment have abused their dominant position by cutting off public healthcare access to surgical masks in order allocate supplies to other distribution channels at inflated prices.  The regulator has warned suppliers not to use fear and misinformation to artificially raise prices.

The UK Competition and Markets Authority says it will use its powers to enforce against rip-offs and misleading claims but stops short of price regulation of essential medical and food supplies. 

Meanwhile, Armenia’s competition authority has investigated over 90 pharmacies over shortages of masks and sanitisers. Although it has not found any evidence of unlawful practices, the state is working with counterparts internationally to try to ensure continuity of supplies is not distorted by suppliers trying to take advantage of the situation.

Iceland’s competition authority is focusing on the tourism sector and has issued a temporary exemption to allow the Confederation of Tourism to collaborate on ways to reduce customer cancellation, short of price coordination.

The policy tension cannot go unnoticed.  At a time of national emergency, this might require tougher enforcement of some laws and an easing of others.  We all need to stay vigilant to the developing situation and the implications for economic health.

Court of Appeal upholds procurement competition law challenge against Network Rail

Court of Appeal upholds procurement competition law challenge against Network Rail

The Court of Appeal has dismissed a challenge by Network Rail against a judgment of the Competition Appeal Tribunal (CAT) on preliminary issues in the standalone damages action brought by Achilles Information Limited (Achilles) against Network Rail.

Network Rail imposes requirements on those wishing to work on Network Rail’s managed infrastructure, that suppliers must be approved by the Railway Industry Supplier Qualification Scheme (“RISQS”) run by the Rail Safety and Standards Board. The CAT concluded that by including the RISQS-only rule in two of its schemes, Network Rail is entering into agreements between undertakings which have as their effect the prevention, restriction or distortion of competition within the UK.

The Court of Appeal ruled that the CAT made no errors in its assessment that the operation of the schemes constituted relevant economic activity under Chapter I/II. 

The judgment will embolden potential claimants who wish to challenge the procurement procedures of public bodies who are themselves not directly involved in the supply of the relevant goods and services in an economic market.

Network Rail Infrastructure Limited v Achilles Information Limited [2020] EWCA Civ 323