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COVID-19: the Competition Authorities' response

Posted on 25 March 2020

Competition Regulators have not been exempt from the practical difficulties presented by the outbreak of the COVID-19 virus. A number of regulators have announced delays to their functioning, including the EU Commission which has suspended some investigations into proposed mergers and requested that companies delay initiating the merger process.

The CMA is seeking an extension of the time limit (usually 24 weeks) for assessing mergers and has reallocated resources in order to meet urgent deadlines. Although companies should expect a longer wait before a formal investigation is commenced, companies can take steps to streamline the process by ensuring their application is fully formulated at the time of submission. The CMA has already announced that its funeral services market investigation report will be delayed by 6 months.

In a joint statement issued on 23 March, the European Competition Network has affirmed a commitment to the competition rules in place currently and emphasised that these rules are sufficiently flexible to account for market disruption.

Will the rules be relaxed?

The Government has already announced that to enable food retailers to meet demand and keep essential shops open they will be allowed to share data about stock levels, and pool resources such as staff, distribution depots and delivery vans. There may also be further announcements to temporarily suspend the application of some competition rules regarding the exchange of information and cooperation to ensure food supply chains maximise efficiencies.

Meanwhile, the European Commission has suspended the aviation rules which oblige airlines to fly empty "ghost flights" to retain flight slot allocation rights. All companies are encouraged to take this opportunity to improve efficiencies and innovate to adapt to the changing market.

New areas of focus for the Competition Authorities

As demand has risen exponentially for certain goods in supermarkets and pharmacies, extra regulation is needed to ensure the price of goods is not overinflated. For example the CMA has already contacted traders and platforms who have sought to inflate the price of hand sanitiser and supermarkets have taken steps to limit the number of certain goods which can be purchased per customer.

There is a concern that competing businesses may behave unlawfully in instances where they believe their conduct my fall under the radar but the CMA continues to monitor market behaviour and businesses are advised to act responsibly. It will be imperative that companies are transparent with regulators about changes to their business practices and that discussions with competitors are well documented so that any allegations of misconduct can be rebutted.

Utilities regulation

Utilities companies have been in talks with the Government about introducing unilateral measures for the economic regulation of utilities to ensure a properly coordinated response despite the lack of a properly functioning competitive market.

Sanctions and remedies

Sanctions imposed for breaches will need to be proportionate and take into consideration the highly unusual and pressurised circumstances of this outbreak. We are likely to see lower fines and less intrusive remedies than would have been imposed traditionally. As was seen in the ICO's approach to fining BA/Marriott for infringements of GDPR in 2019, agreements may be reached to allow for an extended period of time for payment of a fine.

Enforcement

The CMA has been quick to respond to the unfolding pandemic and has formed a task force to take urgent action, including obtaining extended legal powers to ensure a robust response to competition law infringements. The task force will also advise the Government on how to ensure competition law does not hamper emergency measures intended to improve efficiencies in public health and the supply of essential goods and services, while ensuring that the situation is not exploited.

Advice to firms

  • Businesses should be cautious of being approached by others interested in exploiting the new market conditions and report any anti-competitive behaviour through the relevant channels.
  • Some businesses may find themselves with a position of enhanced market dominance and should be aware of the competition and regulatory implications of this.
  • Businesses should be alive to opportunities for innovation which may arise as businesses are encouraged to maximise efficiencies.
  • Document any discussions or negotiations which take advantage of newly relaxed regulation and continue to coordinate efforts with the CMA with full transparency.
  • Keep up to date with changing regulations and Government advice.

Practical guidance for COVID-19
Read the latest COVID-19 related updates on our hub.

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