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Competition law and COVID-19 – where are we now?

Nick Pimlott
07/04/2020
As the COVID-19 outbreak escalated across the globe, so has the response from the competition authorities. In the UK, the Competition and Markets Authority (CMA) continues to act swiftly to ensure that consumer interests remain protected during the crisis.
 

A COVID -19 task force has been set up to identify and take enforcement action against firms who are exploiting these exceptional circumstances – and people’s vulnerability – through unjustifiable prices or misleading claims.

At the same time the CMA is taking steps to ensure that competition law does not stand in the way of legitimate measures that protect public health and support the supply of essential goods and services. 
 

CMA Guidance

CMA guidance issued on 25 March 2020 gives comfort that the current extraordinary situation may trigger the need for companies to cooperate in order to ensure the supply and fair distribution of scarce products and/or services affected by the crisis to all consumers. 

The key compliance message set out in the guidance is that UK competition law is still very much in force but with a new focus on "prioritisation". Rather than suspending or relaxing competition law, the CMA will concentrate its investigative resources only those behaviours it chooses to act against. 

The CMA has stressed that its approach does not bind the European Commission in its application of EU competition law in the UK, nor will it protect businesses from private third party litigation. 

In addition to a slight shift in approach, the guidance has introduced some limited circumstances in which the CMA will not take enforcement action. Such an exception to UK competition law applies only where temporary measures to coordinate action taken by businesses:  

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

b)    are clearly in the public interest;  

c)    contribute to the benefit or well-being of consumers; 

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

e)    last no longer than is necessary to deal with these critical issues, 

The CMA has emphasised that this limited exception does not give a ‘free pass’ to businesses to engage in conduct that could lead to harm to consumers in other ways. The CMA will not tolerate unscrupulous businesses exploiting the crisis as a ‘cover’ for non-essential collusion. 
 
 

Corona virus Exclusion Orders

Due to the 'exceptional and compelling reasons of public policy', which have become evident throughout the COVID-19 outbreak, the principles set out in the CMA guidance were crystallised into UK law on 27 March 2020. 

The Secretary of State has exercised its powers to bring certain arrangements out of the scope of the prohibitions set out in Chapter 1 of the Competition Act 1998 by making three exclusion orders – respectively concerning arrangements related to health services, groceries, and maritime crossings.


The Health Services Exclusion Order

Made to assist the NHS in making arrangements with independent healthcare providers which can provide additional capacity to treat both COVID-19 patients and others. Ordinarily, some cooperative arrangements of this nature may have been considered anti-competitive – however, the Secretary of State is satisfied that there are exceptional and compelling reasons of public policy why the prohibition contained in Chapter I of the Competition Act 1998 ought not to apply to, or ought to be deemed never to have applied in relation to, the agreements specified in the Order.
 

The Groceries Exclusion Order

Made in response to the significant strain that has been place on the UK's groceries supply chain. By bringing certain agreements relating to activities by groceries chain providers and logistics services providers out of scope of UK competition law, businesses in the groceries sector will be able to work together and share information in order to manage the supply chain and logistics issues posed by COVID-19 – without fear of breaching competition laws.

For example, businesses may agree to limit the sale of particular groceries through the supply chain to ensure essential items can be effectively distributed and made available to consumers.
 

Each of the exclusion orders applies to in-scope agreements made from 1 March 2020 and provides that the Secretary of State will publish a notice (with at least 28 days' notice) when it considers that the exclusions are no longer necessary. 
 

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