Since the beginning of the COVID-19 crisis in Europe, good few national competition authorities have yet opened investigations into potential infringements of competition laws: the Greek competition authority has launched a pre-investigation inquiry into price increases and availability shortages of the same products and some other medical supplies; the Italian competition authority has opened an abuse of dominance investigation into the sale of medical masks, gloves, and hand gels at alleged anti-competitive prices by Amazon and eBay; he Polish Competition Authority has initiated proceedings on the conduct of wholesalers supplying personal protective equipment to hospitals to examine whether it constitutes abuse of dominance or results from price-fixing.

With a need to contribute and to provide some clarity on this issue, the European Competition Network (ECN), consisting of the European Commission, the European Surveillance Authority and the national competition authorities of each EU/EEA Member States, issued on March 23, 2020 the joint statement on the application of competition law during the COVID-19 crisis. Besides, some national competition authorities have issued individual guidelines: for example, the United Kingdom Competition and Markets Authority (CMA) issued the guidance on the approach to business cooperation in response to COVID-19, as well as the open letter to the pharmaceutical and food and drink industries.

ECN acknowledged the social and economic consequences triggered by the COVID-19 crisis in EU/EEA: it clearly communicated that even at this time ensuring a level playing field between companies is an objective that remains relevant. It effectively underpins as follows: there is no suspension of competition law. ECN emphasized three points:

  1. in this extraordinary occurrence companies may need to establish closer cooperation(s) in order to ensure the supply and fair distribution of deficient products to all consumers. From such point of view, ECN “will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply”. Any such measure that is temporary and necessary in the current situation would in any event likely satisfy the conditions set out in Article 101(3) of the Treaty on the Functioning of the European Union for exemption of restrictive agreements from prohibition.
    Article 101(3) TFEU provides that agreements are exempted from prohibition if they contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which do not (i) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives, and (ii) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
    CMA made a similar point in its guidance stating that it would not investigate action where temporary* measures to coordinate action taken by businesses: (i) are appropriate and necessary in order to avoid a shortage, or ensure security, of supply; (ii) are clearly in the public interest; (iii) contribute to the benefit or wellbeing of consumers; (iv) deal with critical issues that arise as a result of the COVID-19 pandemic; and (v) last no longer than is necessary to deal with these critical issues.
     
  2. ECN emphasized the importance of ensuring that products considered essential to protect the health of consumers in the current situation (e.g. face masks and disinfectants) remain available at competitive prices, and expressed readiness to take action against companies taking advantage of the current situation, whether by cartelising or through the abuse of dominant position. Some national competition authorities have already taken action against such practices; other countries resorted to price regulation, say France, where the government imposed price control on hand sanitizer to counter price-gouging or say Serbia, which put a ceiling on the prices protective masks and gloves, and Bosnia and Herzegovina, which capped prices of basic foodstuff and hygienic products.
     
  3. ECN brought to mind various manufacturers that they have a tool at their disposal to set maximum prices for their products and thus prevent unjustified price increase at the distribution level. Setting maximum prices or recommended prices to distributors or retailers is not prohibited and this may be a way to control the prices charged to consumers for products which are high in demand and low in stock.
     

*Note: all emphasis made throughout the text are from the guidance

Serbia and Montenegro

Serbia and Montenegro do not have the self-assessment system for individual exemptions. Technically, any agreement that does not satisfy the conditions for group exemption (because of the market shares of the parties or the contents of the agreement) must be notified to the competition authority for individual exemption.

The Serbian Commission for Protection of Competition has issued a statement reiterating this. It said nothing on the rule that the agreement cannot be implemented before the exemption is granted, meaning : the rule continues to apply.

The deadline for the Serbian competition authority to decide on individual exemption is 60 days from filing the request. What’s more, this deadline is suspended during the state of emergency, and the authority is at remote work mode. Serbian competition authority stands on the position that the fact that the conditions for individual exemption are met is not a valid defence in the proceedings for infringement which consists of the implementation of the agreement before the exemption is obtained. This effectively means that the parties will not be able to implement the agreements subject to individual exemption despite urgency.

It is still to observe and see if the Serbian competition authority takes into consideration to eventually act similarly as CMA in that it would not prosecute technical infringements if the agreements between undertakings are appropriate and necessary in order to avoid a shortage or ensure security of supply, clearly in the public interest, contribute to the 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 issues.