On 23 March 2020, the European Competition Network (ECN), of which the European Commission and the national competition authorities of all EU Member States are members, published a Joint Statement on the application of competition law during the COVID-19 crisis. During the pandemic, the ECN will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply. In the current situation, cooperation between competitors may be necessary to secure the supply chain and avoid imminent shortages in supplying rare products.
In this regard, the European Commission explains, in its Temporary Framework Communication of 8 April 2020, the main criteria it will apply in assessing possible cooperation projects aimed at addressing the shortage of essential products and services during the COVID-19 crisis (notably medicines and medical equipment that are used to test and treat COVID-19 patients or are necessary to mitigate and possibly overcome the outbreak) and in setting its enforcement priorities during the pandemic.
In particular, the exchange of information and the coordination between undertakings will not give rise to an enforcement priority for the Commission, insofar as such measures would:
i. be designed and objectively necessary actually to increase output in the most efficient way to address or avoid a shortage of supply of essential products or services, such as those that are used to treat COVID-19 patients;
ii. be temporary in nature (i.e. to be applied only as long there is a risk of shortage or in any event during the COVID-19 outbreak); and
iii. not exceed what is strictly necessary to achieve the objective of addressing or avoiding the shortage of supply.
Undertakings should document all exchanges and agreements between them and make them available to the Commission on request. The fact that a cooperation is encouraged and/or coordinated by a public authority (or carried out within a framework set up by the latter) is also a relevant factor to be taken into account to conclude that such cooperation would not be problematic under EU competition law or would not be an enforcement priority for the Commission.
Moreover, the Luxembourg Competition Council also indicated in its Guidelines concerning the enforcement of competition law during the COVID-19 crisis adopted on 31 March 2020 that it will not take any action against undertakings, when their temporary measures adopted to coordinate business action:
a) are appropriate and necessary in order to avoid a shortage or to ensure security of supply;
b) are clearly in the public interest;
c) contribute to the interest or well-being of consumers;
d) address critical issues arising from the current pandemic; and
e) do not last longer than necessary to deal with these crucial issues.
1. Are significant increases in the prices of some sanitary products contrary to competition law?
Some companies seek to take advantage of the current situation to increase the prices of certain of the most desired products (e.g. facemasks and sanitising gel).
According to the Joint Statement of 23 March 2020 of the European Competition Network (ECN), the latter wants to ensure that products considered essential to the protection of the health of consumers in the current situation remain available at competitive prices. For this reason, the ECN will not hesitate to take action against companies taking advantage of the current situation by cartelising the market or abusing their dominant position. Indeed, exploitative conduct could potentially infringe the prohibition on abuse of dominance.
However, as the ECN also recalls, the existing competition rules regarding vertical relationships (between players at different stages of the supply chain) allow manufacturers to set maximum prices for their products. The latter could prove useful to limit unjustified price increases at the distribution stage.
In its Communication of 13 March 2020, the Luxembourg Competition Council has indicated that it monitors any suspicion of excessive prices, an artificial shortage of supply, agreements between companies or associations of companies or abusive behaviour in this area in particular. Moreover, the Council gives priority to complaints related to the context of the COVID-19 crisis and in particular to those concerning health products to fight against the virus. A complaint filing form is available on the website of the Council.