The antitrust authorities have signalled their approval for cooperation between competitors during the ongoing COVID-19 crisis.
According to the European Commission, in times of crisis there might be a need for competitors to "coordinate on production stock management and potentially distribution".
President of the Federal Cartel Office (FCO) Andreas Mundt and EU Commissioner Margrethe Vestager emphasise that the authorities are open to direct communication.
According to Mundt, even after the crisis, cooperation might be necessary to overcome economic difficulties. However, he also issued a warning: "if companies try to exploit this emergency situation, for example by price fixing to the detriment of consumers or by abusing their dominant position we will act vigilant."
Cooperation in times of crisis
On 8 April 2020 the European Commission published "Framework Communication addressing the antitrust issues related to cooperation between competitors in COVID-19 related urgency situations". The commission acknowledged that companies and competitors might have to cooperate to safeguard the shortened supply of goods. Special consideration is attributed, but not limited, to the health sector and medicine.
For example, the European Commission proposes that a trade association can be entrusted to:
- coordinate joint transport for input materials;
- contribute to identifying those essential medicines for which, in view of forecasted production, there are shortage risks;
- aggregate production and capacity information, without exchanging individual company information;
- predict demand on a national level; and
- share aggregate supply gap information and which undertakings are able to fill the supply gap (without information exchange between competitors).
Activities regarding the production, stock and distribution of goods may require exchanges of commercially sensitive information and a certain level of coordination. Such activities will not violate competition law if they are temporary and do not exceed what is strictly necessary.
On 15 April 2020 Mundt reiterated that joint action might be necessary after the crisis to overcome economic difficulties: "To the extent that such activities are necessary due to the current crisis, they are – for an unlimited time – also not problematic from a competition law point of view."
Mundt emphasised that, since the outbreak of the COVID-19 pandemic, the FCO has held several talks with many undertakings regarding the exemption of cooperation between competitors. These requests concerned, in particular, cooperation in storage and redistribution between undertakings to avoid supply shortages.
By means of requesting discussions with the antitrust authorities, undertakings can get at least some degree of legal certainty. The European Commission has provided further assistance by issuing so-called 'comfort letters' (ie, formal confirmation that a project does not violate competition law) regarding the exemption of specific cooperation projects.
Cooperation with competitors must be evaluated in light of the possible risks under competition law. The European Commission's guidelines on horizontal cooperation agreements set out advice regarding purchasing agreements or agreements regarding the commercialisation of products. If uncertainty remains even after the application of these criteria or if undertakings plan to enter into a special cooperation due to the COVID-19 crisis, the FCO can be contacted – Mundt acknowledges that the office is open for such direct communication. For cooperation projects which have a pan-European impact, the European Commission will issue comfort letters. In such instances, the commission advises that notes should be taken of each communication with a competitor.
The FCO will continue to issue warnings regarding competition law violations during the COVID-19 crisis. Further, the office intends to actively investigate undertakings that exploit the current situation and violate EU competition law by entering into anti-competitive agreements or abusing their dominant position.
An exchange of experiences might be helpful for companies – especially during the COVID-19 pandemic. However, companies should check whether such an exchange of information (whether bilateral or by means of a trade association) respects the limits of antitrust law as part of their compliance regime. Special caution is required if a cooperation is planned in the area of scaling back production or closing distribution channels.
