UK Watchdog Won't Go After Most COVID-19 Coordination

Law360 (March 25, 2020, 8:37 PM EDT) -- The U.K.'s competition authority said Wednesday enforcers are not looking to penalize companies for coordinating to help the country respond to the coronavirus outbreak, but warned there's "no free pass" for collusion that's not essential.

The Competition and Markets Authority issued guidance outlining the agency's approach to cooperation among businesses during the pandemic, saying it's aware of concerns that enforcing competition law could impede efforts to respond to the crisis. The move comes after enforcers in Europe and the U.S. offered similar guidance this week.

Throughout the U.K., the CMA said, companies are pitching in on national and local efforts, "from providing essential goods and services to consumers, to ensuring key workers can carry out their important tasks."

"The CMA understands that this may involve coordination between competing businesses," the guidance said. "It wants to provide reassurance that, provided that any such coordination is undertaken solely to address concerns arising from the current crisis and does not go further or last longer than what is necessary, the CMA will not take action against it."

Companies will not be targeted as long as the coordination is directly aimed at responding to COVID-19, is appropriate and necessary to avoid shortages, and is clearly in the public interest. The measures also must be temporary and not be in place longer than necessary, the CMA said.

But the authority also cautioned that it would continue to go after conduct that harms consumers even during the crisis response. Businesses should not share information about future pricing or strategies, the guidance said, or collude to keep prices high if demand for certain products falls.

Businesses also should not exclude smaller rivals from collaborations intended to ensure supplies or abuse their dominant positions to raise prices.

"The CMA will not tolerate unscrupulous businesses exploiting the crisis as a 'cover' for nonessential collusion," the guidance said.

Section 9 of the Competition Act 1998 spells out the specific requirements for coordinating companies to qualify for an exemption from the rules against restrictive agreements. But the CMA said it does not have the power to grant clearance decisions on the criteria and said businesses will need to make an assessment on their own.

The authority did offer some general observations in the guidance, saying that coordination would likely be exempt if it averts a supply shortage, ensures distribution of scarce products, continues essential services or helps to provide new services, so long as the measures are reasonably necessary.

The CMA also said the situation is dynamic and that the guidance may need to be updated.

"The impact of the COVID-19 pandemic continues to evolve," the CMA said. "So too may the issues faced by businesses as they participate in efforts to mitigate the effects of the pandemic, and also the types of exploitative behaviour that cause consumer detriment."

Last week, the U.K. government temporarily relaxed elements of the competition law to allow supermarkets to work together during the pandemic response. Those changes allow the retailers to share data on stock levels, distribution depots and delivery vans, as well as the pooling of staff to help meet demand.

On Monday, Europe's network of national enforcers, the European Competition Network, issued a statement also highlighting the need for some companies to cooperate in response to the coronavirus outbreak. The ECN said its members would generally not go after conduct that's temporary and aimed at avoiding supply shortages.

In the U.S., the Department of Justice and Federal Trade Commission said Tuesday that they will offer an expedited process for companies seeking assurances that activities related to combating the spread of COVID-19 don't violate antitrust law.

--Additional reporting by Nadia Dreid and Bryan Koenig. Editing by Orlando Lorenzo.

For a reprint of this article, please contact reprints@law360.com.

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