Application of competition rules in the context of the state of emergency

May 1st, 2020

In a normal legislative context (outside the state of emergency), the rules of competition law sanction anti-competitive practices consisting, among others, in setting prices, limiting/ controlling production and trade, sharing markets, applying, in relations with trading partners, certain unequal conditions at equivalent performance etc. At the same time, the abuse of a dominant position of a company holding an important market share (a market share of over 40% presumes a dominant position) is punishable by the competition authorities.

However, the state of emergency per se is of nature to allow not only the restriction of certain citizens’ rights, but also the restriction of competition, by, for example, banning traffic on certain routes or by streamlining food and other products of strict necessity. Such measures may lead to a decrease in competition on the relevant market, but will be justified by the measure establishing the state of emergency.

In this context, a reduction of the economic activity and implicitly of the economic operators’ income, the latter might be tempted to adopt recovery measures that could violate the competition regulations, such as the agreement with other economic operators in the sense of sharing the markets and applying certain unequal conditions at equivalent performance (for example, two economic operators agree to distribute together in a certain deficient area at a much higher price than other distribution areas). It is important mentioning that the special economic situation determined by the state of emergency cannot in any case represent a justification for violating the competition rules, and the normally punishable behaviors will remain punishable even during the state of emergency.

According to the Competition Council, companies may take some measures justified by the prevention of the spread of coronavirus[1]. However, the competition authority states that it follows very closely the companies’ behavior, as the measures adopted by the companies must not lead to restrictions of competition. In this sense, the following practices are prohibited:

  • increase in prices without an objective justification (such as increase in production costs etc.);

  • exchange of sensitive information: prices (strategies, price reductions, discounts), price structure (research, production, distribution), trading terms and methods, promotion strategies, revenues and volumes related to sales, profit margin, market share, territories, lists of customers/ distributors/ suppliers, planned and/ or submitted offers, purchased volumes, business plans and investments (anticipation of market entry, planned investments) or the level of use of production capacities;[2]

  • exclusion of some competitors from the market;

  • abuse of a dominant position;

  • concluding anti-competitive agreements, in order to eliminate the trade of a certain product/ service, fixing prices, dividing customers and territories).

As an exception, considering the crisis situation, both the Competition Council[3], and the European Union competition authorities[4], agree that economic operators may act in a coordinated manner so as to avoid a shortage of essential products and to ensure a balanced distribution thereof.[5].

Examples of practices allowed in the state of emergency, according to the Competition Council:[6]:

  • retailers can coordinate both the transport of goods, to ensure the supply of basic products in all fields, and home deliveries for people who cannot leave their homes and for consumers at high risk;

  • administrators of the online trading platforms may impose measures to limit the unjustified increases in prices for basic products and services or may suspend the sale of certain products if there are suspicions of abuse;

  • producers can set maximum prices for their products - a measure that would be beneficial insofar as it would limit the unjustified increase of prices at the distribution level;

  • limiting the quantities of essential products purchased by a single person or on a single receipt.

Sometimes it is difficult to distinguish a competitive behavior from one that can raise risks in terms of competition rules, meaning that companies will always have to analyze in advance the measures taken on the market, especially in the context of emergency.

[1] Competition Council press release dated 13.03.2020 (Back)
[2] Competition Council Guide on compliance with the competition regulations dated 05.12.2017 (Back)
[3] Competition Council press release dated 13.03.2020 (Back)
[4] Antitrust: Joint statement by the European Competition Network (ECN) on application of competition law during the Corona crisis dated 23.03.2020 (Back) [5] Antitrust: Joint statement by the European Competition Network (ECN) on application of competition law during the Corona crisis dated 23.03.2020 (Back) [6] Competition Council press release dated 13.03.2020 (Back)

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