The COVID-19 outbreak is presenting enormous economic challenges to a wide variety of businesses. In times of difficulty, firms often have an incentive to collude. That said, competition law rules continue to apply irrespective of the macro-economic environment – in other words, an economic downturn or crisis cannot be used as a justification to break the law.
EU and Irish competition law rules prohibit any arrangement between firms which prevents, restricts or distorts competition (such as co-ordination regarding pricing or output). They also outlaw the abuse of a dominant position in any market (which may include unfair pricing and/or ‘tying’ products, i.e., forcing customers to purchase other, unrelated products). That said, anti-competitive arrangements may be permitted if they result in efficiencies which benefit consumers.
However, given the severity of the coronavirus pandemic and its economic and health implications, the ECN recognises that certain forms of co-ordination may be required by firms for the ultimate benefit of consumers.
The ECN is a network of antitrust regulators including the European Commission, the EFTA Surveillance Authority and all EU/EEA national competition authorities including the Irish Competition and Consumer Protection Commission. The ECN has recently stipulated that the relevant enforcement authorities will not target any co-ordination or co-operation which ensures the supply and fair distribution of scare products such as personal protective equipment. Such practices are likely to lead to efficiencies which outweigh their negative effects.
However, the ECN has also warned that any anti-competitive pricing practices in the supply of essential health products (such as face masks and sanitising gel) will not be tolerated. Such anti-competitive practices may include, for example, competing resellers of such products agreeing to keep prices artificially high. Similarly, a dominant supplier of such products could engage in excessive pricing or illegal tying, i.e. forcing customers to purchase another, unelated product.
The ECN’s statement is a timely reminder that EU competition law rules – and their Irish counterpart – remain in full force during the current pandemic.