Short Reads

COVID-19: fast-forwarding competition law

COVID-19: fast-forwarding competition law

COVID-19: fast-forwarding competition law

07.05.2020 NL law

Competition authorities are temporarily ‘green-lighting’ certain collaboration initiatives to safeguard the supply of essential products in light of the COVID-19 outbreak. At the same time, authorities warn against using the current exceptional circumstances to engage in anti-competitive practices, such as price-fixing, excessive pricing, refusals to deal or opportunistic takeovers. 

The aftermath of the COVID-19 crisis may lead to further fine-tuning of the European Commission’s upcoming review of antitrust policies, as well as to an increased number of cartel investigations.  It may also speed up the drafting of protectionist measures at national and EU level. Companies should take account of this dynamic landscape in their current and future day-to-day business dealings.

  1. Cooperation to tackle scarcity due to COVID-19

The COVID-19 crisis has led to sudden surge in demand for certain, particularly healthcare-related, products. To tackle the supply shortages of these essential products, companies may need to cooperate more intensely through, for instance, joint production, stock management or distribution. In response to this need, the European Commission has drafted temporary guidance for business cooperation to help companies assess the antitrust compatibility of their intended collaborations. According to the Commission, these collaborations will either not be an antitrust issue, or not an enforcement priority, if they: 

  • are designed and objectively necessary to actually increase output in the most efficient way to address or avoid a shortage of supply of essential products or services;
  • are temporary in nature in that they apply for as long as there is a shortage risk or in any event no longer than the duration of the COVID-19 outbreak;
  • do not exceed what is strictly necessary to achieve the objective of addressing or avoiding the shortage of supply.

The fact that the cooperation measures are encouraged, coordinated or specifically requested by public authorities will also play a role in the cooperation’s antitrust viability. Companies uncertain whether their cooperation initiative will pass the Commission’s antitrust test can seek oral guidance or request an ad hoc ‘comfort’ letter. We advise companies to make use of this option, since the exact boundaries of a ‘green-lit’ cooperation project may not be immediately clear and can blur over time. The European Commission’s first comfort letter was recently issued to ‘Medicines for Europe’ for a cooperation between pharmaceutical producers to reduce shortage risks of critical hospital medicines for the treatment of COVID-19 patients.

Most competition authorities follow a similar path as that of the Commission. The European Competition Network (ECN), the International Competition Network (ICN) and the Organisation for Economic Co-operation and Development (OECD) have acknowledged the necessity for companies to temporarily cooperate more tightly in order to safeguard the supply and fair distribution of scarce products. Most national competition authorities have endorsed these statements, issued similar statements of their own, and provided further guidance or comfort to companies (see the IBA website for a comprehensive overview):


Statement Competition Authority

Specific guidance


Autorité de la concurrence statement

Le Rassemblement des Opticiens de France


Bundeskartellamt statement

Grocery retail sector


ACM statement

  • Health insurers
  • The ACM will take account of these extraordinary times in relation to, for instance, (i) the exchange of stock information by supermarkets, (ii) logistical cooperation on food supply, (iii) the exchange of sales information by pharmaceutical wholesalers and (iv) sectors agreeing to take a more lenient approach towards debtors.

United Kingdom

CMA statement

United States

FTC and DoJ joint statement


2.  Continued monitoring of potential anticompetitive practices

Outside the above-mentioned strict boundaries for temporary cooperation, compliance with the existing competition rules is still key. The European Commission has warned that it actively screens for anti-competitive collusion or abuse of dominant positions (including dominant positions created by the particular circumstances of the crisis). Several national competition authorities have expressed equal determination against anti-competitive practices stemming from the crisis: see for instance the warnings issued in France, the Netherlands, the United Kingdom and the United States. Recent practice shows that their interventions can be quick and informal. The Dutch ACM intervened in a case relating to a shortage of lysine buffer and other test materials in the Netherlands. According to the ACM, Roche Diagnostics holds a key position in the Netherlands with regard to test equipment and test materials. However, the ACM refrained from taking further steps after Roche Diagnostics committed itself to sharing its recipe of lysis buffer with the Dutch government, and to work together with manufacturers and laboratories on scaling up production.

Apart from actively screening for anti-competitive conduct, authorities are also calling upon companies to do their bit against unfair practices. The ECN has reminded suppliers of the existing possibility to set maximum prices for products to prevent unjustified price increases at distribution level. In addition, excessive pricing by non-dominant companies, untouchable under the competition rules, can be caught by consumer protection rules. The EU consumer protection authorities have published a Common COVID-19 Position requesting online platform operators to identify and take down illegal practices. The Italian competition authority has launched investigations against Amazon and eBay about significant price increases for healthcare related products on their platforms. The UK CMA has been in touch with Amazon and eBay to ensure listings charging unjustifiable prices for essential goods are removed quickly. The Dutch ACM is pleased with the steps the three major online platforms in the Netherlands have taken to stop COVID-19 related exploitation and abuses.

3.  Cooperation to tackle overcapacity due to COVID-19

Apart from supply shortages, the COVID-19 crisis has also led to overcapacity in certain sectors. Overcapacity in the milk, flowers and potatoes sectors has led the European Commission to temporarily allow certain collective market stabilisation measures. As a result, these sectors may collectively plan production and withdraw products from the market for a maximum duration of six months. Similarly, the United Kingdom has taken measures to allow the dairy industry to adapt to decreased demand by, for instance, sharing labour and facilities, and cooperating to reduce production.

However, companies should remain cautious of engaging in these type of industrial restructuring arrangements, particularly without any prior ‘backing’ from public authorities. According to EU case law, ‘crisis cartels’ generally have the object to restrict competition, thus making it more difficult for companies to justify them under the competition rules. Companies intending to work together to reduce overcapacity would therefore be wise to tread carefully and seek legal counsel, or (informal) guidance or comfort from the competition authorities.

4.  Changes in merger control due to COVID-19

The COVID-19 crisis has also had an impact on M&A transactions. Not only are merging parties faced with potential delays in merger control procedures, the economic downturn has also led to increased concerns of ‘opportunistic’ takeovers by third-country (state-backed) investors.

These concerns have led the Commission to fast-forward ahead of the Foreign Direct Investments (FDI) Regulation (see our March 2019 article), and publish guidance urging Member States to protect strategic industries from “predatory buying” by state-backed third country (“foreign”) investors. The guidance calls upon Member States to make full use of their FDI screening mechanisms and, if not yet in place, to swiftly introduce them. Member States are also advised to consider other protectionist options, including the acquisition of special rights in certain companies (“golden shares”). EU Commissioner Vestager has stated that more clarity will soon be provided on the various EU law compliant options available to Member States in order to protect their strategic assets from being acquired by foreign acquirers.

Meanwhile, competition authorities will need to factor the COVID-19 crisis into their merger assessments, leaving them with the challenge of having to predict a merger’s impact on a particularly volatile competitive landscape. They may also be confronted with an increasing number of “failing firm” claims in merger filings. On 17 April 2020, the UK CMA provisionally cleared Amazon’s investment in Deliveroo, based on Deliveroo’s rapidly deteriorating financial position. However, when doing so, the CMA underlined its intention to adhere to the high standards applicable to a successful failing firm defence. Similar statements have been made by EU Commissioner Vestager in regard of EU merger control. As a result, companies will still need to convincingly prove that: (i) absent the merger, the allegedly failing firm would be forced out of the market due to financial difficulties, (ii) there is no less anti-competitive alternative purchase than the notified merger, and (iii) without the merger, the assets of the failing firm would inevitably exit the market. Even so, most merger regimes have a possibility for companies to request an exemption from the mandatory standstill period before closing a concentration, which may bring some relief to financially distressed companies in need of speed.

5.  And now what?

The quick succession of measures to deal with the COVID-19 crisis is to be applauded, although it may have left certain companies uncertain of what to do next. Please find below a number of recommendations for companies to fill in the blanks.

  1. When in doubt, reach out

Companies should not forget that, as well as the Commission’s COVID-19 specific antitrust guidance, the existing guidelines on horizontal cooperation and vertical agreements are helpful tools to assess whether an intended cooperation passes the antitrust test. If still uncertain, companies should not hesitate to reach out to the European Commission or national competition authorities to (informally) ‘green light’ their business dealings. The system of informal guidance and comfort letters for COVID 19-related cooperation is in place and up for grabs, so make use of it in order to ensure the cooperation stays within the set boundaries.

Companies should also anticipate that the experience competition authorities are currently gaining with this system could result in the revival of a similar system, under the existing competition law framework, particularly given the pre-crisis calls for informal guidance letters (see our November 2019 and April 2020 Newsletters).

  1. Document, monitor, document

Companies can expect competition authorities to double down on cartel investigations in the aftermath of the COVID-19 crisis. They will be double-checking whether companies have ‘disentangled’ their temporarily ‘green-lit’ cooperation initiatives and returned to behaving as ‘normal’ competitors. It would not be the first time that an initially permissible cooperation overshoots into anti-competitive conduct. In addition, they will be looking for ‘clandestine’ cartels, which may have used the crisis as a cover up for their anti-competitive coordination.

Companies are therefore well-advised to document all actions within their cooperation initiatives during and after the crisis. It follows from the European Commission’s first comfort letter that sufficient safeguards need to be in place to limit the exchange of confidential business information among the companies within a ‘green-lit’ cooperation project. Companies should therefore carefully document their actions by, for instance, concluding non-disclosure agreements, setting up clean teams, and making minutes of all meetings between them. This documentation will not only help to prove that they have stayed within the strict boundaries set by the temporary guidance for business cooperation or the existing competition law framework, but may also prove their antitrust compliance in the aftermath of the COVID-19 crisis.

Aside from documenting, companies should also monitor their own pricing conduct both during and after the crisis. Consumer protection laws will tackle a company’s unfair prices, whereas the competition rules will hammer down on dominant companies charging excessive prices. The current crisis has an added difficulty: fluid market circumstances may turn quite suddenly non-dominant companies into dominant ones. Companies should therefore continuously monitor their market position and pricing decisions and, preferably, document them carefully.

Furthermore, companies should note that the current deliberations on the exact boundaries between cooperation and information exchange may result in a further fine-tuning to these rules in the European Commission’s ongoing review of the horizontal guidelines. It could also speed up the current debate on digital platforms, since the current crisis may further strengthen their market position (see our January 2020 and April 2020 Newsletters).

  1. FDI and M&A are here to stay

Companies engaged in M&A transactions should assess the implications of a lengthier merger approval process and the impact of the dynamic landscape on their transactions’ substantive assessments. It is also advisable for them to check the potential applicability of FDI screening mechanisms, and their implications for their transaction, as well as keeping an eye out for other potential protectionist measures rapidly coming into place.

More about the coronavirus

You can read more publications on the impact of the coronavirus on our website. Here you will also find a list of contacts within our organisation who can advise you with questions about the implications of the coronavirus for your company.

This article was published in the Competition Newsletter of May 2020. Other articles in this newsletter:


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