COVID-19: EC Publishes Guidance on Allowing Limited Cooperation Among Businesses

COVID-19 outbreak has caused major disruption of supply chains and a steep rise in demand for certain products and services, notably in the health sector. These circumstances risk leading to shortages in critical medical goods used to treat COVID-19 patients, but also in other essential goods and services outside the health sector.

Tackling these exceptional general supply shocks and avoiding shortages in a timely manner may require the swift coordination of companies in order to overcome, or at least mitigate, the effects of the crisis to the ultimate benefit of citizens. However, some forms of cooperation are prohibited by EU competition law.

As a result, the European Commission (EC) has published a Temporary Framework Communication (Communication) to provide:

Examples of cooperation that would not breach EU competition law include cooperation measures through a trade association or an independent advisor, aimed to:

The temporary exemption will in turn apply to the following forms of cooperation between competitors:

However, to benefit from this exemption, such measures must meet the following additional conditions:

The exemption may also be applicable if such measures are encouraged and/or coordinated by a public authority (or carried out within the framework set up by the latter); or are imperatively requested by public authorities to temporarily cooperate in response to urgency situations related to the current COVID-19 outbreak.

Finally, the EC also repeats its availability to provide “comfort letters” in specific circumstances in response to requests submitted to the dedicated email address it specifically created in that context (see our previous blog post). For example, the EC announced that it has issued a “comfort letter” to Medicines for Europe concerning a specific cooperation project allowing businesses to share competitively sensitive information on stock availability and stock management measures aimed at avoiding situations of shortages of critical hospital medicines during the current pandemic.

There are important parallels between the EC framework and the guidance provided by other national competition authorities, such as the guidance provided by the UK’s Competition and Markets Authority (CMA).

While the Communication and any EC comfort letters do not directly bind the CMA and other national competition authorities, the CMA and the other national competition authorities are under a general requirement to safeguard the consistent application of EU and national competition law, according to Regulation 1/2003. Therefore, they may be expected to take a similar position in their jurisdictions.

The Communication applies as of 8 April and will remain applicable until the EC withdraws it, once it considers that the underlying exceptional circumstances are no longer present.

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National Law Review, Volumess X, Number 105