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Competition in Coronavirus times: weekly update

07 April 2020
Another week of the ubiquitous pandemic in the EU and the growing economic problems of Member States have brought more news and activities related to competition law.

Issues include, among others: (i) the increasing need for cooperation between entrepreneurs and the corresponding change in the approach of antitrust authorities introducing guidelines in this respect to facilitate cooperation in accordance with competition law, (ii) Member States adding additional powers for Competition Authorities and regulating the prices of certain goods and services; (iii) changes in the manner of conducting merger clearance proceedings, or (iv) approval of subsequent state aid programs for companies affected by the effects of COVID-19.

COOPERATION

Guidance on companies' cooperation

The European Commission and NCAs have acknowledged that the exceptional pandemic situation may trigger the need for companies to cooperate in order to overcome the ongoing crisis. As there is still uncertainty when and how such cooperation initiatives may be found compatible the regulators try to provide relevant guidance.

The Commission for that purpose has set up a dedicated mailbox.

All the information on specific initiatives should be sought through: 

COMP-COVID-ANTITRUST@ec.europa.eu 

In order to facilitate a swift follow-up, companies are asked to provide upfront as much detail as possible on the initiative, including:

  • firm(s)
  • product(s) or service(s) concerned
  • scope and set-up of the cooperation
  • aspects that may raise concerns under EU antitrust law
  • benefits that the cooperation seeks to achieve
  • explanation of why the cooperation is necessary and proportionate to achieve those benefits in the current circumstances

Same dedicated mailbox has been set up by Spanish competition authority: covid.competencia@cnmc.es  

In Luxemburg on the other hand the authority set out the guidance in a document issued on March 31. The regulator announces that it would not take action against temporary cooperation that: 

  • are appropriate and necessary in order to avoid a shortage or to ensure the safety of supply
  • are clearly in the public interest
  • contribute to the interest or welfare of consumers
  • address critical issues that arise as a result of the current pandemic
  • last no longer than is necessary to address these critical issues

DOMINANCE

Expedia, Booking.com scrutinized by UK's CMA over COVID-19 contract change.

In the UK the main hotel booking platforms was recently found under scrutiny by the competition regulator over whether consumer-friendly changes to booking conditions due to the COVID-19 pandemic (i.e. by allowing consumers to cancel hotel reservations without a fee) amount to an abuse of market power over small hoteliers 

ENFORCEMENT

Price regulation

Some member states have adopted legislation enabling the relevant authority to regulate the maximum prices for essential goods i.e. food, hand sanitizer, baby milk, hygiene products.

  • In Poland such regulation can be enacted by the Ministry of Economy. Four specialised inspection bodies i.e. the Trade Inspection and the Pharmaceutical Inspection will conduct controls whether entrepreneurs comply with the regulated prices
  • Violation of the regulation can cause in fine PLN 5000 up to PLN 5 000 000
  • The entrepreneur will be obliged to pay the fine within 7 days from the date on which the decision became final
  • Fine will be imposed by voivodeship inspectors
  • The decision imposing the fine may have a value of immediate enforceability

New enforcement powers

In order to deal with the retailers exploiting the coronavirus outbreak the competition authorities are also being equipped with new enforcement tools.

  • In Poland, the President of the OCCP, who is also in charge of controlling product prices, will be able to impose new fines:
  • up to 10% of the turnover achieved in the financial year preceding the year of imposing the penalty, if an entrepreneur even unintentionally, violates the maximum prices' regulation repeatedly violated or on a large scale, in relation to many goods or services
  • up to 5% of the turnover, but not more than PLN 50 million if the entrepreneur, even if unintentionally:
  • did not provide the information requested by the President or provided false or misleading information
  • prevent or hinder the President from initiating or carrying out an inspection

Voices are heard that similar regulations may be soon adopted in the UK.

Suspension of antitrust fines

Given the fallout of the COVID-19 pandemic the Italian competition authority decided to suspend all recent or looming deadlines for the payment of antitrust fines. Fines that were due between Feb. 23 and April 15 now have a new deadline of Oct. 1.

MERGERS

The Commission continues to review merger during pandemic

Around the globe, the pandemic has caused merger-control authorities to suspend deadlines and notifications (e.g. France, the UK, Denmark). That does not apply to European watchdog. Although on March, 13 the European Commission asked companies to hold off on notifying new deals “where possible” and suspended some high-profile merger reviews, recently the regulator has declared that it would continue to review the merger transactions. Nevertheless, some delays must be expected as the current situation is limiting the possibility to obtain the relevant information from both notifying companies and third parties.

Merger notifications in electronic forms 

Merger notification during pandemic are mostly accepted only in electronic form filing either by authorities' website or dedicated mailbox. Such measures are taken e.g. by the Commission, in Austria and in Ireland.

STATE AID 

In recent days the European Commission has approved several national staid aid schemes aimed at supporting the national economy during the coronavirus outbreak. The Commission found the measure as necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. 

Denmark

On April, 3 the Commission approves €200 million Danish loan in support of the Travel Guarantee Fund for travel cancellations due to coronavirus outbreak

Spain

On April 2, the Commission has approved a Spanish “umbrella” aid scheme to support self-employed, small and medium-sized enterprises and large companies affected by the coronavirus outbreak through direct grants, repayable advances, tax and payment advantages, public guarantees on loans and loans at favourable terms.

Sweden 

On April 2, the Commission approved a €9.1 billion Swedish plan to guarantee loans to smaller companies suffering losses due to the COVID-19. The mechanism will see the Swedish state take on up to 70 percent of the risk.

Malta

On April 2, the Commission has approved a 350 million-euro Maltese state aid program enabling public guarantees on loans to support its economy during the pandemic.

France

On March 31, the European Commission approved a French plan to defer certain taxes owed by airlines to help them withstand losses caused by the COVID-19 pandemic.

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