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Legal Alerts

25/03/2020

Competition Law in Times of Crisis

Legal Alerts
Competition
General

In a time of crisis, competition law regulations do not change in content or enforcement. On the contrary, it is vital for companies to remain complaint with applicable antitrust laws and continue their commercially independent behavior. Information deemed sensitive for competition law during the ordinary course of business remains sensitive through economic crisis, spread of infectious disease or state of emergency.

Antitrust authorities across the globe are issuing statements announcing that they are closely monitoring the commercial behavior triggered by the COVID-19 outbreak. The Competition Authority issued a warning on its website declaring that they will impose “the heaviest administrative fines” on those who display anti-competitive behavior in the food sector.

We recommend the following non-exhaustive suggestions on market behavior and contacts with other undertakings in order to reduce the risks of competition law during the crisis period:

  • The golden rule of competition law  ̶  interaction with competitors must be avoided except when absolutely necessary  ̶  should be adhered to more strictly in a time of crisis and as uncertainties increase.
  • Communications between competitors should be closely monitored in terms of content and method. However, the volatility generated by the crisis may adversely affect the monitoring process. This may create a dangerous situation for exchanges of competition sensitive information (such as the examples listed below) between competitors.
  • The competition law is indifferent in its analysis if illegal information is shared face to face, physically or electronically, as all are in violation of competition law. Therefore, the competition law risk remains the same if the employees are using alternative methods such as webinars, Skype, Zoom, WhatsApp, Microsoft Teams or Slack to disperse information as physical contact diminishes.
  • Similarly, any assembly of multiple undertakings may very easily result in the exchange of competition sensitive information between undertakings. Therefore, it will be beneficial to stop or minimize participation in any meetings or events with other undertakings even if these meetings are specifically authorized under the existing body of law.
  • You should avoid any kind of collective arrangements to limit the supply of goods with low or high demand to counter price drops or generate artificial price surges, such as crisis cartels.
  • Research and development projects pose another threat for competition law compliance. Interactions between competitors should be carried out with the utmost care. Competition sensitive information, which is non-exhaustively provided below, should not be exchanged with other undertakings even if the project intends to solve the current crisis.
  • As a result, the golden rule should be followed and contact with competitors must be minimized. It is recommended not to contact competitors unless absolutely mandatory.
  • In the case of compulsory contact, current (which cannot be obtained from publicly available sources) and future commercially sensitive parameters are all considered sensitive information, and even unilateral disclosure is enough to cause severe competition law violations.

These non-exhaustive items include:

  • sales volume and product prices, forecasts and expectations concerning these items,
  • cost items such as raw materials, labor or production costs;
  • precautions on production, capacity, utilization rate, stock quantities and stock information;
  • changes to commercial policies such as new promotions, discounts and loyalty programs; measures such as payment postponement/freezing; or human resources, such as decreasing the number of employees or working conditions.