Does competition law still apply in light of COVID-19?
The purpose of competition law is to make sure that businesses don’t act in an anti-competitive way. But we are in pretty strange times! The short answer to the question is yes, although the government has relaxed the rules for some sectors.
The Competition and Markets Authority, which is responsible for regulating competition law in the UK, has also published some useful guidance for businesses.
However, before you start collaborating with your competitors to keep products flowing during this crisis, make sure that you’ve done your homework! More information below…
So what have the CMA said?
There is an acknowledgement that we are in unprecedented times. Whilst this doesn’t give you carte blanche to ignore competition rules (do so at your peril!), there are some assurances that the CMA won’t enforce in certain circumstances, essentially where it:
- is appropriate and necessary in order to avoid a shortage, or ensure security, of supply;
- is clearly in the public interest;
- contributes to the benefit or wellbeing of consumers;
- deals with critical issues that arise as a result of the COVID-19 pandemic; and
- lasts no longer than is necessary to deal with these critical issues.
If you want a guarantee that whatever you’re doing will be treated as exempt from competition law, this is possible, so long as further tests are met. Typically, they are complicated, but essentially are there to allow the ongoing availability of essential goods and services.
Certain sectors (grocery supplies and supermarkets, for instance) have specific exemptions to allow cooperation between competitors.
Remember these headline points:
- COVID-19 isn’t a free pass for businesses to act anti-competitively. The rules continue to apply as usual.
- Most of what businesses do don’t cause competition law issues. But be wary of having discussions with competitors, changing distribution models or trying to control how your customers sell your products, for instance.
- Make sure that your staff continue to understand the competition law risks. Keep them trained (there are e-learning alternatives out there), and if things are quieter now, it may be a good time to crack on.
- Be aware of the assurances and exemptions that are available.
- The fines for getting it wrong are still a maximum of 10% of worldwide turnover.
- We’re here to help so get in touch if you need any further information!
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If your business needs legal support with any issues arising from COVID-19, please get in touch with James Geary.
All information in this update is accurate at the time of writing. It is meant for general information only and is not legal advice.