What significance does the Corona crisis have for antitrust law? We summarize the most important opportunities and risks.
The Corona crisis is hampering business activities in all sectors and it comes as no surprise that companies are considering cooperating to reduce costs and improve services.
Since coordinated actions among companies could lead to doubts regarding competition law rules, the EU competition authorities linked in the European Competition Network (ECN) issued a joint statement, which has also been published by the Croatian Competition Agency (AZTN). The statement acknowledges the need for cooperation to ensure the supply and fair distribution of products to all consumers, but also notes that authorities will not hesitate to take action against companies taking advantage of the current situation by cartelising or abusing their dominant position.
Behaviour that would normally be subject to stricter supervision could be justified in the current situation if the main goal is to make products available at competitive prices. Therefore, the ECN has explicitly stated that it will not actively intervene against necessary and temporary measures implemented to avoid a supply shortage.
However, this does not mean that the competition authorities will remain inactive. On the contrary, they will monitor such cooperation to prevent any abuse.
The crisis situation is not an excuse for taking clearly anticompetitive action. The classic anticompetitive measures, such as price fixing, territorial and customer allocation remain prohibited.
3. Abuse of market power
While noting that necessary cooperation initiatives are unlikely to be problematic, the ECN also emphasized that it is imperative to ensure that products essential to protecting consumers’ health in the current situation (e.g. face masks and sanitising gel) remain available at competitive prices.
In order to avoid excessive prices being charged for products considered material in this situation, the Croatian Government has set the maximum price for certain products to the price applied on 30 January 2020. This decision entered into force on 16 March 2020 and the State Inspectorate has been asked to report regularly to the Ministry of Commerce on the implementation of these measures. The decision covers a variety of food products (e.g. flour, milk, eggs, oil, salt, pasta, meat, fish, fruits and vegetables), baby food and diapers, drinking water and different protective medical clothing, medicines and medicinal products. Setting a higher price (than the one applied on 30 January 2020) is possible only exceptionally (when the change occurs exclusively due to an increase in product supply price irrespective of the trader’s will).
Although the Government’s decision initially affects traders, other actors in the supply chain should be cautious as well. Given the above, in addition to the supervision by the Ministry of Commerce, it is expected that AZTN will closely monitor the food and healthcare sector and other key industries to avoid anticompetitive practices, especially those related to abuse of a dominant position.
4. Merger control
For the time being, the notification obligations and the deadline regime of merger control in Croatia remain unchanged.
AZTN is continuing with its activities. Meetings in person are excluded for a certain period, but other communication channels (email, phone, delivery via post) are available.
Nevertheless, because of the situation, non-statutory deadlines might be prolonged, which should be taken into consideration when planning transactions, including in the relevant merger control clauses.
To enable business to organize around ongoing competition matters, we have prepared a quick overview of AZTN and other national competition authority working regimes, which is available here.