On 25 March, the CMA issued extensive guidance on its approach to co-operation initiatives taken by competitors in response to the current crisis. The guidance generally underlines that the CMA's focus will be consumer protection and that its main aim is to reassure businesses that proportionate measures which are clearly targeted at concerns arising from the current crisis and which do not go further than what is necessary will not be subject to competition law enforcement action.
The guidance addresses two questions: how the CMA will prioritise cases and choose to investigate in the first place; and, how it will apply exemption criteria to situations that would otherwise be anti-competitive absent the unprecedented COVID-19 context.
Prioritisation criteria
On the first question, the CMA states that it will not take enforcement action against measures to coordinate action where all of five criteria are satisfied:
- the measures are appropriate and necessary to avoid a supply shortage or ensure security of supply;
- they are clearly in the public interest;
- they contribute to consumer welfare;
- they deal with critical issues that arise as a result of the pandemic; and
- they are temporary, meaning that they must last no longer than is necessary to deal with the critical issues in question.
Whilst helpful, the CMA will apply a high threshold when considering the application of these factors. The CMA has expressly stated that these factors should not be taken as providing a “free pass” to businesses to engage in conduct that could harm consumers in other ways, and that the CMA will not tolerate businesses exploiting the crisis as “cover” for non-essential collusion.
Exemption criteria
On the second question, the CMA provides additional guidance to businesses to allow them to self-assess whether and how the legal criteria for exemption will apply in the context of the COVID-19 crisis.
To be exemptible, cooperation must (i) address the critical issue directly and must be in the interests of consumers (i.e. the cooperation is necessary to prevent a shortage or allows for continuity or essential services or the introduction of a new essential service); (ii) be proportionate to the nature of the critical issue by not going further than what is reasonably necessary to achieve the COVID-19-related objective. In particular, the CMA notes that competition must remain wherever possible. For example if two firms collaborate on sharing capacity information, they should continue to compete in other respects, i.e. on price.
The CMA has also commented that in contrast to its usual approach, where the application of its prioritisation and exemption criteria is unclear in relation to a critically important matter, it may accept to offer informal guidance about its enforcement priorities “…on a case-by-case basis, to the extent that this is possible given current CMA staffing constraints”.
The guidance however makes clear that the CMA intends to remain on the alert for measures which opportunistically seek to exploit the crisis, for example manufacturers colluding to keep prices high of in-demand or essential products (such as face masks and other medical equipment).
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