This article was written by Dr Annalies Muscat and Dr Laura Spiteri
Undoubtedly, the current COVID-19 pandemic means that we are living in unparalleled times; perhaps for some of us, unprecedented.Equally unprecedented during our lifetime is the joint statement issued on 23 March 2020 by the European Commission together with the national competition authorities of the Member States, cooperating with one another through the European Competition Network (the "ECN"), on the application of competition rules amid the COVID-19 crisis. The Office for Competition, Malta's national competition authority, issued a statement confirming the contents of the joint statement on 24 March 2020.
Article 5 of the Competition Act (Chapter 379 of the Laws of Malta), mirroring article 101 of the Treaty on the Functioning of the European Union, prohibits undertakings from entering into any agreements or concerted practices with the object or effect of preventing, restricting, or distorting competition. However, the competition authorities within the ECN have indicated that they understand that the extraordinary situation created by the pandemic may require undertakings to cooperate with one another to ensure that scarce products are supplied, and fairly distributed among consumers.To this end, they have indicated that they will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply.
In the ECN's view, such temporary and necessary measures are, in any case, unlikely to breach the competition rules. Such measures would in most cases generate efficiencies and outweigh any restrictions that are normally placed on competing undertakings.
The ECN also issues a warning to those unscrupulous retailers taking advantage of the current pandemic who are hiking up the prices of face masks and hand sanitisers.The ECN cautions that products considered essential during these times should still be sold at competitive prices. To this end the ECN encourages manufacturers to set maximum prices for these essential products.It is hoped that this would limit unjustified increases in prices at the distribution level.
This "loosening" of competition rules should, however, not be seen as an opportunity to enter into cartels with one another or to abuse a dominant position they may hold. The Office for Competition has clearly stated that any undertakings taking undue advantage of the current situation will face action. The ECN invites undertakings to reach out to the relevant competition authorities for informal guidance should any queries arise with regard to any such measures sought to be adopted.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.