The Channel Islands Competition and Regulatory Authorities (CICRA) have reminded businesses that competition law remains in force despite the COVID-19 pandemic although they have confirmed that the approach to enforcement will be pragmatic. Whilst it remains to be seen if the separation of CICRA from 1 July 2020 impacts the approaches taken, it may now be more important than ever for business to reconsider the requirements of the Channel Islands' competition laws.
- Anti-competitive agreements are prohibited in both Guernsey and
Jersey, very much in summary, where the object or the effect of the
agreement is to hinder or prevent competition to an appreciable
extent. Regulators will continue to investigate alleged breaches of
the law and will not allow businesses to exploit the crisis as a
pretence for non-essential collusion.
- In the usual way, businesses should be mindful of entering into
or continuing with anti-competitive arrangements and remain alive
to any high risk practices that may fall foul of the law including
for example: price fixing, market sharing and imposing minimum
- CICRA have, however, confirmed that no competition law
enforcement action will be taken against cooperation between
businesses or rationing of products in light of the COVID-19
pandemic to the extent that this is necessary to protect consumers,
for example arrangements to avoid a shortage of supplies.
- If your business is entering into such an agreement, consider:
- whether the agreement is in the interests of consumers; and
- if it goes beyond what is necessary to alleviate the urgent circumstances of the pandemic.
- Seek legal advice on the nature of the agreement or comfort from the regulator if you are unsure of the status of a proposed agreement.
Considerations for dominant businesses
- If your business holds a dominant position, continue to guard
against abusive practices including for example: excessively high
pricing, refusals to supply, price discrimination, setting
discounts at predatory levels or in a manner aimed at foreclosing
- Is your business operating in new markets or markets with
limited competition? If so, consider whether it may have a newly
conferred dominant status.
- A dominant status occurs normally, although not always, where a
business persistently holds a share above 50% in the market place
and is less likely to occur where a business holds a share of less
than 40% (unless there is wider evidence of dominance). However,
dominance needs to be considered on a case by case basis.
- Do not assume that abusive conduct will be exonerated because
the interests of your business are in alignment with government
policies or are in aid of the "greater good" throughout
the COVID-19 pandemic.
- Pay particular attention to business pricing strategies;
regulators are likely to be particularly alert to allegations
of unfair pricing.
- Be able to objectively justify any conduct which may be perceived as abusive and demonstrate that it goes no further than is necessary to achieve a legitimate aim. For example, be able to justify why your business is supplying one type of customer with scarce resources instead of another.
Mergers and Acquisitions
- The regulators have not announced any plans to halt their
consideration of mergers, though they have indicated that the
adoption of a pragmatic approach to supervision during the COVID-19
pandemic means that there may be delays to the consideration of
these applications. Parties to a merger should therefore notify the
relevant regulator (or both) where pre-approval for a merger is
mandatory under the law. The regulators will continue to only
approve mergers that do not "substantially lessen"
- In Guernsey, parties to a merger must also demonstrate that the
merger does not prejudice consumers, the public interest or the
economic development and well-being of the Bailiwick.
- If your business is party to a proposed merger:
- consider the timetable for the merger as a whole – there
may be potential delays in the merger process as many businesses
will face challenges as a result of the crisis;
- where pre-approval is required under Channel Islands'
competition law, consider whether the proposed merger will pass the
"substantially lessen test", considering that there may
be less competition by nature of the current climate;
- if your business faces a delay in obtaining approval, do not engage in any conduct with the other parties in the pre-approval stage which may contravene competition law and lead to financial penalties, including formulating contingency plans; the approval of the regulator will not exonerate pre-approval misconduct.
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.