COVID-19: Temporary framework for assessing anti-trust issues
On 8 April 2020, the European Commission issued a Communication setting up a temporary framework for assessing anti-trust issues related to business cooperation in response to the emergency situation stemming from the COVID-19 outbreak. In light of the shortage of medicines during the current health crisis, the Communication is aimed at European pharmaceutical companies in particular, but it is relevant for all undertakings trying to overcome this shortage.
Commission allows temporary and necessary cooperation to ensure the supply of essential goods and services
Pharmaceutical companies and other undertakings will, subject to certain conditions, be allowed temporarily to coordinate their activities in order to overcome a potential shortage of supply of medicines and medical equipment during the COVID-19 outbreak - also where such cooperation would normally constitute a breach of the competition rules. It is a condition that the coordination is intended to increase output and optimise distribution of medical equipment, particularly medicines for hospitals, which are urgently needed. The Commission also provides guidance on how to ensure optimal and rational supply of medicines to avoid shortages during the COVID-19 outbreak
The Commission notes that temporary and necessary cooperation initiatives to ensure security of supply will not give rise to an enforcement priority for the Commission, provided that the measures are objectively necessary to increase output and avoid a shortage of supply of essential products during the COVID-19 outbreak, and that they do not exceed what is strictly necessary to achieve the objective (proportionate). Such cooperation may for instance involve coordinating the reorganisation of production and distribution of products, which may necessitate exchange of sensitive information. If the cooperation is encouraged or coordinated by a public authority, this will also be taken into account when assessing the compatibility of the initiative with the competition rules. If undertakings are specifically requested by public authorities to tackle urgency situations related to the COVID-19 outbreak, the cooperation will also be allowed. The Commission further notes that the Communication might be amended or supplemented at a later point to also cover other forms of cooperation depending on the evolution of the crisis.
In connection with the publication of the Communication, EU Commissioner for Competition Margrethe Vestager said that the guidance is necessary to ensure that there is sufficient supply of critical hospitals medicines to treat COVID-19 patients . There is a risk that demand will grow even further, resulting in a risk of supply failure. Therefore, there may be an actual need for rapid and effective coordination between undertakings to overcome the consequences of the crisis and protect consumers in the EU.
Commission offers guidance on specific cooperation initiatives that need to be swiftly implemented
It is also stated in the Communication that the Commission will depart from the general rule in Council Regulation 1/2003, providing that undertakings are themselves responsible for assessing the legality of their cooperation agreements (“self-assessment”). Thus, the Commission offers guidance to undertakings to facilitate initiatives that must be swiftly implemented in order to effectively tackle the COVID-19 outbreak, especially where there is still uncertainty about whether such initiatives are compatible with EU competition law. To this end, the Commission has set up a dedicated webpage and a mailbox (COMP-COVID-ANTITRUST@ec.europa.eu) that can be used to seek
informal guidance on specific initiatives.
The Commission notes that it will continue to provide ad hoc guidance on specific cooperation initiatives aimed at addressing the shortage of essential products during the COVID-19 outbreak. The Directorate General for Competition will also offer guidance by issuing administrative notices in the form of “comfort letters”. The generic medicines association "Medicines for Europe" has already received such “comfort letter” from the Commission in connection with a voluntary cooperation between pharmaceutical companies which, accordingly, was deemed compatible with the competition rules.
Read the Commission’s Communication.
Statement by the International Competition Network (ICN)
On 9 April 2020, the International Competition Network (ICN) also issued a statement addressing the key considerations related to competition law enforcement during the COVID-19 outbreak. ICN is a network of 140 competition agencies from 129 jurisdictions.
In its statement, ICN recognises the national competition agencies’ authority to evaluate the efforts among undertakings to ensure security of supplies in their decisions, although anti-competitive market practices should still be monitored. Furthermore, ICN calls for transparency in connection with any case management changes and encourages to continued cooperation between competition agencies, e.g. through the exchange of experience. Thus, the Commission’s Communication is fully in line with this view.
Read also our previous news articles:
Contact
