Communication from the Italian Competition Authority related to business cooperation and the Covid-19 emergency
On 24 April 2020 the Italian Competition Authority (“ICA”) published a Communication on cooperation agreements and Covid-19 emergency (“Communication”). The Communication is operational from the day of its publication and will remain in force until further notice.
The Communication is in line with the communication published by the European Commission on 8 April 2020, which establishes a temporary framework for assessing antitrust issues related to business cooperation in response to situations of urgency stemming from the current COVID-19 outbreak.
The Communication provides ICA’s guidance on certain forms of cooperation between companies aimed at ensuring the supply and fair distribution of scarce products and services during the COVID-10 outbreak, particularly with regard to essential products/services.
As a general rule, the ICA stated that it will not actively intervene against necessary, temporary and proportionate cooperation agreements designed to avoid shortages of essential products and services; at the same time, it will not hesitate to take action against companies that take advantage of the crisis by cartelising or abusing their dominant position.
More in detail, the ICA acknowledged that the usual self-assessment of the compliance of cooperation agreements with antitrust rules can prove difficult in this period of crisis. Therefore, it declared to be ready to provide companies with informal guidance on their intended cooperation projects aimed at preventing shortage of essential products/services. To this end, the ICA has set up a dedicated email address (accordicooperazione-COVID@agcm.it).
While the Communication appears to apply to all essential products and services, the ICA unsurprisingly tackles specifically the healthcare and the agri-food sector, indicating that it would assess “more flexibly” cooperation agreements that could go beyond what is typically considered compliant with antitrust rules. These include cooperation agreements requiring the exchange of confidential information aimed at allowing a reorganization of an entire production sector with a view to increase and optimize the production process and to avoid that pharmaceutical companies focus their production on certain drugs, leaving other products under-produced with a risk of shortages. The ICA (consistently with the Temporary Framework of the European Commission) clarified that a more flexible approach could be applied where the relevant measures were (i) actually needed to facilitate production of drugs or medical devices needed to fight the virus, or of goods and services considered essential, (ii) applied for the time strictly necessary, and (iii) characterised by a high degree of proportionality.
The ICA also recalls the rules on vertical agreements and, in particular, the power of producers to impose a maximum resale price: this power could be useful in order to limit unjustified price increases at the distribution level.
Finally, the ICA declared its availability to release – exceptionally and at its own discretion – ad hoc “comfort” letters on the compliance of cooperation projects between undertakings with the Italian antitrust rules set forth by Law No 287/90.