Top Tips – Collaborating with competitors during Covid-19
Competition laws still apply in times of crisis.
You should consider them and obtain advice even if:
- the purpose of the collaboration is to meet public health objectives;
- you are being asked by government to collaborate with competitors.
There are examples of industry players being asked by Government to collaborate in times of crisis and after the event, the circumstances of the crisis being overlooked, and fines imposed.
You may need to collaborate with your competitors in relation to a matter that would normally be a parameter of competition (e.g. combined deliveries; opening times; manufacturing/logistics sharing). If this is the case then:
- limit co-operation to what is strictly necessary to achieve the aim (whether that is government policy or public health objectives);
- put in place competition law protocols for any communications with competitors, stick to those rules and document any discussions;
- consider having a competition lawyer on any call you have with competitors even if there is a government official also on the call;
- consider getting in touch with the domestic competition authority to explain what is envisaged and why and ask them to confirm there are no red flags;
- monitor the co-operation: expanding the scope of the co-operation might require a fresh competition analysis and even if you are maintaining the same level of co-operation remember this is a fast-moving situation – you need to make sure that co-operation that was justifiable last week is still justifiable this week;
- get any request to collaborate from government in writing (or at least minute the call and follow up by email to confirm what you understand has been asked of you and how you propose to respond).
If you are asked to collaborate by government, get that request in writing (or at least minute the call and follow up by email to confirm what you understand has been asked of you and how you propose to respond).
There are other categories of case, lacking a clear government policy or public health objective, where it may be in your and competitors’ commercial interests to act collectively (for example in seeking rent relief from landlords; or in agreeing an approach to negotiations over necessary inputs, in invoking force majeure clauses in contracts; or rationing supply) but unless you are compelled to behave collectively by Government (which would be very rare) you will breach competition laws in doing so. Penalties for breaching competition law can involve significant financial penalties; criminal sanctions and damages claims so exercise caution.
Many competition authorities have published guidance on collaborating during Covid-19 and have promised to review requests to collaborate as expediently as possible. Some competition authorities have also created dedicated mailboxes or online portals that companies can use to receive quick guidance or approval.
- United Kingdom: the Competition and Markets Authority (“CMA”) has formed a dedicated Covid-19 taskforce and has published guidance on business cooperation during Covid-19. The CMA has also created an online portal which allows businesses or individuals to report unfair business practices.
- The European Commission: published a Temporary Framework to provide guidance to companies planning to cooperate in response to Covid-19 and will also provide oral guidance, or (exceptionally) comfort letters in writing, in relation to specific cooperation projects and has created a dedicated mailbox for these requests.
- The European Competition Network: published a joint statement which, among other things, recognised the need for companies to cooperate during Covid-19. A number of national competition authorities, including France and Spain, have created dedicated mailboxes for companies to request urgent guidance or record a complain.
- United States: the US authorities published joint guidance on cooperation during Covid-19 and is aiming to evaluate potential collaboration within as little as one week. The DOJ recently approved ongoing collaboration between medical equipment providers using this expedited review procedure.
To date competition authorities have approved competitor collaboration in response to the Covid-19 crisis across a range of sectors, including supermarkets, transport (ferries and airlines), medical equipment and generic pharmaceutical manufacturers.