In the context of the Coronavirus crisis, antitrust law must not be ignored. Companies, such as those in the supermarket or pharmaceutical sectors, that normally compete may have to cooperate in these exceptional circumstances, even under State recommendations. Such horizontal cooperation is still subject to antitrust rules. Indeed, the crisis does not justify any kind of exchange of confidential information or cartels or abusive practices such as excessive pricing.
While some National Competition Authorities have taken specific measures in the areas of misleading advertising, unfair commercial practices and competition law, in Belgium there has been no announcement by the Belgian Competition Authority (BCA), or the Belgian Government in general, that changes to Belgian competition law are necessary or being considered for the time being. However, the European Competition Network (ECN) has published a joint statement about the application of competition law during the Coronavirus crisis, allowing companies to cooperate to meet demand and to avoid supply shortages.
It is important to note that the crisis will affect merger control in Belgium. On 19 March 2020, the BCA announced that, given the containment measures and teleworking by its staff, companies are invited to postpone any proposed concentrations that are not urgent.
In view of the Coronavirus crisis, the companies concerned must ask themselves what freedoms the antitrust law gives them to improve their supply and reduce costs. Those in crisis have little time to read legal statements. Below, we summarize in brief the opportunities and risks arising from the crisis:
1. Ban on cartels
Even under the current rules, restrictions of competition which are necessary to achieve cost reductions or an improvement in supply can be exempted from the ban on cartels. This can be decided independently by each company, if necessary, after obtaining legal advice and/or coordination with the appropriate competition authorities.
The ECN and some National Competition Authorities have announced that they are open to the cooperation of competitors in the event of a crisis. This applies, in particular, to cases where the main concern is the supply of consumers. For instance, in Norway a temporary exemption from the ban on cartels has already been in force for a few days for the entire transport sector.
Existing rules allow manufacturers to set maximum prices for their products. This could be used to limit unjustified price increases at the distribution level.
The exchange of information in order to reduce costs and improve supply can also be exempted from the ban on cartels.
There could also be increased supply relationships between competitors in order to avoid short-term supply bottlenecks.
The typical restrictions on competition, such as territorial and customer allocation and agreements on a shortage of supply, will of course remain prohibited.
2. Abuse of market power
In the case of supply storages, a dominant supplier must supply the affected customers on a non-discriminatory basis. The supplier does not have to treat newcomers equally.
In the event of unjustified delivery cancellations, affected customers can apply for an interim injunction. The requirements for a successful injunction application are high. In the long run, the Coronavirus crisis may increase the market shares of the surviving companies, bringing them within the scope of the prohibition of abuse.
3. Merger control
For the time being, the notification and deadline requirements for merger control in Belgium remain unchanged, but the BCA has invited companies not to notify mergers that are not urgent.
In other countries, there are already changes in place.
The changes in the deadline requirements must be taken into account when planning transactions, including in the relevant merger control clauses.
Mergers for rescuing failed firms can be cleared under certain strict conditions, in particular if there is no less harmful alternative and the market position of the failed firm would essentially fall to the acquiring company even without the merger. In Belgium, there is the option to request the non-application of the standstill obligation when acquiring companies on the verge of bankruptcy.
Annabelle Lepièce, Partner, Brussels
Eléonore Mertens de Wilmars, Junior Associate, Brussels