PNSA COVID-19 Legal Response Team
We have already mentioned in our previous article that competition law may step in order to address the price gouging phenomena in the context COVID-19 pandemic.
Countries all over the world have taken specific measures in order to limit unjustified price increases.
- Italy – The Italian Competition Authority has opened an investigation over inflated Coronarvirus prices for products such as hand sanitizer and disinfectant.
- UK – The Competition and Market Authority publicly states that it shall take action against infringement of consumer protection and competition laws, such as excessive pricing and misleading advertising.
In light of the increase of demand for basic products, UK supermarkets request the government to suspend competition regulation in matters of coordination. Specifically, supermarkets wish to coordinate their shopping deliveries. Such measure would help cover remote areas as well. This request is currently under analysis.
- France – The Government has capped the prices for hand sanitizers in order to stop price increases for such products. French Competition Authority has also announced that it actively monitors price coordination & abusive prices.
- Poland – The Polish Competition authority is currently investigating wholesalers that allegedly terminated their contracts with hospitals for protective equipment in order to obtain significantly higher prices.
- US – According to the Washington Attorney General Ferguson his office is investigating cases of price gouging during the COVID-19 public health emergency. Also, California declared a state of emergency, which enforced the prohibition against price gouging of food, emergency supplies, medical supplies, gasoline, emergency cleanup services, hotel accommodations, and transportation.
- China – SAMR implemented strict pricing supervision, which covers entire supply chain, including manufacturing equipment and raw materials for protective gear. Also, some e-commerce platforms are monitoring the prices of masks and protective gear on their platforms in order to ensure their compliance with China price regulations.
But price gouging is not the only competition issue raised in this crisis. What about coordinated or unilateral measures taken to deal with the virus? Is it necessary to enforce competition regulations in a lighter way? Should competition law be suspended?
Information exchange – The U.S. antitrust agencies have stated that there information exchanges in order to better respond to COVID-19 threat are permitted limited to the designing a best practices kit (e.g.:, related to remote working, travel restrictions). Adherence to the best practices should be entirely voluntary. The prohibition of sensitive commercial information is still applicable!
Cooperation between competitors – Regarding cooperation between competitors, the latter is not prohibited outright but must comply with the specific conditions laid down in EC Guidelines on horizontal agreements.
Currently, the main supermarkets in UK are requesting for a suspension of the application of competition regulation in order to collaborate regarding the supply of groceries. This demand aims at managing more efficiently logistic resources in the context of the increased demand for basic products. This means that in this specific case most probably the desired framework of cooperation exceeds the limits set out by the EC Guidelines.
What about Romania? What are companies allowed to do in the context of COVID-19 pandemic? What is forbidden?
We remind here that the President of the Romanian Competition Council has recently announced that it is currently investigating the behavior of companies which commercialize products & protection equipment consisting in the sudden and excessive increase of their prices.
The Romanian Competition Council (RCC) expressly stated that companies may take some specific measures aiming at limiting the spread of the virus. In this sense, the RCC gave green light to the following:
- Reducing their functioning schedule in order to avoid crowds within commercial premises;
- Managers of e-commerce platforms may impose measures in order to limit unjustified price increases for basic products and services.
In the same time, it is reminded by the RCC that restriction of competition is forbidden. Therefore, companies shall not use this crisis in order to:
- Increase their prices without objective justification!
- Exchange sensitive commercial information!
- Eliminate their competitors!
- Abuse of their dominant position!
- Engage in anticompetitive agreements (elimination of commercialization of a certain product/service, price fixing, market/client sharing)!
By Mihaela Ion and Vanessa Nistor