EU Won't Bring Cartel Charges Over COVID-19 Cooperation

Law360 (March 23, 2020, 8:45 PM EDT) -- European companies will be able to coordinate the distribution of much-needed products as the continent battles the rapid spread of COVID-19 without being brought up on cartel charges, Europe's competition authorities said Monday.

The European Competition Network said it wouldn't be going after companies who are taking the "necessary and temporary measures" they need to get supplies where they need to go. In other words, it's OK to cooperate for now.

"The ECN understands that this extraordinary situation may trigger the need for companies to cooperate in order to ensure the supply and fair distribution of scarce products to all consumers," the network said in a joint statement issued Monday.

So it will not "actively intervene" against any cooperation aimed at avoiding supply shortages, said the network, which is composed of competition authorities from the 28 states that are members of the European Union and the head of competition for the bloc's own European Commission.

It said it doesn't expect that greenlighting coordination during the current crisis caused by the spread of the novel coronavirus will bump up against European Union law, but it encouraged companies to reach out if they have concerns about any working relationships with other companies.

But the loosening of reins came with a warning: The competition enforcers said they would not look kindly on any price-gouging as a result of the relaxed rules, particularly when it came to scarce items like hand sanitizer and masks.

"At the same time, it is of utmost importance to ensure that products considered essential to protect the health of consumers in the current situation remain available at competitive prices," the statement said. "The ECN will therefore not hesitate to take action against companies taking advantage of the current situation by cartelising or abusing their dominant position."

Europe's economy has taken a hit as governments scramble to get ahead of the spread of COVID-19, the disease caused by the novel coronavirus. Italy has been besieged with tens of thousands of cases after social distancing half-measures backfired and now has the highest number of deaths in the world from the disease, more than 6,000 as of Monday.

German Chancellor Angela Merkel has also been exposed to the disease and went into self-quarantine Sunday as a precaution. The country she helms rounded the corner on 29,000 confirmed cases of the disease Monday, and 118 deaths, according to Johns Hopkins University.

The European Commission is also doing its part to make it easier for member states to keep companies afloat during the pandemic, approving a slew of state aid schemes over the weekend intended to convince banks to take a chance on ailing businesses by providing government guarantees of their investments.

The commission also greenlighted a €50 million state aid program that would allow the much-afflicted Italy to invest in the production of in-demand safety products for its weary health care workers, who have reported that the more than 60,000 COVID-19 cases have strained their health care system nearly to the breaking point.

--Editing by Orlando Lorenzo.

For a reprint of this article, please contact reprints@law360.com.

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