Overview
For additional guidance, please refer to Steptoe's COVID-19 Resource Center.
In the light of COVID-19, the UK Competition and Markets Authority (CMA) together with the UK Government, has taken several steps to assist both businesses and consumers.
The UK Government has currently relaxed competition rules by excluding the following agreements from the Chapter I prohibition in the Competition Act 1998:
- Agreements between grocery chain suppliers and agreements between logistic service providers, intended to address the effects or likely effects of coronavirus on the supply of groceries to consumers in the United Kingdom (see The Competition Act 1998 (Groceries) (Coronavirus) (Public Policy Exclusion) Order 2020).
- Agreements between the National Health Service Commissioning Board (NHS England) and providers who are not part of the NHS, between other NHS bodies and independent providers or between independent providers, intended to assist the NHS in addressing the effects or likely effects of coronavirus on the provision of health services to patients in England (see The Competition Act 1998 (Health Services for Patients in England) (Coronavirus) (Public Policy Exclusion) Order 2020).
- Agreements between those maritime operators providing passenger and freight crossing services across the Solent, intended to assist the operators in addressing the effects or likely effects of coronavirus on the provision of crossing services (see The Competition Act 1998 (Solent Maritime Crossings) (Coronavirus) (Public Policy Exclusion) Order 2020).
At the same time, the CMA has reassured other industries that it will not take enforcement actions in relation to cooperation between businesses that are necessary to protect consumers (e.g., ensuring security of supplies). In order to assist businesses, the CMA has published a guidance document “CMA approach to business cooperation in response to COVID-19.” In short, the cooperation agreements that meet the following criteria will not face an enforcement action by the CMA:
- are appropriate and necessary (including being no broader in scope than necessary) in order to avoid a shortage, or ensure security, of supply;
- are clearly in the public interest;
- contribute to the benefit or wellbeing of consumers;
- deal with critical issues that arise as a result of the COVID-19 pandemic; and
- last no longer than is necessary to deal with these critical issues.
The CMA has set up a Task Force that will monitor the behavior of the companies on the market, with particular focus on harmful and unjustified sales and pricing practices. The CMA has identified on several occasions that their policies will focus on consumers and their needs.
The UK Financial Conduct Authority and Payment Systems Regulator, which have competition law enforcement powers in the financial sector, have made a joint announcement that they support the CMA guidance and will take a consistent approach to enforcement in relation to financial services firms. They agreed that it was important that competition law does not impede firms from working together to provide essential services to customers in the present situation, but warned that they would not tolerate conduct that seeks to exploit the situation and harms consumers.
The European Commission has also approved the UK Government’s proposed aids under its Coronavirus Business Interruption Loan Scheme, including:
- guarantees that cover 80% of loan facilities for SMEs with a turnover of up to GBP 45 million to cover their working and investment capital needs; and
- direct grants (not exceeding around £734,000/ €800,000) to support SMEs from all sectors facing temporary financial difficulties due to the COVID-19 outbreak
In respect of merger control, the CMA has asked the merging companies to delay formally filing new notifications. At the same time, the ongoing merger reviews continue as before in compliance with strict deadlines.
Please see also our alert Changes to EU Competition Rules in Times of COVID-19 addressing further some of the practical aspects of the above mentioned topics.