EU competition chiefs allow suppliers to coordinate to combat coronavirus

EU competition chiefs allow suppliers to coordinate to combat coronavirus

EU antitrust regulators gave the green light on Monday for suppliers to coordinate distribution of scarce products to cope with the coronavirus outbreak without fear of breaching cartel rules, but warned against price gouging.

The move by the European Competition Network (ECN), made up of the European Commission and national competition agencies in the 27-country bloc, came after Britain eased its competition laws to allow supermarkets work together and even ration products.

The Greek antitrust agency last week also cited the virus pandemic for loosening rules governing deals between manufacturers and distributors, while the German cartel office said extensive cooperation would be allowed due to the present circumstances.

The ECN said it was aware of the social and economic consequences of the crisis.

"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," it said.

"In the current circumstances, the ECN will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply."

The body, however, warned against companies trying to maximize profits from sought-after products such as face masks and sanitizing gel. It said it would not hesitate to take action against companies taking advantage of the situation by abusing their dominant position.

It said setting maximum prices for products, usually only allowed under strict circumstances, may be useful in the current climate to limit unjustified price hikes by distributors.

The joint statement will clear up any doubts about cooperation, said Assimakis Komninos, partner at law firm White & Case.

"This was to be expected because it offers a coordinated response to the crisis and a welcome clarification. It shows a common decision by all the authorities and it shows that the current rules are flexible," he said. (Reuters)

Source: www.businessworld.ie