European Commission publishes a temporary Framework for undertakings collaborating to address the shortage of essential products and services.
On April 8, 2020, the European Commission published a Communication setting out a temporary framework for assessing antitrust issues related to business cooperation in response to situations of urgency stemming from the current COVID-19 outbreak.
Usually, business cooperation which aims at allocating production or exchanging sensitive information is considered as anticompetitive.
However, the European Commission acknowledges that the COVID-19 outbreak has severely disrupted supply chains, leading to "an asymmetric demand shock caused by either an abrupt decline in consumer demand for certain products and services or a steep rise in demand for other products and services" (paragraph 2).
Given the exceptional circumstances and in people's best interest, the European Commission seeks to facilitate business initiatives aiming at overcoming the shortage of essential products and services especially in the health sector, and mitigating the detrimental effects of the crisis.
For example, companies may need to coordinate their production, or exchange information on sales and stocks in order to meet the demand of certain medicines.
Since the entry into force of Council Regulation (EC) No 1/2003, the principle remains that companies have to self-assess the compliance of their practices with antitrust rules. To address this crisis, European Commission decided to provide a temporary framework in order to facilitate the assessment of cooperation projects aimed at tackling the COVID-19 outbreak ("COVID-19 EU Framework").
On the one hand, COVID-19 EU Framework sets out the main criteria that European Commission will follow to assess crisis cooperation by taking into consideration the actual degree of interaction between companies.
The European Commission points out that business cooperation through trade associations should not rise any difficulties under EU competition law, if it is subject to sufficient safeguards as set out in the Commission's Guidelines on the applicability of Article 101 of TFEU to horizontal co-operation agreements.
However, if companies wish to go further in their cooperation, cooperation should be (paragraph 15 of the Framework):
- objectively necessary to increase the production of essential products in the most efficient way;
- limited in time, i.e. to be applied only as long as there is a risk of shortage or in any case during the COVID-19;
- proportionate to achieve the objective of addressing or avoiding the shortage of supply.
In addition, the COVID-19 EU Framework provides that companies should document their exchanges and agreements between them and make them available to the European Commission on request (paragraph 15).
Furthermore, the fact that cooperation is promoted by a public authority should be taken into account for the antitrust assessment (paragraph 16).
On the other hand, the European Commission provides companies with a temporary process in the form of ad hoc comfort letters to guide them in their cooperation initiatives (paragraph 5).
Companies wishing to obtain such a written comfort must give the European Commission detailed information on the proposed cooperation and explain how the benefits to consumers outweigh any anti-competitive effects. However, the Commission may decide not to answer, at its own discretion, and eventually, such comfort may be non-binding.
At that point, the European Commission issued on April 8th, 2020 a comfort letter on request of "Medicines for Europe", an association promoting generic, biosimilar and value added medicines, in connection with a specific project for voluntary cooperation between pharmaceutical manufactures in order to address the risk of shortages of essential hospital medicines for the treatment of COVID-19 patients.
European Commission set up a dedicated mailbox where companies can send their request for informal advice on the compatibility of their cooperation initiatives with EU antitrust law, and has already received few requests for comfort letter from companies and trade associations for such guidance.
The EU COVID-19 Framework applies from the April 8th, 2020 until its withdrawal by the European Commission when the underlying exceptional circumstances no longer exist. It may be amended or supplemented by the European Commission, depending on the evolution of the crisis (paragraph 21).
After the publication of the COVID-19 EU Framework, European national competition authorities stated that they will informally advise companies on the compatibility with antitrust rules of cooperative actions taken in response to the COVID-19 crisis in a joint statement released by the European Competition Network (ECN).
On April 22, 2020, the French Competition Authority informally advised Rassemblement des Opticiens de France, a professional association representing opticians, aiming to act in support of its members in their discussions with landlords on rent arrangements in connection with the consequences of the COVID-19 crisis. FCA considered that, even though this issue does not fall within the scope of the European Commission's Framework, the envisaged intervention would not appear to be contrary to antitrust rules.
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