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  • Competition & COVID-19-CCI Issues Advisory For Businesses During COVID-19

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    The Competition Commission of India (CCI) has issued guidance to businesses on coordinating activities during the COVID-19 pandemic. The CCI advisory allows limited coordination between competitors to ensure supply of essential goods and services, such as sharing stock data or transport logistics. It also permits temporary joint ventures for efficiency gains related to production, supply or distribution. However, businesses cannot engage in price fixing, market allocation or other anticompetitive coordination. Nor can they exploit consumers or exclude smaller rivals through their unilateral conduct during the pandemic. The CCI's case-by-case approach to assessing competitive effects is suited to India's legal framework and pandemic conditions.

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    The Competition Commission of India (CCI) has issued guidance to businesses on coordinating activities during the COVID-19 pandemic. The CCI advisory allows limited coordination between competitors to ensure supply of essential goods and services, such as sharing stock data or transport logistics. It also permits temporary joint ventures for efficiency gains related to production, supply or distribution. However, businesses cannot engage in price fixing, market allocation or other anticompetitive coordination. Nor can they exploit consumers or exclude smaller rivals through their unilateral conduct during the pandemic. The CCI's case-by-case approach to assessing competitive effects is suited to India's legal framework and pandemic conditions.

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    Competition & COVID-19-CCI Issues Advisory For Businesses During COVID-19

    Uploaded by

    Ashhab Khan
    The Competition Commission of India (CCI) has issued guidance to businesses on coordinating activities during the COVID-19 pandemic. The CCI advisory allows limited coordination between competitors to ensure supply of essential goods and services, such as sharing stock data or transport logistics. It also permits temporary joint ventures for efficiency gains related to production, supply or distribution. However, businesses cannot engage in price fixing, market allocation or other anticompetitive coordination. Nor can they exploit consumers or exclude smaller rivals through their unilateral conduct during the pandemic. The CCI's case-by-case approach to assessing competitive effects is suited to India's legal framework and pandemic conditions.

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    Competition & COVID-19-CCI issues advisory for businesses during COVID-19

    MM Sharma
    Head -Competition Law & Policy
    Vaish Associates Advocates
    [email protected]

    The fair trade regulator, the Competition Commission of India (“CCI”), has joined other peers across
    the Globe and has issued a brief advisory on 19 April 2020 for guidance of businessmen across
    sectors on whether limited coordination can be allowed to bridge demand and supply gap during the
    nationwide lockdown due to COVID 19 pandemic and if so to what extent.

    The advisory published on the official website can be viewed here.

    We provide below a gist of the DO’s & DONTs’ for benefit of our readers.

    What you CAN DO during COVID-19:

    1. You may coordinate certain activities in a limited way, by way of sharing data on stock levels,
    timings of operation, sharing of distribution network and infrastructure, transport logistics, R
    & D, production etc. to ensure continued supply and fair distribution of products (e.g.
    medical and healthcare products such as ventilators, face masks, gloves, vaccines etc. and
    essential commodities) & services (e.g. logistics, testing etc.) during CODID 19, provided such
    coordination does not lead to either price fixing, limiting or allocation of markets etc. as
    mentioned and prohibited under sub section 3 of section 3 of the Competition Act, 2002.

    2. You may enter into JOINT VENTURES to undertake the above mentioned coordinated
    ventures to assist the government or the authorities concerned to fight the Corona Virus
    pandemic to ensure continued supply and fair distribution of products (e.g. medical and
    healthcare products such as ventilators, face masks, gloves, vaccines etc. and essential
    commodities) & services (e.g. logistics, testing etc.).

    3. However, such JOINT VENTURES must be shown to lead to efficiency gains to escape any
    possible challenge thereof as an anti-competitive agreement to share, allocate or limit or
    control price, markets etc. The increase in efficiency must relate to efficiency in production,
    supply, distribution, storage, acquisition or control of goods or provision of services. Besides,
    it may also lead to the accrual of benefits to consumers; improvement in production or
    distribution of goods or provision of services; and promotion of technical, scientific and
    economic development by means of production or distribution of goods or provision of
    services.

    What you CAN NOT DO during COVID-19

    1. Any co-ordination with your competitors which may lead to either price fixing, limiting or
    allocation of markets etc. as mentioned and prohibited under sub section 3 of section 3 of
    the Competition Act, 2002.

    2. Any co-ordination with your competitors which may be considered as DISPROPORTIONATE


    AND UNNECESSARY to address concerns arising from COVID-19. This may vary from case to
    case and will be considered on the facts and circumstances of each case.

    Page 1 of 2
    3. Apart from any co-ordination with competitors or dealers considered necessary and
    proportionate to the requirement of meeting any emergency needs during the COVID-19
    crisis, all other unilateral business conducts or market behaviour, by any firm with a large
    market share in the relevant markets, which may be considered either exploitative to
    consumers or exclusionary for smaller business rivals are and continue to be prohibited and
    may be penalized as abuse of dominant position under section 4 of the Act.

    The CCI official advisory is just in time and a welcome step. It will be noticed that unlike the
    competition authorities of EU1, CCI has not committed itself either against “active intervention” for
    “necessary and temporary” cooperation between competitors; or like those in the USA, has not
    carved out certain categories of collaborations 2that may be permitted during the pandemic or like in
    UK3, or Holland, where exemption is granted to certain sectors by invoking relevant provision in the
    statute.

    In our view, the approach taken by CCI is the right approach suited to the peculiar conditions in India
    because the existing legal framework in terms of assessing the appreciable adverse effect in
    competition (“AAEC”) under the Competition Act, 2002 (the Act) is flexible and enables the CCI, to
    undertake a case-by-case analysis taking into account any hardship/peculiarities of the present
    circumstances. The determination of AAEC requires a balancing of its procompetitive effects against
    its anticompetitive effects, mentioned specifically as factors under Section 19(3) of the Act. For
    instance, one of the factors that the CCI may consider while assessing the impact of an agreement is
    whether it enables or leads to “improvements in production or distribution of goods or provision of
    service”. Similarly, for determining the unliteral conduct of an enterprise with a strong market
    position to see whether an abuse of dominant position has occurred, requires the CCI to consider if
    an objective justifications exists that the enterprise had (such as, protecting the quality of supply
    chain, or meet competition) when imposing such restrictions.

    1
    The European Competition Network has confirmed that its competition authorities will not actively intervene
    against necessary and temporary measures put in place in order to avoid a shortage of supply during COVID
    19. Available at https://ec.europa.eu/competition/ecn/202003_joint-statement_ecn_corona-crisis.pdf
    2
    the Antitrust “Agencies” in USA i.e the Department of Justice (DOJ) and the Federal Trade Commission (FTC)
    in a joint statement have clarified that certain collaborative actions designed to improve the health and safety
    response to the current pandemic such as research and development activities, sharing of technical know-
    how, etc. will be considered consistent with the applicable antitrust laws. Available at -
    https://www.ftc.gov/system/files/documents/public_statements/1569593/statement_on_coronavirus_ftc-
    doj-3-24-20.pdf
    3
    UK and Dutch competition authorities have taken welcome steps to allow cooperation in the food supply
    chain. UK Notification available at-http://www.legislation.gov.uk/uksi/2020/369/made

    Page 2 of 2

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