Competition & COVID-19-CCI Issues Advisory For Businesses During COVID-19
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.
We provide below a gist of the DO’s & DONTs’ for benefit of our readers.
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.
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.
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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
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