The Covid-19 pandemic has spread around the globe while effecting many areas of life. Curfew declarations and remote working strategies which came into effect to protect individuals and companies against the effects of the virus also caused a great stagnation in the markets. Along with the fluctuations in the supply-demand situation, some of the competition authorities of various countries made statements on the subject regarding the protection of the competitive environment.

What are Turkish Competition Authority’s Actions Taken Against the Pandemic?

There is no hesitation that the virus effected many areas of life, particularly essential product prices. As per the Turkish Competition Authority’s (“the Competition Authority”) announcement dated March 23, 2020 and the press release dated March 25, 2020; it was determined that an exorbitant price increase was made by taking advantage of the situation created by the outbreak in the food market, especially in fresh fruits and vegetables. Thus, the heaviest administrative fines determined by the Competition Law No.4054 (“Law No. 4054”) will apply to the people or companies who are engaged in anti-competitive actions.

Considering that the attention of the public is focused on the virus and its effects, it has become a natural reaction that consumers show an intense demand for medical materials that have become essential needs such as masks, colognes and disinfectants. In light of the recent developments, Turkey’s Ministry of Commerce released a statement dated March 26, 2020, stating that Turkish Advertising Board imposed approximately 10 million TL administrative fines on many companies, which were determined to have made an unfair price increase on surgical masks, 3M masks, disinfectants, surgical gloves, hand sanitizers, cologne, pasta and other various food supplies in order to protect consumer welfare and prevent actions and transactions that disrupt effective competitive environment.

As per the merger and acquisition applications, notifications and other works to be submitted to the Competition Authority, there is no announcement made regarding any measures to be set against the pandemic yet. However, two verbal hearings set on April 14 and 15 have been postponed indefinitely and although applications to the Competition Authority (especially those related to mergers and acquisitions) are still ongoing, some delays may be expected. And with the increase of the effect of the virus, measures such as encouragement of postponement of merger and acquisition notifications and the postponement of the start dates of the preliminary investigations may be brought to the agenda.

Global Competition Authorities Actions Against Covid-19

While all individuals and companies are looking forward to the announcements of the institutions regarding the changes that affect the commercial life due to the virus, the relevant institutions started to make a statement one by one. Competition authorities around the world expressed that they closely follow the commercial behavior triggered by the pandemic as various countries have taken specific measures regarding competition law. For instance, the European Commission, released a statement to encourage electronic reporting of mergers and acquisitions and requested to postpone mergers and acquisitions applications until further notice as much as possible.

The European Competition Network (“the Competition Network”), which is composed of the national competition authorities of the European Union (“EU”) member states, issued a joint statement on March 23, 2020 about how to apply the competition law rules during the pandemic. Normally, as a rule, undertakings of member states under Articles 101 and 102 of the Treaty on the Functioning of the European Union is to prevent execution of the contracts or actions that disrupts the competitive environment. However, under this circumstances, the Competition Network highlighted that the EU member states’ competition authorities are aware of the social and economic consequences triggered by the virus, hence due to this extraordinary situation it may be necessary for companies to cooperate for the fair distribution and supply of products that are increasingly difficult to reach and the Competition Network will not interfere with the temporary and necessary measures taken within the scope of this cooperation. Additionally, the Competition Network explained the importance of keeping the prices of products that are essential for protecting the health of consumers such as masks and disinfectants on competitive level. In this context, the Competition Network also announced that it would not hesitate to act against companies that want to take advantage of the current situation by creating a cartel or abusing their dominant position.

On 19 March, the United Kingdom (“UK”) government released an announcement stating that it is temporarily relaxing elements of competition law to allow food retail sector to work together. The announcements allow retailers to share data on stock levels, sharing distribution depots and delivery vans, and pooling staff to help meet the demand. However, in another statement, it is highlighted that United Kingdom Competition and Markets Authority (“CMA”) will not tolerate “unscrupulous businesses exploiting the crisis as a cover for non-essential collusion. This includes exchanging information on longer-term pricing or business strategies, where this is not necessary to meet the needs of the current situation.”. Therefore, a special Covid-19 Taskforce is formed to tackle negative impacts of the pandemic on the market. And in other statements of the CMA, it was declared that all meetings will be held through video conferencing, times stipulated under law will continue to be respected but some of the related times may be extended and resources will be redistributed by prioritizing important works. 

Alerts to the Companies on Envisaged Measures

The Competition Network’s joint statement is followed by various EU member state competition authorities to signal more relaxed competition law implementations. However, it has been repeated many times by these authorities that the stretching the rules does not mean not to follow the rules. Although measures taken by governments and implementations by companies are necessary to improve public health and order, businesses should be aware of the possible competitive risks generated by co-operations. In this case, a global crisis such as the Covid-19 outbreak will not be enough to justify collaborations that violate competition laws. In order to avoid the sanctions imposed by such violations, companies should determine which co-operations are necessary and whether these co-operations comply with the relevant laws, and if necessary, should discuss their plans with relevant competition authorities.

As can be seen, the measures taken by the competition authorities in Europe are uniting in the point of postponing non urgent work applications and promoting distance work mainly in order to reduce personal contact. Although no explanation has been made by the Competition Authority regarding the operation of competition law rules amid crisis, measures such as the encouragement of postponement of merger and acquisition notifications, the extension of certain periods or postponement of non-priority applications may bring to the agenda as in the EU. If such measures are taken, it may be possible for the epidemic to slow down the implementation of competition law and it may be possible to prolong the processes hold some transactions in competition law investigations by the competition authorities.

Lastly, in line with the various investigations conducted by the Competition Authority focusing on food and health products; it can also be expected additional measures to come on essential products with a tendency to increase prices of shelves as a result of the outbreak. The Competition Network, the Competition Authority along with CMA have warned that they will not hesitate to take action against any activity that disrupts competitive environment.  Thus, it shall be avoided from the collective mechanisms so called cartels, which violates the competition law, by reducing the production for the products with low demand or to increase the price for the products with high demand.  

Author: Deniz Çelikkaya