Despite the CMA's clear warning that it will continue to pursue suspected cartel conduct, anticompetitive information sharing or abuse of dominant positions during the COVID-19 crisis, it has also stressed that it does not want competition law concerns to stymie urgent industry-wide cooperation required to ensure the supply and fair distribution of scarce goods/services to consumers affected by the COVID-19 crisis.
In its Guidance, the CMA has therefore tried to balance the need to show flexibility and provide firms with certainty that legitimate, limited competitor cooperation will not face enforcement action or sanction, against its concern that the COVID-19 crisis should not provide firms a 'free pass' to ignore their competition law obligations. There now appears to be three ways in which competitor cooperation may not fall foul of usual competition laws:
Route 1: CMA chooses not to prioritise the cooperation for investigation
The CMA has sought to reassure firms that it that it "will not take enforcement action against" COVID-19 related cooperation provided that such "temporary measures" are, in summary, strictly limited to those absolutely necessary, and demonstrably and directly linked to securing supply of essential services and supplies. In so doing, the CMA provides a list of cumulative criteria which will inform whether or not it will investigate COVID-19 cooperation, the key messages from which we have summarised in Section 3.
The reassurance that the CMA will use its discretion and not open investigations into limited and temporary competitor coordination required to respond to the crisis is welcome. However, the CMA's criteria also underline how competitors should still exercise caution before engaging with each other unless the coordination is temporary and clearly limited to matters of "public interest", addressing "critical issues" facing consumers as a result of COVID-19.
Any other cooperation outside the relatively narrow range of legitimate behaviours envisaged in the Guidance, e.g. related to managing the commercial fall-out from the COVID-19 crisis (e.g. to mitigate against the effects of a slump in demand), will not necessarily be covered by the CMA's reassurance, even if it is well-intentioned or designed to avert the collapse of the industry. Such cooperation would continue to carry material competition law risk – at least absent further informal engagement with the CMA.
Route 2: the cooperation exempted from application of UK competition laws
The Guidance also highlights that, under existing competition laws, instances of ostensibly anticompetitive collusion can nevertheless be individually exempted from the application of competition laws where, in simple terms, the consumer benefits of the cooperation outweigh any restriction of competition. In practice, this is usually a high threshold to overcome and exemptions are relatively rare.
The Guidance explains how the CMA envisages such individual exemptions to be applied to industry coordination "reasonably…considered necessary" to respond to the COVID-19 pandemic. This is helpful in so far as it makes clear the CMA will take into account the exceptional circumstances of the COVID-19 crisis when determining whether such an individual exemption might apply – e.g. by taking into account how industry participants will have little time to consider alternatives when deciding whether cooperation between competitors is urgently required.
However, similar to the reassurance regarding which cases the CMA will prioritise for investigation, the Guidance on individual exemptions is likely only to provide certainty and clear comfort in a relatively narrow range of circumstances. It is notable that there is existing case law which suggests that industry-wide responses to health crises, e.g. designed to arrest the collapse of the relevant industry, will not necessarily be regarded as worthy of exemption. Further, the CMA notes in the Guidance that it will not provide prospective 'clearance' decisions to businesses considering COVID-19 cooperation (and query whether it would provide informal guidance in this regard). Rather, businesses intending to cooperate will have to 'self-assess' whether they meet the relevant criteria.
Route 3: UK Government grants sector-specific, temporary exclusion
The most certain way of ensuring any competitor cooperation does not fall foul of UK competition laws is to lobby Government (e.g. engaging both the Department for Business, Energy and Industrial Strategy, the relevant sectoral regulator, and/or the CMA) to introduce legislation which temporarily relaxes the application of UK competition laws to specific industry-wide cooperation.
The Government has already shown itself willing to quickly introduce such emergency legislation. It has passed/announced legislation to temporarily relax the application of certain UK competition laws to allow:
(a) supermarkets to share information and collaborate on stock levels, logistics and staffing to secure the supply of essential goods across the UK;
(b) independent healthcare providers to share/allocate (amongst themselves and the NHS) certain procedures, staff, facilities and purchasing of goods/services in order to meet the NHS's demand for surge capacity;
(c) Isle of Wight ferry operators to cooperate on service levels (in the face reduced service demand) to ensure essential food, freight and medical supplies reach the island; and
(d) dairy farmers to work together (with the industry trade association and statutory levy board) to avoid waste and maintain capacity to meet future demand, including by sharing labour and facilities, cooperating to temporarily reduce production and/or identifying where there is hidden, additional capacity in the supply chain for processing milk into other dairy products.
However, notably, the legislation above which has been passed specifically does not cover (i.e. does not exempt) the direct sharing of (confidential) information relating to costs or prices. Further, given the resource constraints posed by COVID-19, such Government legislation requires lobbying and time that firms may not have, and/or may be difficult to obtain save for those firms operating in industries providing essential consumer goods/services.