Competitor Collaborations in the Age of COVID-19

During times of crisis, competing businesses may find themselves under pressure to collaborate and pool resources in order, for example, to meet the demand for essential supplies. Governments and competition agencies in some jurisdictions have provided guidance and procedures for competitor collaborations during COVID-19, whereas others have gone so far as to relax their competition laws to insulate certain types of competition collaborations from liability for violation of competition laws. 

Below are some of the steps taken in Canada and other countries regarding competitor collaborations:

• The Competition Bureau (Bureau) released a statement on April 8, 2020, recognizing that competitor collaborations of “limited duration and scope” may be required to ensure the supply of products and services “that are critical to Canadians” during these exceptional times. The Bureau signalled that it will “generally refrain” from scrutinizing temporary business collaborations undertaken for those purposes that are “executed in good faith and do not go further than what is needed”.  For firms wishing to obtain greater certainty, the Bureau has created a team to assess the proposed collaborations on the basis of information outlined in the Bureau’s statement and provide informal guidance to facilitate rapid decisions to enable businesses to support the crisis response efforts.[1]

• The U.K. government has temporarily allowed for supermarket operators to coordinate with each other with respect to manufacturers, suppliers, transport and logistics providers. Retailers may also pool staff with one another to help meet demand. With respect to competitor collaborations not covered by this exemption, the Competition and Markets Authority has stated that it has “no intention of taking competition law enforcement action against cooperation between businesses or rationing of products to the extent that this is necessary to protect consumers – for example, by ensuring security of supplies.”[2]

• The Australian Competition and Consumer Commission (ACCC) has similarly authorized the temporary coordination between supermarkets and their suppliers and distributors to ensure that consumers have reliable and fair access to groceries during the COVID-19 pandemic. The ACCC further authorized (1) wholesalers of medicines to coordinate with each other to facilitate distribution of essential medication and pharmacy products, (2) the Australian Banking Association to coordinate in providing financial relief packages for individuals and businesses affected by COVID-19, (3) the six largest telecom service providers to collaborate to serve the surge in network demand, and (4) gas and electricity industry participants to ensure secure and reliable energy supply during the pandemic.

• The U.S. Department of Justice and Federal Trade Commission issued a joint statement indicating that they will take into account “exigent circumstances” such as the need for health-care facilities to work together to provide COVID-19 response-related resources and services, such as that “businesses may need to temporarily combine production, distribution, or service networks.”[3]

• More generally, the New Zealand Commerce Commission has stated that it has “no intention” of taking enforcement action against businesses that are cooperating with respect to shared staff, distribution or other measures, to ensure that consumers continue to be supplied with “essential goods and services.”[4]

• Similarly, competition authorities in the European Competition Network issued a joint statement emphasizing that they will not “actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply.”[5]

It is important to note, however, that each of the above regulatory authorities have emphasized that these initiatives should not be understood to permit businesses to engage in anti-competitive conduct that is unrelated to the current crisis or is harmful to consumers (e.g., price fixing). Accordingly, businesses should take care to ensure that any collaborations with competitors do not go beyond what is necessary to achieve a purpose envisaged by the enforcement agencies, such as exchanging information on pricing or business strategies, where this is unnecessary to meet the needs of the current situation. Where there is any uncertainty, companies should obtain competition law advice in this regard.

If you have any questions, please do not hesitate to contact your usual Blakes contact or any member of the Blakes Competition, Antitrust & Foreign Investment group.

Please visit our COVID-19 Resource Centre to learn more about how COVID-19 may impact your business.