This article is written by Rupam Choudhary, student from NLU Delhi. In this article, she has discussed an important area i.e. Competition Law during the time of COVID-19 in India.
COVID-19 has raised serious questions worldwide affecting six continents. It has taken a toll on the socio-economic conditions of people around the world while affecting almost every sector. As per a report of UNCTAD, the present economic crisis is worse than the 2008 financial crisis wherein the developing countries hit the most. To combat such economic decline, proper regulations and advisories by the different regulatory and the authorities are the need of an hour. Being a market regulator, the Competition Commission of India (CCI) is on its toes when it comes to taking the precautionary measures.
Measures taken by the CCI
During this catastrophe, the CCI has proven its stand by issuing various circulars and public notices. The first circular on the precautionary measures taken by the CCI was issued on March 17, 2020. Further, the CCI issued the public notice dated March 30, 2020, allowing the parties to file the notice related to combination matters under the ‘Green Channel’, at the e-mail address provided therein. Besides, the CCI issued another notification on April 20, 2020, which is the extension of its prior notice dated April 13, 2020. It is explicit from the notice that the information against the anti-competitive agreements and the abuse of dominance can be filed via e-mail to the competent authority. The said process is also applicable for filing the combination notices. The CCI widened its scope for the combination matters by also allowing the video conferencing in the case of pre-filing consultation, which was earlier suspended by the Public Notice dated March 23, 2020. Now, the fresh dates of all the matters listed for hearing and the other due compliances till May 3 will notify by the CCI.
The CCI also issued an advisory dated April 19, 2020, which highlights in-built safeguards of the Competition Act (the Act). As per the said advisory, coordination between the businesses involving certain activities are allowed to enhance efficiency, especially of the essential commodities and healthcare products and services. Such cooperation must only be provisional and limited to meet the present necessity. Enterprises or groups must not indulge in any collaboration or cooperation amongst their competitors if it is non-essential or adversely affect the market.
There is no doubt that the promptness of the CCI in taking the preventive measures will help the enterprises in ease of doing their business without worrying much about the market regulator. It is pertinent to note that the CCI has not granted any exemption. It has particularly warned the business entities not to indulge in any activities which are unnecessary or not proportionate.
Approvals Granted by the CCI in the Combination Matters
Even in this exceptional situation, the CCI is quite responsive while dealing with the combination matters. The CCI approved a joint venture between Adani Green Energy Ltd. and Total S.A. in the power generation sector. The CCI also approved some acquisitions amongst the companies like the 100% acquisition of GMR Kamalanga Energy Ltd. by JSW Energy Ltd. under Section 31(1) of the Act. On April 24, 2020, the CCI approved acquisition of B.M.M. Ispat Ltd. (target company) by JSW Projects Ltd. (acquirer). Here, the acquirer acquired the majority shareholding of the target company. Further, the CCI received a proposed combination through the green channel, filed under Section 6(2) of the Act read with Regulation 5A of the CCI Amendment Regulation, 2019.
Hence, it is explicit that the COVID-19 outbreak does not constraint the functioning of the CCI on the different matters covered under the Act, and the CCI remains vigilant towards the conduct of enterprises or persons.
Measures taken by the Antitrust Authorities of Other Jurisdictions
The chances of collusion between the businesses behind the veil of the pandemic have increased tremendously. Several anti-competition authorities have been issuing guidelines and advisories to keep the anti-competitive practices in check.
On March 18, 2020, the Norwegian Government issued a press notice wherein it temporarily lifted the ban on cooperation between the businesses. They exempted the transport industry, including the air and water transports, for 3 months from its antitrust prohibition. At the same time, it also warned that the cooperation meant only for the consumers’ welfare and efficient usage of resources and must be within the scope of necessity.
In the US, a joint statement was issued on March 24, 2020, by the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice, to combat the COVD-19 by accelerating the antitrust procedures. The said guidelines were also in the line of promoting the co-operation among the businesses to ease the production and distribution channel of the healthcare commodities.
In the UK, the government also provided relaxations in its antitrust laws, like permitting the supermarkets to cooperate. It also exempted certain agreements and arrangements from the purview of the competition law enforcement. The Competition and Market Authority (CMA)’s approach towards the cooperation among the businesses during COVID-19 is well reflected from a guideline issued on March 25, 2020, stating their standards regarding such exemptions.
The European Union has taken several measures to tackle with this extraordinary situation. A joint statement issued by the European Commission (EC), the National Competition Authorities (NCA), and the EFTA Surveillance Authority [combinedly known as ‘European Competition Network’ (ECN)] on the application of the antitrust laws. In case the companies have any doubts about initiating the cooperation, there is a provision to take the ‘informal guidance’ by the Commission. The ECN assured to not actively intervening in any activities which are requisite to avoid disruptions in the supply chain. On April 8, 2020, the International Competition Network (ICN) issued a statement on a similar line. On the same day, ‘Temporary Framework Communication’ was also adopted by the EC and subsequently a ‘comfort letter’ issued to the ‘Medicines for Europe’ for coordinating in the pharmaceutical industry to avoid shortage in supply of essential medicines for treating patients affected by this novel virus. In addition to these, several guidelines issued for helping the companies in assessing their conduct concerning their competition laws. On April 29, 2020, the EC approved a French state aid of €5 billion and approximately € 900 million to the Renault group and the companies of Hungary, respectively. This approval is to ensure the competition in the market while reducing the adverse economic effect caused by the present pandemic.
Australia has also taken many steps to control the aftermath of the COVID-19. As per the media report of April 8, 2020, the Australian Competition and Consumer Commission (ACCC) Taskforce started granting temporary authorization to several industries like airlines, oil companies. On April 29, 2020, the ACCC has granted such approval to the public and private hospitals of West Australia. Price gouging has also taken into consideration. Unlike India, the ACCC promptly intervened in both essential and non-essential services, like transport, fitness to provide redressal to the distressed consumers. On April 24, 2020, the ACCC has also permitted the mining industry to cooperate.
Besides several other countries like Australia, Japan, Iceland, Russia also issued various guidelines or exemptions concerning their competition laws to fight against the pandemic.
Similarity Among Different Competition Authorities
The most common approach of these countries is to promote cooperation and collaboration among the businesses with a caution that it must not indulge in any anti-competitive practices. Such cooperation must have the edge over its adverse effects, if any. The ultimate aim behind such relaxations or the advisories is to avoid any disruptions in the production and supply chain of the essential commodities. Hence, the health and safety of the people will not be compromised.
At the risk of repetition, India has not suspended the enforcement of the competition law. It is also pertinent to note that it still applies to every sector, irrespective of its necessity. The cooperation must address the COVID-19 concerns. Since the Indian competition law is of the nature of ex- post facto, the conduct of business entities becomes very important. They must be vigilant while coordinating with other entities. The CCI will not hesitate to look into the illegitimate cooperation in the future and can also initiate the investigation, if required. Cartels and abuse of dominance are still not covered under the safeguards provided by the CCI. Therefore, it is advisable for the companies to create archives of the document to reveal the pre-condition and post-condition. Such archives can also be useful to show the over-all compliance and to justify the business arrangement, if the need arises.
Since the COVID-19 outbreak, not only disrupted the essential commodities but almost every other industry of the market. Thus, it is feasible for the government, and in particular, the CCI to show concerns towards the non-essential commodities and services. The CCI should propose some guidelines on the regulation of these sectors too, which are struggling for regaining their position.
Hence, considering the present situation, the business entities should be watchful while exchanging confidential information like sharing of data, business strategies, fixing the price. Before entering into any collaboration or co-operation, they should examine all the competition law compliance in prior. Companies must respect and adhere to the competition laws of their countries, or else they can attract hefty penalties or damages. Therefore, it is requisite that their conduct must be legally compatible with the law. Taking the expert legal advice in these situations shall also be preferred to avoid any risk of violating the provisions of the said laws. One must not forget that the CCI is keeping a tight rein on the businesses and their activities.
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