UK Competition law and co-operation between competitors: dos and don'ts during COVID-19

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Ironically, relaxation of competition law during the current crisis is as likely to heighten risks as reduce them. UK businesses need to work together in an effort to ensure the supply and distribution of essential goods and services to consumers and key workers. Whilst competition law clearly prohibits collusion involving price fixing, market sharing and/or bid rigging (which attract high fines), what is the position where two or more independent companies come together with the best of intentions to deal with the effects of COVID-19? Are there additional risks?

To date, the Competition and Markets Authority (CMA) has granted temporary narrow exclusions from the prohibition on anti-competitive agreements (Prohibition) for co-operation between competitors on particular issues in the following sectors, (subject to notification requirements):

  • groceries;
  • health services;
  • Isle of Wight ferry operators; and
  • dairy supply chain.

These exclusions also give protection from collective consumer claims for damages.

Co-operation in all other cases will be permissible only if businesses can demonstrate that the co-operation produces benefits for consumers that outweigh any anti-competitive effects. In practice, it may be difficult to satisfy this test. Having said that, the CMA has recently taken steps to clarify its approach to business co-operation in response to COVID-191, and to set out when co-operation between competing businesses is likely to be justified under competition law2 (although the CMA cannot guarantee protection from private enforcement).

Businesses which are contemplating co-operating with competitors to address concerns arising from COVID-19 should ensure they and their relevant employees know the parameters of what is, and is not, permissible, with adequate specific training where necessary. It is not a free for all. They should follow the principles below:

Do:

  • co-operate where this is reasonably necessary to ensure the availability of essential goods/services3 to consumers (and thereby avoid or mitigate shortage of supply);
  • limit the extent of the co-operation to the minimum necessary to achieve the aim (for example, targeting only particular goods/services or geographic areas);
  • ensure that the co-operation is temporary and lasts no longer than is necessary to deal with the specific issue(s) arising as a result of COVID-19;
  • continue to compete where co-operation is not necessary (for example, as regards the price of the products in question); and
  • reduce the range of products/services on offer to consumers but only if necessary to avoid supply shortages of the relevant product/service in the first place.

Don't:

  • exchange competitively sensitive information, such as future pricing or business strategy, unless, and only insofar as, absolutely necessary to achieve the specific aim (in which case this must be subject to specific agreed rules to limit damage to competition, such as limiting who has access to that information);
  • co-operate more widely in scope than necessary to address the aim (for example, do not extend the co-operation to goods that are not affected by COVID-19);
  • use co-operation to limit commercial damage from a fall in demand for products/services by keeping prices artificially high to the detriment of consumers or sharing markets or customers;
  • agree with competitors to keep prices high for essential products; and
  • exclude rival businesses from participating in the co-operation, or refuse to grant rivals access to supplies/services.

Why does this matter?

The EU and UK authorities do not want competition law to impede necessary business co-operation. They have made it clear that they will not tolerate exploitation of the crisis as a "cover" for non-essential collusion and will take action if required. In the UK the CMA is closely and actively monitoring relevant market developments through its dedicated COVID-19 Taskforce and by encouraging businesses and individuals to report unfair practices. 

If the authorities find that the parties to a co-operation agreement have infringed competition law, the penalties are severe: significant penalties of up to 10% of worldwide turnover; and the agreement (or relevant parts of it) would be unenforceable. Any customers or competitors who may have suffered harm could bring claims for damages.

In addition, in the UK, there are sanctions for individuals for breach of competition law: company directors could be disqualified for up to 15 years; and individuals found guilty of the "cartel offence", which includes price fixing, market sharing and agreeing to limit output, can be imprisoned for five years and/or made to pay an unlimited fine.


  1. CMA approach to business co-operation in response to COVID-19 (25 March 2020, CMA118):
  2. The European Commission (EC) has also issued guidance on business co-operation during COVID-19 (Temporary Framework for assessing antitrust issues related to business cooperation in response to situations of urgency stemming from the current COVID-19 outbreak, C(2020) 3200 final). It has granted a temporary exclusion from the Prohibition to producers in the milk, flowers and potatoes sectors, and has allowed co-operation for the supply and distribution of COVID-19 medicines.
  3. The CMA guidance does not define "essential" goods/services, but these will include goods or services considered essential to protect the health of consumers in the current situation, such as face masks and hand sanitisers.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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