CN11 - ECN statement on the application competition law in the context of the crisis in Ukraine
19 April 2022
On 21 March 2022, the European Competition Network ("ECN") issued a joint Policy Statement ("Statement") on the application of competition law in the context of the war in Ukraine. ECN members include: the European Commission ("Commission"), the EFTA Surveillance authority and national competition authorities ("NCAs").
Key takeaways
- The ECN understands that companies may need to cooperate to ensure the purchase, supply and fair distribution of scarce resources and to mitigate severe economic consequences. Such cooperation would likely not amount to an infringement of competition law.
- The ECN will not actively intervene in cooperation initiatives which are "strictly necessary and temporary measures" in the current circumstances.
- Companies may contact members of the ECN for informal guidance if they have concerns about the compatibility of any cooperation initiatives with EU/EEA competition law.
The ECN's Statement follows the European Council's statement on 24 February 2022 condemning Russia's military aggression against Ukraine. In the Statement, the ECN acknowledges that the conflict in Ukraine may trigger increased business disruptions, and that companies may be required to turn to their competitors and others in the vertical supply chain for assistance.
Referring back to its statement at the beginning of the Covid-19 pandemic, the ECN notes that the EU/EEA competition instruments have mechanisms in place to take into account market and economic developments but that the objective of competition law (to ensure a level playing field between companies) remains relevant during crises. The Statement set out that, during the war in Ukraine, ECN members will not intervene if cooperative measures are "strictly necessary", "temporary" and designed to:
- ensure the purchase, supply and fair distribution of scarce products and inputs, or
- mitigate severe economic consequences, including those arising from compliance with sanctions imposed by the European Union.
However, the statement does not provide details of the types of cooperation or the conditions to be fulfilled by companies in order to take advantage of the policy. Companies will therefore have to self-assess to determine whether the practice complies with competition laws. If a company has doubts about the compatibility of their cooperation initiatives with EU/EEA competition law, informal advice may sought from the Commission, the EFTA Surveillance Authority or the relevant NCA(s).
The Statement concludes with a warning that the ECN will not hesitate to take action against companies taking advantage of the current situation by entering into cartels or abusing their dominant position.
Comment
Where companies are cooperating with competitors as a result of the market impact of the crisis in Ukraine, it would be prudent to:
- maintain a record setting out the business disruption arising from the conflict in Ukraine and how cooperative efforts may mitigate the problem;
- limit any cooperation to ensure that it is no broader than necessary to cure the legitimate disruption;
- regularly re-evaluate the need for cooperation as circumstances change to ensure continued collaboration is still required; and
- remember that the ECN has warned companies against using the current situation as a cover for entering into cartels or abusing their dominant position.
With thanks to Eloise Robson of Ashurst for her contribution.
