Aug 08,2020 | 05 min read

Competition Law - Basics Of Competition Law - Especially In Light Of The COVID-19 Pandemic By Nitish Sharma

 

The outburst of COVID-19 pandemic has immensely impacted businesses across the globe. It has brought the economy to a standstill, pushing the world into recession. Industries dealing with non-essential goods and products have been facing huge losses, leading to the shutdown of their operations and employees being laid off. However, on the other hand, this pandemic has also created many beneficial opportunities for sectors dealing in essential commodities like healthcare, pharma, telecom, FMCG and retail, etc. There has been a startling rise in the demand in these sectors.  

In such a situation the non-essential commodities sector may collaborate with the essential commodities sector to shield themselves from the wrath of losses. This apparent coordination between the competitors may lead to the imposition of unfair and discriminatory prices as a measure to benefit from the current situation. Consequently, this would also bring an adverse effect on competition across the world. However, as a vigilant regulator, the Competition Commission of India (“CCI”) stands tall, even at this time of crisis, to look out for all the possible anti-competitive conduct in the market.

Basics of Competition Law

In India, all competition-related matters are governed as per the provisions of the Competition Act, 2002 (the “Act”). The Act provides for the establishment of CCI for three-fold reasons, i.e. to prohibit anti-competitive practices, to stimulate and sustain free and fair competition and to safeguard the interest of consumers and facilitate freedom of trade in the market. The Act prohibits anti-competitive practices by regulating the following areas: 

  • Prohibition of Anti-Competitive Agreements.

  • Prevention of Abuse of Dominant Position.

  • Regulation of Combinations.

CCI’s advisory to Business during the COVID-19 pandemic

On April 19, 2020, the CCI issued an advisory to the businesses and competitors, acknowledging the need to coordinate practices for filing up the demand and supply gap, that has arisen due to the COVID-19 pandemic (“Advisory”). 

Some Key Takeaways from the Advisor:

  1. Competitors may coordinate certain activities, such as sharing data about the stock level, operation timing, infrastructure transport logistics, R&D and production to maintain a proper and continuous supply of medical and healthcare products like ventilators, masks, gloves, and vaccines and services such as testing and logistics. The only condition precedent being that this coordination must not amount to any kind of price-fixing, limiting or allocating the markets that are prohibited under Section 3(3) of the Act.

  2. The built-in safeguards provided under the Act to protect the businesses from sanctions for certain coordinated practices shall also be applicable to the conduct of the businesses during this pandemic, as long as these coordinated conducts/practices have been undertaken to address the concerns arising from the COVID-19 pandemic.

  3. Further, the ultimate aim must be to propagate efficiency and not to indulge in any kind of anti-competitive agreement or limitation or to create a restriction in the market.

  4. Any coordination with competitors which leads to price-fixing, limiting of markets or market allocation among competitors is prohibited under the Act and shall continue to be prohibited during this pandemic as well.

  5. Unilateral business operations or market behaviour by companies/businesses, having a large market share in the relevant market, either exploitative or exclusionary in nature, except whose coordination is necessary for meeting the requirement of COVID 19, shall continue to be prohibited under the Act.

Conclusion:

In light of the aforementioned, it can be concluded that the companies associated in the business of essential goods or services must not involve themselves in any kind of anti-competitive activities and should refrain from an unnecessary or arbitrary hike in the prices of essential commodities, especially in this unprecedented situation arising due the pandemic.

Further, it is to be appreciated that the Advisory was a necessary step and has been taken at the most opportune time. The Advisory appreciates the production and distribution of necessary commodities across the nation. CCI has taken the right approach by undertaking to assess the appreciable adverse effect to the market competition on a case to case basis and by also taking into account the hardships which may arise in the present situation.

Webliography: 

  1. Rahul Girl and Anshuk Walia, (2020, 8th April), India: CCI revises guidance note for merger control notification, Retrieved from 

  2. India: Competition & COVID-19-CCI Issues Advisory For Businesses During COVID-19, (2020 15th May), Retrieved from: https://www.mondaq.com/india/antitrust-eu-competition-/934746/competition-covid-19-cci-issues-advisory-for-businesses-during-covid-19

  3. Priyanka Batik, (2020 20th May), India: Covid 19: Spotlight On The Competition Law Regime In India, Retrieved from: https://www.mondaq.com/india/cartels-monopolies/937194/covid-19-spotlight-on-the-competition-law-regime-in-india-

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