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Out-Law News 2 min. read

Competition authorities in Europe respond to Ukraine crisis

Businesses can work together to ensure the continuity of supply of food, oil and other scarce products within the European single market without facing penalties under competition law, authorities have said.

The European Competition Network (ECN), a body that represents competition authorities within the EU, including national competition authorities and the European Commission, has confirmed that it will not “actively intervene” against “strictly necessary and temporary” business cooperation measures that are “specifically targeted” at avoiding severe disruptions caused by the impact of the Russian invasion of Ukraine or sanctions that have been imposed in response.

No formal exemptions from competition law have been introduced by the ECN, but the body has suggested that businesses cooperating 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 EU” will not be investigated for their compliance with competition law.

According to the ECN, the cooperation between businesses to address the risk of severe disruption is likely to be considered to fall within conduct permitted by competition law or be allowed on the basis that efficiencies arising from the cooperation outweigh a restriction of competition. It said that businesses unsure of whether their cooperation arrangements comply with competition law can seek informal guidance from the Commission, the EFTA Surveillance Authority or national competition authorities “any time”.

The ECN warned, however, that companies that seek to exploit the Ukraine crisis for their own gain can expect to be subject to enforcement action.

It said: “It is of utmost importance to ensure that essential products (for example energy, food, raw materials) remain available at competitive prices and that the current crisis is not used to undermine a competitive level playing field between companies. The ECN will therefore not hesitate to take action against companies taking advantage of the current situation by entering into cartels or abusing their dominant position.”

Angelique Bret of Pinsent Masons noted that the UK’s Competition and Markets Authority (CMA) has not yet issued specific guidance relating to the Ukraine crisis and, although the CMA may well share the views of the ECN, businesses should obtain legal advice before engaging in any new cooperative arrangements with competitors or potential competitors within the EU or the UK even if they appear to fall within the parameters of the ECN’s guidance.

“As the war in Ukraine has led to sharp price increases in the energy sector across the EU/EEA and UK, including for electricity and gas, competition authorities will be keen to ensure the situation is not exacerbated by anti-competitive practices,” Bret said. “Ireland’s competition authority has already reminded businesses of the continued need to comply with competition and consumer law in light of rising fuel prices during the crisis.”

Several other EU national competition authorities, including in Germany, are monitoring fuel prices. Separately, on 29 March 2022, the Commission – with the German competition authority’s assistance – conducted dawn raids in the natural gas sector over suspected abuse of dominance in breach of competition law.

“These developments are reminiscent of the EU and UK competition authorities’ responses to the Covid-19 pandemic during 2020, albeit less far-reaching: the guidance is less detailed and no new legal exemptions have been introduced,” Bret said.

Rebuilding Ukraine
The prospect of Ukraine’s re-emergence as a modern country with a thriving economy when the war ends offers the chance to build something better, from physical and digital infrastructure to greater social value and a greener economy.
Rebuilding Ukraine
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