The CMA recognises that businesses may need to cooperate to ensure supply of essential products and services during the COVID-19 outbreak.

By Rob Moulton, David Little, Gregory Bonné, and Anna Lewis-Martinez

On 27 March 2020, the FCA and Payment Systems Regulator (PSR) announced their support for the Competition and Markets Authority’s (CMA’s) guidance on its approach to business cooperation under competition law in response to COVID-19, published by the CMA on 25 March 2020.

Both the FCA and the PSR have said that they will take an approach consistent with that of the CMA in relation to their competition law enforcement activity in the financial services sector during the pandemic. That is, the agencies will not seek to take enforcement action against business-critical cooperation between financial services providers, which is required to ensure the supply and distribution of scarce products and/or services affected by the crisis. The agencies noted that “it is important that competition law does not impede firms from working together to provide essential services to consumers in the current coronavirus situation”. However, neither the FCA nor the PSR will tolerate conduct that seeks to exploit the situation and that harms consumers.

CMA Guidance

Competition law exists to ensure that businesses do not limit competition to the detriment of consumers. For example, there is a prohibition on agreements between businesses that prevent, restrict, or distort competition in a particular market.

The CMA’s guidance acknowledges that competition law enforcement could impede necessary cooperation between businesses to deal with the current pandemic and to provide essential supplies and services during this time. The CMA has reassured businesses that so long as any coordination “is undertaken solely to address concerns arising from the current crisis and does not go further or last longer than what is necessary”, the CMA will not take any action.

The CMA’s guidance sets out how the CMA will:

  • Prioritise its work
  • Apply the criteria for exemption from the competition law prohibition on agreements and arrangements restricting competition during the COVID-19 outbreak
  • Take enforcement action against exploitative behaviour to prevent harm to consumers

The CMA emphasises that its guidance applies only to matters relating to the pandemic and that it will withdraw this guidance by a notice on its webpage when it is no longer necessary.