The effects of the COVID-19 virus pandemic ("coronavirus") on society and the economy are still and increasingly noticeable. In addition to the health consequences for numerous people infected, private and public institutions (theatres, museums, cinemas, etc.) are still closed throughout Germany, countless events have been cancelled and even exit restrictions have been imposed on the public. The events have also had a significant impact on the economy, as shown by the collapse in stock prices. Many companies fear they may face insolvency due to lack of demand and lack of payment from their customers. We have already reported on how antitrust law and practice has adapted to the current extraordinary situation. Following our first report, further developments relevant to antitrust law have taken place. Internationally, governments and authorities have so far reacted to the challenges posed by the spread of the coronavirus with diverging signals. The announcements and measures range from the loosening of antitrust regulations in certain areas directly related to supply, transport, and healthcare, via increased financial aids, to a particularly tightened monitoring of the ban on cartels. Even apparently consumer-friendly behaviour can currently call on the competition authorities to start investigations concerning a possible abuse of dominance. Companies are currently faced with both opportunities and risks, which – especially in the current extraordinary situation – must be carefully assessed.
In response to the current extraordinary situation, many competition authorities and governments – especially in Europe – have increasingly indicated they will loosen the competition rules in cases where the pandemic is of relevance:
Contrary to the loosening of antitrust regulations described above, however, the exact opposite approach is being taken by some competition authorities, particularly the announcement that they will monitor the ban on cartels in a specifically strict way during the crisis:
In addition to or as an alternative to a more generous (or stricter) application of the ban on cartels, the loosening of the rules on state aid seems to be the currently preferred measure to mitigate the economic impact of the coronavirus:
For further details please go to our website article on "State aid and the Corona pandemic".
Moreover, the coronavirus is also having an initial effect on antitrust law related aspects of transactions. Besides the somewhat hesitant investment behaviour of some investment companies that has been observed, there is a particular risk that competition authorities will be unable to smoothly carry out their work in transactions:
Several governments and authorities have identified antitrust law or the amendment of existing regulations as a measure to deal with the economic consequences of the coronavirus. With the duration of the corona pandemic, antitrust relevant topics in the crisis period and the way of dealing with them are increasing. On the one hand, cartel prohibitions have been loosened (temporarily) in individual cases, on the other hand, existing competition rules will be enforced more strictly. For companies, this leads to both opportunities and risks.
Accordingly, companies should review whether, to what extent and for how long they may benefit from the newly created legal opportunities in antitrust law. In the worst case, an incorrect assessment of the current legal situation could even transform an initially foreseen economic benefit into a disaster (e.g. through fines due to a subsequently identified antitrust infringement). As the example of Expedia and Booking.com shows, companies can be brought directly into the focus of competition authorities – even if their actions initially appear to be quite consumer-friendly. In view of the current special situation, due caution should also be taken with regard to transactions.
Thus, obtaining antitrust law related advice is of particular relevance in times of the coronavirus – and in the event of similar exceptional circumstances in the future.