Many undertakings have recently faced unprecedented challenges in the new market situation caused by Covid-19. Competition authorities across the globe have reacted to the ongoing crisis. The European Union’s Competition Commissioner Margrethe Vestager recently pointed out that the crisis is not a shield against competition law enforcement. The new situation raises questions about, among other, the impact of the crisis on merger control proceedings and competition authorities’ approach to increased cooperation in respect of essential goods and services.
The Finnish Competition and Consumer Authority (“FCCA”) recently stated that it will take into account the state of emergency caused by Covid-19 when applying the Finnish Competition Act:
As regards merger control, the FCCA has not asked market participants to completely hold off on filing merger control notifications, but to postpone notification where possible, and agree separately with the FCCA on the submission of any filings. In general, parties should be prepared for delays in the process. For transactions that are still being negotiated, the expected delays may be taken into account when agreeing on filing deadlines, long-stop dates and the like in transaction documents. Stop-the-clock provisions may possibly be used more frequently and with a slightly lower threshold than in normal circumstances. Since it has become more difficult for the FCCA to obtain statements from market participants, stricter requirements may be posed on information from the notifying party. Over time, we may perhaps also witness more “failing firm” -defences in merger control proceedings in connection with the acquisition of distressed companies.
In terms of antitrust enforcement, the FCCA recognizes that undertakings may need to cooperate to ensure the sufficient availability of products to consumers. The FCCA will therefore not intervene in measures that are necessary to ensure the adequate supply or equal distribution of products to all consumers. However, the FCCA will continue to intervene in cartels, which aim at raising prices to the detriment of consumers. The same applies to the abuse of a dominant market position e.g. by excluding competitors or charging manifestly unfair prices. Pricing abuses, such as excessive pricing, are likely to catch the competition authorities’ attention. Caution is therefore required when implementing price increases, in particular as regards sudden increases of prices of essential products, which are not cost-based or in line with previous practice. In respect of shortages of supply, dominant undertakings must make sure not to discriminate among similar customers and not to refuse to supply without objective grounds.
The FCCA’s policy largely mirrors the joint statement by the European Competition Network (“ECN”) on application of competition law during the Covid-19 crisis. According to the joint statement, the ECN will not actively intervene in necessary and temporary measures put in place by undertakings in order to avoid a shortage of supply of scarce products. The ECN also emphasizes the need to ensure that products considered essential to protect the health of consumers (such as face masks and sanitising gel) remain available at competitive prices.
Although the regular competition law instruments and framework remain in place, Covid-19 must be taken into account in the risk assessment and when evaluating market circumstances. Please do not hesitate to contact us should you have any questions regarding the possible impact of Covid-19 on your business and agreements.
For more information, please contact:
Lotta Pohjanpalo
Partner
Janiela Valtonen
Senior Associate