Five actions to defend competition in the markets during COVID-19

As the pandemic evolves from a health crisis to an economic one, there is excessive pricing of sorely needed products.

As the pandemic evolves from a health crisis to an economic one, competition authorities are closely monitoring market developments and reacting accordingly. They are facing down excessive pricing of sorely needed products in various countries.  The United Nations Conference on Trade and Development (UNCTAD) urges competition authorities to use all their tools to combat the adverse consequences of COVID-19 in the markets.  Lee Kok Leong, executive editor, Maritime Fairtrade, reports

Under normal circumstances, competition is needed in markets to keep prices low, but with the COVID-19 crisis wreaking havoc on markets the world over, collaboration has taken precedence.  The pandemic’s sweeping economic impact has left governments balancing between defending competition, so prices do not become prohibitive, and granting exemptions to competition rules to ensure the survival of entire economic sectors.

UNCTAD recommends that governments take five key actions to protect competition in the markets during the COVID-19 crisis.

  • Ensure equal conditions between companies for a level playing field that remains relevant even in a crisis period.
  • Temporarily allow cooperation arrangements necessary to ensure the supply and distribution of affordable products to all consumers to prevent a shortage of essential products.
  • Closely monitor markets of essential products such as disinfectants, masks and gels to ensure their availability, if necessary, through temporary prices caps to protect the health of consumers during the pandemic.
  • Vigorously enforce competition law against companies that take advantage of the crisis by creating cartels or abusing their market power.
  • Adapt competition procedures and deadlines to the extraordinary circumstances created by the pandemic.

As a preventive measure, the French government issued a decree to regulate the price of hand sanitizers to prevent retailers and pharmacists from engaging in abusive price increases.  Competition authorities in Kenya and China have heavily sanctioned retailers engaged in excessive pricing of health-related products.

On the other hand, the United States’ Department of Justice and the Federal Trade Commission have allowed collaborations among competitors in the health sector based on previous measures taken in the aftermath of hurricanes Harvey and Irma.  Likewise, Canadian and German authorities have allowed pro-competitive agreements between companies competing in the same market if they have good justifications.

While Germany has given the green light for collaboration in the retail industry and for supermarkets, Canada has allowed collaboration to support the delivery of affordable goods and services.  Similarly, the competition and markets authority in the United Kingdom has temporarily allowed retailers to collaborate to ensure the continuity of food supplies.

South Africa has approved a specific list-based block exemption from antitrust rules in the health-care sector to allow cooperation.  Norway has granted a three-month exemption from the national antitrust laws to the airline transport industry.

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