Elaboration of the ICN Document: Horizontal Cooperation and Crisis Cartels in Time of COVID-19

23 October 2020

GMP News

Being a member of International Competition Network (ICN) and a co-chair of its Cartel Working Group the FAS Russia is highly interested and encourages the promotion of the project described below.

Most jurisdictions consider cartels (horizontal agreements on price fixing, market allocation, production reduction etc.) as an unacceptable antitrust violation and enforce against cartelization. However, to reduce harmful economic consequences of the COVID-19 pandemic jurisdictions undertake some extraordinary measures, including these limiting competition and enabling horizontal agreements generally prohibited under normal economic conditions.

Competition authorities around the world have quickly reacted by making it clear in public statements and guidance that collaborative activities between manufacturers, distributors, or purchasers may be compatible with competition rules provided that such collaborations benefit consumers and they are limited in scope and duration of pandemic conditions.

Such horizontal agreement intrinsic to cartels are allowed in the period of COVID-19 for the purpose of direct supply of goods and services crucial for saving human lives (production of the vaccine, artificial lengths ventilation devices, pharmaceuticals etc.). In these circumstances it is important to strike a proper balance between needs in horizontal cooperation and avoidance possible anticompetitive effects in the long run. Competition authorities are on high alert for cartels recognizing they may be enticing to firms in the current climate and won’t allow dishonest firms to take advantage of global pandemic.

The new project undertaken by the Cartel Working Group will explore the challenges faced by the competition authorities in this exceptional time of crisis in ex-ante assessing horizontal cooperation projects that are deemed to be essential to face the emergency of the COVID-19 pandemic and in ex-post detecting assessing and sanctioning crisis cartels.

The project will seek to collect and highlight the main features of competition authorities’ statements and guidance on cooperation during COVID-19 and share experiences on the application of such guidance to specific projects.

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