Businesses should not take advantage of COVID-19; certain coordinated conduct may be allowed for increased efficiencies: CCI issues Advisory

The Competition Commission of India has cautioned businesses to not take advantage of COVID-19 to contravene any provisions of the Competition Act.

. It has nonetheless stated that certain coordinated conduct may be allowed for increased efficiencies to address concerns arising from COVID-19 .

. In its 'Advisory to Businesses in Time of COVID-19', the Competition Commission has acknowledged that COVID-19 has caused disruptions in supply chains, including those of critical healthcare products and other essential commodities/services.

. To cope with significant changes in supply and demand patterns arising out of this extraordinary situation, businesses may need to coordinate certain activities, the Competition Commission has added.

. " ..(these activities may include) sharing data on stock levels, timings of operation, sharing of the distribution network and infrastructure, transport logistics, R&D, production etc. to ensure continued supply and fair distribution of products (e.g. medical and healthcare products such as ventilators, face masks, gloves, vaccines etc. and essential commodities) &services (e.g. logistics, testing etc.).", it is explained.

. It is clarified that the Competition Act has in-built safeguards to protect businesses from sanctions for "certain coordinated conduct", provided such arrangements result in increased efficiencies.

. " These provisions will inform the decisions of the Commission. However, only such conduct of businesses which is necessary and proportionate to address concerns arising from COVID-19 will be considered. ", Competition Commission has said.

. The Advisory records Section 3(3) of the Competition Act which presumes that certain concerted actions between competitors cause an appreciable adverse effect on competition. It is added that this presumption is not applicable to joint ventures, if such agreements increase efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services.

. Further, Section 19(3) also enables the Commission to have due regard to the accrual of benefits to consumers, improvement in production or distribution of goods or provision of services and promotion of technical, scientific and economic development by means of production or distribution of goods or provision of services, it is recorded.

. Read the Advisory:

Businesses should not take advantage of COVID-19; certain coordinated conduct may be allowed for increased efficiencies: CCI issues Advisory

Bar & Bench

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