War in Ukraine an “extraordinary situation” which might justify certain cooperation between companies – European Competition Network statement
News    ·   22-04-2022

AUTHOR: Lisa Abela, Katya Gatt

Some days ago, the European Competitive Network (ECN) - a network of 27 competition authorities within the European Union and the DG Competition of the European Commission, seeking to ensure an effective and consistent application of EU competition rules - issued a statement on the application of competition law in the context of the ongoing war in Ukraine.

The ECN’s joint statement condemned Russia’s military aggression against Ukraine and, as it had stated in its statement on the application of competition law during the COVID-19 crisis, pointed out that EU competition law has mechanisms that take market and economic developments into account when appropriate and necessary.

While competition rules’ objective of ensuring a level playing field between companies “remains relevant also in a period when companies and the economy as a whole suffer from crisis conditions”, the “extraordinary situation” that is the war in Ukraine may trigger the need for companies to address “severe disruptions” caused by the impact of the war and/or imposed sanctions in the Internal Market, it said. This could include cooperation between companies in order to ensure the purchase, supply and fair distribution of scare products and inputs or to mitigate severe economic consequences including those resulting from compliance with sanctions.

The ECN considers that, in light of such circumstances, such cooperation would likely either not amount to a restriction of competition under Article 101 TFEU to begin with or would generate efficiencies that would likely outweigh such a restriction. In any case, the ECN explicitly states that it “will not actively intervene against strictly necessary and temporary measures specifically targeted at avoiding the aforementioned severe disruptions caused by the impact of the war and/or of sanctions in the Internal Market”.

While encouraging companies to reach out the Commission, the EFTA Surveillance Authority or their national competition authority for informal guidance should they require assurance on the compatibility of proposed cooperation measures, the ECN also highlights that it will not hesitate to take action against companies taking advantage of the crisis to enter into cartels or abusing their dominant position. It cautions that essential products should remain available at competitive prices.

It would be prudent for companies to limit cooperation to what is strictly necessary, and only until it remains strictly necessary, to cure legitimate disruption, and to seek appropriate advice when uncertain.

In the wake of the ECN’s joint statement on the COVID-19 crisis, the Commission had published a Communication to set out a “Temporary Framework for assessing antitrust issues related to business cooperation in response to situations of urgency stemming from the current COVID-19 outbreak”. One will need to wait and see whether similar guidance will be forthcoming in this case.

A few weeks ago, the Commission adopted a State aid Temporary Crisis Framework to use the flexibility foreseen under State aid rules to support the economy in view of the war in Ukraine (more information on this here: http://www.camilleripreziosi.com/en/news-resources/1/4737/new-state-aid-temporary-framework-in-the-cont).

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