Competition exemptions in time of COVID-19

In a six week period from mid-March 2020, the ACCC received 33 applications for authorisation of competitor collaborations to deal with disruption and risks arising from the COVID-19 pandemic. In response to this unprecedented number of urgent applications, the ACCC deployed substantial resources and used streamlined processes to grant interim and final authorisations in extremely quick timeframes.

A new COVID-19-related authorisations report, released today, describes the approach the ACCC took to authorising these competitor collaborations and how that approach served the Australian economy at a time of crisis.

In general, Australia’s competition laws prevent collaborations between competitors, even if potentially beneficial to society. However, the ACCC has broad powers to provide exemptions to businesses allowing them to collaborate, in situations where the likely benefits to the public outweigh the likely detriments.

“The ACCC recognised that during the extraordinary times at the height of the pandemic, our role in authorising what would normally be anti-competitive conduct would be crucial in helping particular industries meet the needs of the Australian public,” ACCC Chair Rod Sims said.

“A year ago, no-one knew the degree to which COVID-19 would affect Australians’ everyday lives, and the extent to which collaboration would be needed in critical sectors like health, food supply and aviation. As the extent of the crisis became clear, however, the ACCC saw the need for agile and flexible decision-making in response to the sudden surge in exemption applications.”

Broadly, the types of conduct authorised by the ACCC fell into five categories: provision of health services; supply of medicines and other essential items; responding to market disruption and changing consumer demand, such as ensuring food supply and telecommunications network capacity; financial relief measures; and, responding to flow-on impacts from the pandemic.

The report contains case studies demonstrating the type of authorisation applications the ACCC received.

“We knew it was the right thing to do to remove competition law barriers so medicine distributors could work together to identify and mitigate any shortages or supply chain problems impacting the availability of medicines,” Mr Sims said.

“Similarly, the sharp increase in demand for basic goods during lockdowns meant we were right to authorise major supermarkets to co-operate, so they could help consumers get reliable and fair access to groceries, particularly during periods of panic buying.”

The ACCC has a six-month time limit to make a determination under Australia’s authorisation regime; however, it can grant ‘interim authorisation’ when appropriate. While the usual timeframe for an interim decision is four weeks, most of the interim authorisations granted during the pandemic were completed in less than three days.

Competition law exemptions can carry risks to the economy, and the ACCC did not authorise businesses to discuss, negotiate or agree on the prices of goods and services.

“At a time when many people were facing financial hardship, price competition was as important as ever,” Mr Sims said.

“While the ACCC was willing to be flexible, we ensured that authorisations and exemptions were strictly limited in duration so that businesses would return to competing with each other as normal as soon as was practical. We also imposed strong monitoring and reporting obligations so that we could identify any issues or unintended consequences of the authorisations.”

“In order to get through this enormous volume of COVID exemption work, we had to redirect substantial resources away from non-urgent projects to the authorisations teams,” Mr Sims said.

Background

ACCC authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.

Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment.

A full list of COVID-19-related authorisations and exemptions can be found on the ACCC’s authorisations public register.

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