Are there any new market rules?
The widespread of COVID-19 continues to affect significant number of individuals and companies around the world. The pandemic and the imposed in this regard self-isolation restrictions and the limited right of movement of a considerable part of the population not only in Bulgaria, represent an extremely serious challenge to the established business models, including in the context of disturbed supply channels combined with the overuse of certain essential goods and undoubtedly reduced interest in goods and services that do not have this characteristic. Entities in a number of business sectors are facing a decline in revenue, which can lead to discussions among competitors on possible measures for handling with the upcoming crisis.
And although the economic conditions have changed suddenly and dramatically, the Commission for Protection of Competition has made it undoubtedly clear that it will remain vigilant about any potentially harmful anti-competitive behavior by those market players who may seek to benefit from consumers and / or from the business in the course of these extraordinary circumstances.
Despite the expressed readiness by the Commission for Protection of Competition to undertake a more indulgent approach with regard to temporary and proportional coordinated measures taken by market participants with the only purpose of avoiding shortage of essential goods and ensuring their availability (including at competitive prices) to a widest range of consumers, the market participants may, through their cooperation or communication with competitors, prevent, restrict or distort competition in the following manner:
• the exchange or disclosure of sensitive information from competition law perspective such as business strategy and price intentions remain prohibited under the conditions of State of Emergency;
• although the Commission for Protection of Competition has paid manufacturers attention to the fact that by setting maximum resale prices, they may prevent the resale of their products at excessively high prices, determining (fixing) prices or sharing markets, customers and / or territories between competitors still reveals a serious risk of infringement under the conditions of State of Emergency;
• Agreements between competitors may be considered as unlawful if they provide for a prohibition of contracting or if they stipulate contracting only under certain terms and conditions;
• Unjustified refusals to supply certain persons while preferring others to be supplied may constitute unlawful abuse of a dominant position, even if that dominant position is established for a short period of time and due to a shortage of certain goods.
All of us, as participants in a global business connection, due to the extraordinary situation, are facing a new economic reality that we need to adapt to. However, the price for this adaption should not constitute in any way breach of the established competition rules. Furthermore, despite the announced State of Emergency, the current situation does not provide the business with immunity against competition statutory provisions and the Commission for Protection of Competition would not hesitate to exercise its powers in the process of establishing indications for non-compliance with them.
The above provides general information related to the adoption of the Emergency Measures and Actions during the State of Emergency Act and it is not exhaustive, whereas it serves only as a guide for interpreting the news as of April 8, 2020.
For more information and answers to specific questions related to your business, you can contact us at: firstname.lastname@example.org.
The team of Penkov, Markov & Partners