The competition regulator on Sunday clarified that businesses that work together to increase efficiency in the production of essential goods and supply of essential services to deal with the Covid-19 outbreak would not be sanctioned. Under the Competition Act, certain concerted actions between competitors are presumed to cause an appreciable adverse effect on competition.
“The Act has in-built safeguards to protect businesses from sanctions for certain coordinated conduct,provided such arrangements …result in increasing efficiencies,” said the Competition Commission of India in an advisory, noting that businesses may have to coordinate activities by sharing data on stock level, production timings and R&D effort to ensure continued supply of essential goods and services during the Covid-19 outbreak.
The advisory stated that joint ventures between businesses that increase efficiency in production, supply, distribution, storage, acquisition or control of goods or provision of services are not presumed to have an appreciable adverse effect on competition and that the CCI would take into account the benefit to consumers of any such coordination.
The CCI did, however, note businesses should only coordinate efforts in a manner that is “necessary and proportionate to address concerns arising from Covid-19.”
Experts welcomed the move, saying it was in line with measures taken by competition regulators in other jurisdictions and it would help build confidence among businesses. “It is a welcome move because it boosts confidence of the industry that the commission will be cognizant of challenges while evaluating something in the future,” said Anisha Chand, partner at Khaitan & Co, noting competition regulators in the UK, the US and Europe have announced relaxations to allow businesses to coordinate in dealing with the outbreak.
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