OECD competition policy responses to COVID-19

This policy brief, which you can find here, discusses how competition policy can help address the immediate challenges raised by the COVID-19 crisis, whilst looking to the post-pandemic future. It describes competition principles that governments can follow when designing support measures for the economy, and outlines actions competition authorities can take to address the challenges of the current crisis. Section A focuses on state interventions, while Section B focuses on competition enforcement actions in the short and medium term. A first section concern as regards state intervention is maintaining competitive neutrality. In times of extraordinary, and temporary, demand and supply shocks, governments can support consumers, workers and firms to weather the storm while ensuring readiness to resume economic activity once the crisis passes. This may take the form of grants, subsidies, bank guarantees or other state support. Nonetheless, there is a danger that state support may distort the playing field between companies that receive aid and their competitors that do…

Jorge Padilla and Nicolas Petit on ‘Competition policy and the Covid-19 opportunity’ (2020) Concurrences 2 1

Every economic crisis raises the same normative question for competition law. Should decision makers be temporarily more permissive in their application of the law to private and public restraints of competition? While historical evidence suggests that this is a bad idea, most economic crises since the 1970s led to some softening of competition law. In countries around the world, massive amounts of state aid have been injected into the economy. While such policies deserve praise in their concern for the protection of jobs, recessions have a “cleansing effect” which is desirable and can be dampened by such interventions. Recessions facilitate the exit of zombie firms that crowd out growth opportunities for more efficient competitors, and delay the diffusion of technological innovation. A case might thus be made that the current recession might be a source of opportunities for the EU economy, long trapped in a cycle of weak productivity, low economic dynamism and conspicuous absence of superstar firm creation. The…