This piece is available here, but only in Spanish. The summary below reflects my own translation of the piece.

Plague Fashion

Emergencies – such as wars and natural disasters – undermine the assumptions underpinning competition law and policy. Competition enforcement against cartels builds on the premise that fierce competition is highly beneficial for society, whereas firm cooperation will only create benefits in much more restricted situations. Competition enforcement also relies on legal procedures, which are by nature slow and lend themselves to sophisticated disputes.

Covid-19 has forced authorities to enact exceptional regimes and pressured them to take urgent and even drastic measures. The coming economic recession will likely require similar measures.

The main competition agencies in the world have started to react to this negative scenario. Several of them have declared that they will be alert to any possible violation of competition law. Others have specified that they will not accept excessive prices as a result of the crisis (although this legal prohibition is still controversial in many countries), hoarding, or misleading advertising.

However, the trickiest issue is the legality of cooperation agreements between companies, to ensure the supply and distribution of products or services that could be in short supply. Many jurisdictions around the world have provided guidance on allowed forms of cooperation in the context of the present crisis.

In Chile – where the author was once the head of the competition authority – there is an earlier example of increased cooperation between firms in the context of a crisis, following the 2010 earthquake. At the time, Chile’s Ministry of Interior’s Hands on Work program granted credit lines to affected municipalities so that they could acquire inputs from large construction companies. It could happen that, in line with happened then, the Chilean government now needs to promote greater cooperation between companies to ensure the supply of goods or services to the population. If that happens, it seems prudent to analyse ex ante the impact that such actions could have in light of competition law and policy. In particular, it should be ensured that cooperation between companies is specific, temporary and transparent. If possible, such coordinating efforts should obtain the input from the competition authorities prior to their implementation.

Comment:

This is a very succinct description of why competition law may fail us in times of crisis, and how it may have to be adapted to ensure its usefulness in such times. It also includes a Latin American perspective that I usually fail to reflect here.

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