A step into the right direction

The ”Joint statement by the European Competition Network (ECN) on application of competition law during the Corona crisis” which has been published yesterday, 23 March 2020 is an interesting event in the area of the competition rules in the European Union, for several reasons.

First, it is a premiere, where the competition authorities in the 27 block agreed on a common approach and provided a much-needed temporary safe harbor to the companies struggling to ensure the supply of essential goods and services during the Covid-19 crisis.

Although it is unclear what legal value can we assign to a statement of the EU competition authorities, issued in the ambit of the European Competition Network – guidelines issued by the European Commission, endorsed by the National Competition Authorities, would have been preferable – the good side is that the competition authorities in Europen are finally realizing that things are not just black and white when it comes to cooperation among competitors.

The European Competition Authorities seem still reluctant to loosen the competition rules altogether but there is at least one step ahead, in the right direction, towards nuanced and flexible enforcement of the competition rules. This would be beneficial and it should stay in the long run, especially since the effects of the crisis provoked by the novel coronavirus will remain for at least a few years. There could be long-term structural changes in the economy, as a result of the current outbreak, such as moving production of essential products on the home turf, back from China and other remote places, and given the much higher production costs in the EU member states, cooperation might be necessary in order to build and operate the new production facilities while keeping market prices as low as possible.

As it often happens, the crisis also brings opportunities and the main opportunity for competition enforcement in the European Union is to realize that not everything that looks anticompetitive is indeed anti-competitive. Taking the example of the antitrust enforcement in the US and Canada, we may realize that when the competition rules are enforced in a reasonable (and sound) manner, the economy could, in fact, work better than when the players are policed with severity by the enforcers.