Competition law and COVID19 - the upside and downside

How competition and consumer laws can impact your business during these uncertain times.

Strategic acquisitions and collaboration

1. Failing firm acquisitions and sales: where there are “failing firms”, there will be opportunities to make acquisitions when, in normal circumstances, this would not have been possible.  We anticipate that the ACCC will still look at failing firm acquisitions closely.

2. Authorisation for collaboration between competitors: a range of conduct that ordinarily would give rise to a competition concern may be authorised quickly by the ACCC if the public benefits clearly outweigh the detriments. For example: joint procurement, joint supply, capacity sharing, market allocation etc. Competitors may consider what forms of collaboration would enable goods and services to be delivered to the community while ensuring their longer term survival.

Ongoing compliance

1. Cartel conduct via industry proposals: industry bodies and members may discuss helping the industry through price means, allocation or output. Where authorisation is not possible, members should be careful to ensure compliance with competition laws (ie, cartels and concerted practices).

2. Higher prices, reducing capacity and refusing supply: while charging higher prices, reducing capacity, or refusing to supply a good or service has traditionally not been a breach of competition law (provided the decision is made unilaterally), the ACCC may consider such conduct an unfair term or unconscionable. In addition to the commercial and reputational issues of such conduct, it would be prudent to seek advice for such proposals.

3. Misleading conduct: the ACCC will be especially tough on investigating and prosecuting misleading or false statements seeking to promote goods or services as a result of the virus. Taking advantage of consumers in these circumstances will see very significant fines.

4. Legal remedies under the ACL for cancelled bookings: the ACL has a remedial regime for breaches of consumer guarantees.  You should ensure you know whether your business is obliged to provide a refund, whether a credit will suffice, whether you can keep the deposit and whether you can rely on your terms and conditions.  The ACCC has flagged this as an important area in the current circumstances.

5. No defence for economic duress: competition law does not recognise economic duress, a declared state of emergency, or other condition as a defence to cartel conduct or other breaches. We anticipate however that the ACCC will factor the current circumstances into their enforcement priorities (i.e. they will pursue egregious conduct that takes advantage of consumers but may be more willing to allow forms of collaboration where there are some public benefits).