Orrick | The European Antitrust Enforcers’ Response to the Russia/Ukraine Crisis

After the various measures taken by countries, international organizations and companies to pressure Russia to stop its aggression against Ukraine, it is now the turn of the antitrust enforcers of the European Competition Network (ECN) to make their contribution. They did so by publishing a joint statement on 22 March, in which they indicated that they would be pragmatic, if not flexible, in assessing the behaviour adopted by companies in response to the severe difficulties encountered in connection with the war. They emphasised that cooperation between companies to address war disruptions – for example to ensure the supply, purchase and fair distribution of scarce products and inputs, or to try to minimise the consequences of compliance with EU sanctions – would likely not be considered problematic under antitrust law. The European Antitrust Enforcers also added that they would not actively pursue those temporary and necessary cooperation measures, and that they would provide informal guidance to companies that had doubts about the compliance of such cooperation. However, the Commission pointed out that they would be ruthless with companies that take advantage of the crisis to collude at the expense of free competition. This initiative is reminiscent of the one they adopted in response to the COVID-19 crisis, which was perceived with some relief by companies placed under unprecedented constraints.

The full statement:

Joint statement by the European Competition Network (ECN) on the application of competition law in the context of the war in Ukraine:

• We, the ECN, join the European Council in its statement of 24 February 2022 (link), to condemn in the strongest possible terms Russia’s unprecedented military aggression against Ukraine. We
  stand firmly by Ukraine and its people as they face this war. We are fully aware of the social and economic consequences for Ukraine as well as for the EU/EEA.
• As stated in our joint statement on the application of competition law during the COVID crisis, the different EU/EEA competition instruments have mechanisms to take into account, where appropriate and necessary, market and economic developments. Competition rules ensure a level playing field between companies. This objective remains relevant also in a period when companies and the economy as a whole suffer from crisis conditions.
• The ECN understands that this extraordinary situation may trigger the need for companies to address severe disruptions caused by the impact of the war and/or of sanctions in the Internal Market. This may include for example cooperation in order to (i) ensure the purchase, supply and fair distribution of scarce products and inputs; or (ii) mitigate severe economic consequences including those arising from compliance with sanctions imposed by the EU.
• Considering the current circumstances, cooperation measures to mitigate the effect of severe disruptions would likely either not amount to a restriction of competition under Article 101 TFEU/53 EEA or generate efficiencies that would most likely outweigh any such restriction. In any event, in the current circumstances, the ECN will not actively intervene against strictly necessary and temporary measures specifically targeted at avoiding the aforementioned severe disruptions caused by the impact of the war and/or of sanctions in the Internal Market.
• If companies, on the basis of their self-assessment, have doubts about the compatibility of such cooperation initiatives with EU/EEA competition law, they can reach out to the Commission, the EFTA Surveillance Authority or the national competition authority concerned any time for informal guidance.
• At the same time, it is of utmost importance to ensure that essential products (for example energy, food, raw materials) remain available at competitive prices and that the current crisis is not used to undermine a competitive level playing field between companies. The ECN will therefore not hesitate to take action against companies taking advantage of the current situation by entering into cartels or abusing their dominant position.

View the original statement here

Compliments of Orrick Herrington & Sutcliffe LLP – a member of the EACCNY.