Companies

No Covid-waiver on antitrust compliance

Our Bureau New Delhi | Updated on May 24, 2020 Published on May 24, 2020

The manual, released by the CII comprises guidelines that corporates should keep in mind while collaborating so as to ensure continued compliance with the competition law   -  bakhtiar_zein

CII manual that lists the dos and dont’s for companies as they take on the pandemic

Companies would do well to note that antitrust laws continue to apply even under the current Covid-19 times, and all business decisions taken by them must not fall foul of the provisions of Competition Act 2002, the CII’s new Competition Law compliance manual says.

The manual, prepared and released by the Confederation of Indian Industry (CII), comprises guidelines that corporates should keep in mind while collaborating during the current crisis so as to ensure continued compliance with the competition law.

The Compliance Manual has highlighted that the Covid-19 crisis has created unprecedented challenges both in India and across the world.

This impact of Covid-19 on the functioning of the economy may prompt companies to collaborate with their competitors to tackle the uncertainty and hardship faced. However, companies must note that antitrust laws continue to apply and the CCI would keep a close watch for any potential competition law infringements during this period, the CII Manual highlighted.

Currently, the Competition Act restricts various kinds of collaborative actions by corporates. Businesses have been coming together to counter the challenges posed by Covid-19 and ensure uninterrupted supply of essentials. Earlier, the Competition Commission of India had issued an advisory to businesses that clarified that only such conduct of businesses which was necessary and proportionate to address concerns arising from Covid-19 would be considered. Businesses were cautioned not to take advantage of Covid-19 to contravene any of the provisions of the Act, the CCI had said.

Guidelines

Against the background, the CII has listed a few guidelines that the companies must follow to ensure they are on the right side of the law.

These include: For co-operation with competitors, principles to keep in mind for companies to understand what companies can do and cannot do to deal with the current crisis from a competition law perspective - Scope of the collaborations; Detailed documentation; and ex ante review by legal counsel.

Dominant enterprises which enjoy market power in particular must ensure that their business activities do not in any way lead to an abuse or market exploitation. They must accordingly refrain from (i) limiting production, services or technical development, (ii) excessive pricing and (ii) bundling non-essential products/services with essential services

Companies having market power in the manufacture and sale of essential commodities must avoid entering into any exclusive distribution agreements. Limiting the distribution of essential commodities through exclusive distribution arrangements by manufacturers may be tested under certain provision ( Section 3(4) ) of the Competition Act.

Companies must carefully evaluate their business operations during the Covid-19 period, especially if their business operations might require close collaboration with its competitors.

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Published on May 24, 2020
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