Competition Comm cautions businesses against unfair practices amid coronavirus pandemic

The Competition Commission of India (CCI) on Sunday cautioned businesses against indulging in unfair trade practices amid the coronavirus pandemic that has caused disruptions in supply chains.

At the same time, the watchdog has provided an assurance to companies that coordinated activities and joint arrangements during this time for the purpose of business continuity would be taken into consideration in case there is a complaint against them in the future.

The CCI keeps a tab on unfair business practices in the market place and has powers to take action against erring entities, including imposition of penalties.

In an advisory on Sunday, the regulator said the Competition Act has in-built safeguards to protect businesses from sanctions for certain coordinated conduct, provided such arrangements result in increasing efficiencies.

"These provisions will inform the decisions of the Commission. However, only such conduct of businesses which is necessary and proportionate to address concerns arising from COVID-19 will be considered," it said.

However, the Commission cautioned businesses not to take advantage of COVID-19 to contravene any of the provisions of the Act.

Karan Chandhiok, partner and head (competition practice) at Chandhiok & Mahajan, said the CCI's advisory is a positive signal.

According to him, it provides an assurance to companies considering coordinated activities and joint arrangements for the purpose of getting their business and supply chains back on track in the current situation of the coronavirus pandemic.

"In the future, if a company is probed for anti-competitive conduct, it can raise the defence that its actions were necessary and proportionate to address the business disruption on account of COVID-19," he said.

The Act prohibits conduct that causes or is likely to cause an appreciable adverse effect on competition, including that of certain concerted actions between competitors.

The regulator noted that COVID-19 has caused disruptions in supply chains, including those of critical healthcare products and other essential commodities/ services.

"To cope with significant changes in supply and demand patterns arising out of this extraordinary situation, businesses may need to coordinate certain activities, by way of sharing data on stock levels, timings of operation, sharing of distribution network and infrastructure, transport logistics, R&D, production etc," it said.

Further, the Commission said these might be needed to ensure "continued supply and fair distribution of products (eg. medical and healthcare products such as ventilators, face masks, gloves, vaccines etc. and essential commodities) & services (eg. logistics, testing etc.)".

Chandhiok also said the regulator has cautioned companies against indulging in anti-competitive business practices in the garb of disruptions due to the coronavirus pandemic.