Competition Policy and Practices in the Pandemic Period

Competition Policy and Practices In the Pandemic Period

Turkey
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The coronavirus pandemic has produced material effects on economy and triggered a global economic crisis leading to major changes in commercial activities. Significant part of the world population has largely changed their spending habits that almost stopped the functioning of multiple industries while demand for several others such as health equipment, food products and cleaning materials upsurged. Towering demand for these products caught companies unprepared and led to a supply crisis.

The economic consequences of the pandemic require well-designed, prompt and strong public policies and government interventions for preserving the continuity of economic activity during and after the outbreak. Competition policy is a solid public policy tool available to governments to overcome demand and supply shocks encountered during this crisis. Not surprisingly, antitrust authorities all over the world have taken swift actions and responded to this crisis situation. With the intention to execute an agile competition policy and to guide undertakings under enforcement risk, many authorities formed temporary “task forces”. 

Antitrust responses that came to the forefront focused basically on three aspects;

  • Legitimization of cooperation agreements between undertakings for tackling the supply crisis

Most of the antitrust authorities declared publicly and released comfort letters swiftly for specific cases where undertakings engaged in different types of agreements for tackling supply problems and eliminate scarcity in the markets where demand mounted. This less-interfering policy motivated many actors in health, hygiene, food and pharma to cooperate and produce industry-based and multilateral solutions instead unilateral firm-based efforts.

  • Preventing anti-competitive practices of undertakings seeking to get benefit of demand increase and panic situation of consumers,

Authorities announced to act harsher than normal periods, against irrational anti-competitive practices that create no efficiency and eliminate competition. This approach is the response to the fact that undertakings may have greater motivation in crisis periods to engage into anti-competitive collaborations to increase prices and reduce output. Undertakings with market power on the other hand may take the opportunity of crisis situation to abuse this power by exploitative pricing. Accordingly, Turkish Competition Authority and many other watchdogs have responded to such practices with swift investigations.   

  • Paving the way to the state aids schemes designed to alleviate financial problems of industries negatively impacted by the pandemic.

State aids to be provided in Europe are subject to antitrust review and approval of the European Commission. The Commission has so far approved more than 50 financial aid packages of member states very quickly, targeting industries and companies negatively impacted by the pandemic crisis. The basis for these quick approvals is to ensure the functioning of such undertakings in the market and maintain employment.

Despite this state aid policy of the Commission during the crisis, a remarkable opinion advocates that the state aids should not be allowed and that the survival of companies should be left to natural selection. This contrary argument bears in mind, the fact that undertakings operating in Europe are lagging behind the world in terms of investment and innovation. This view argues that the inefficient undertakings are protected by the competition authorities by allowing state aids in Europe, and therefore the investment and innovation motive of productive companies is reduced, and that the crisis is an opportunity to get rid of inefficient undertakings.

The concrete practices of the competition authority in Turkey addressing extraordinary market conditions emerged during pandemic are listed below:

  • Turkish Competition Authority (TCA) initiated an examination over food price increases in the COVID-19 period based on the observations that food prices and fresh fruit and vegetable prices in particular are rising excessively. The Authority announced that the highest possible available in the legislation will be applied to individuals and institutions engaged in anti-competitive actions in this period. (23.03.2020)
  • TCA President issued a press statement that the people and institutions that caused the increase of prices and supply shortages, especially in the food market, during this harsh period will be punished severely under the law No. 4054. (25.03.2020)
  • The oral hearings to be held on in April 2020 are postponed. (26.03.2020)
  • As part of COVID-19 measures, TCA announced that all applications, petitions and document submissions to the Authority, should be made online through.
  • TCA announced that the deadlines for investigations, research and investigations continued to function during the Covid-19 crisis. In addition to this, within the scope of the investigations carried out, TCA decided that the accept the applications of the related undertakings to provide additional time to submit their second and third written defense and accept the issues that were intended to be submitted in addition to the written defense but could not be raised within the specified period, during the investigation until 30.04.2020. (17.04.2020)
  • TCA initiated an investigation against 29 companies which operate in beauty/hygiene/health, food and chain retailing sectors. (08.05.2020)

By Nazali Tax & Legal Competition Law Department