Relaxed European competition rules to ensure supply and distribution of scarce products

Recent developments in European competition law against the background of the COVID-19 crisis that may be important for your company.

To avoid shortages in the supply of key medicines and medical equipment, on 8 April 2020, the European Commission announced a temporary relaxation of the relevant European competition rules and now allows for limited business cooperation between pharmaceutical companies and medical equipment producers to meet demand.

Notably, the Commission's Temporary Framework is intended to ensure hospitals are supplied with medicines and equipment for coronavirus patients.

The Commission will also issue so-called "comfort letters" concerning a specific cooperation project aimed at avoiding shortages of critical hospital medicines. The Temporary Framework explains when and how firms can obtain guidance or written comfort in accordance with competition rules.

Furthermore, the Temporary Framework provides that manufacturers may coordinate more closely than normally permitted under European antitrust rules. This may apply to production, warehousing and possibly coordination of distribution, so that not all companies concentrate on one or a few medicines while other medicines are not produced in sufficient quantities.

The communication on the Temporary Framework sets out the main criteria that the Commission will use when considering these possible cooperation projects. In particular, the Commission will not take action if the cooperation project is:

• objectively necessary to actually increase output in the most efficient way to address or avoid a shortage of supply of essential products or services (such as those that are used to treat COVID-19 patients)
• temporary in nature (ie to be applied only as long there is a risk of shortage or in any event during the COVID-19 outbreak), and
• not exceeding what is strictly necessary to achieve the objective of addressing or avoiding the shortage of supply.

If you have any questions regarding the Temporary Framework, or should you require assistance with related or general antitrust law issues, please contact a member of our Competition, EU and Trade team.