In our update dated April 15, 2020, we had highlighted reports of companies “joining hands” to fight COVID – 19 when there are no specific exemptions regarding the application of provisions of the Competition Act, 2002 (‘Competition Act’), and that any coordination between entities could be considered to be in violation of the law.

In a welcome and important development in this regard, the Competition Commission of India (‘CCI’) issued an Advisory to Businesses in Time of COVID-19 on April 19, 2020. By way of the Advisory, CCI has recognized the need of businesses (including those in provision of critical healthcare and essential commodities) to coordinate certain activities, including by way of sharing data in relation to stock levels, timings of operations, sharing of distribution network and infrastructure, production, transport and logistics to ensure continued supply and fair distribution of products.

The Advisory, however, emphasizes that the Competition Act has the following “built-in safeguards” to protect businesses from sanctions for coordinated conduct and these will continue to guide the decisions of the CCI:

i.     the presumption of an anti-competitive agreement does not apply to efficiency-enhancing joint venture agreements; and

ii.    the CCI is required to review factors such as accrual of benefits to consumers, improvement in production or distribution/provision of goods and services and economic development while assessing competition law issues.

That being said, CCI will only consider coordinated conduct that are necessary and proportionate to address concerns arising from COVID-19 as benefitting from the in-built safeguards in the Competition Act. The Advisory further cautions that businesses taking advantage of COVID-19 to contravene the Competition Act will not be able to claim protection from sanctions.

This guidance issued by CCI provides some much needed clarity and relief to businesses while considering any collaborations/coordination between entities during the pandemic.