At a time when coronavirus pandemic has disrupted economic activities, industry body CII on Sunday said companies must tread with caution when looking for business collaborations to ensure that their activities do not violate competition norms.
Competition Commission of India (CCI), which keeps a tab on unfair business practices across sectors, has already issued an advisory mentioning that there are in-built safeguards under the Competition Act to protect businesses from sanctions for certain coordinated conduct subject to the condition that such activities result in increasing efficiencies.
The fair trade watchdog has also mentioned that only such conduct of businesses which is necessary and proportionate to address concerns arising from COVID-19 would be considered. It has cautioned that businesses not to take advantage of COVID-19 to contravene any of the provisions of the Act.
Coming out with a compliance manual on the Competition Act amid the pandemic, Confederation of Indian Industry (CII) said the 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.
"Companies must note that antitrust laws continue to apply and all business decisions undertaken by companies must not fall foul of the provisions of Competition Act, 2002," it said, adding that CCI would keep a close watch for any potential competition law infringements during this period.
The manual noted that companies must carefully evaluate their business operations during the COVID-19 period, especially if their operations might require close collaboration with its competitors.
"The concrete antitrust risks surrounding any such collaboration remain difficult to assess. Given the absence of any guidance from CCI, companies should tread with caution and consult their antitrust lawyers as and when required or while exploring any collaboration," it said.
Further, the grouping said companies should reach out to their external counsel to assess these risks and must avoid information exchanges through trade associations or any other platforms.
Dominant enterprises must refrain from limiting production, services or technical development, excessive pricing and 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, it added.
CII Director General Chandrajit Banerjee said there would be challenges for industry given the shutdown and the work from home scenario as well as other factors, including collaborations to cope with supply management, sharing of distribution network and infrastructure.
Referring to the guidelines in the manual, he also said they have been prepared for corporates to keep in mind while collaborating to ensure continued compliance with the competition law.