COVID-19: Irish competition agency says businesses must decide pricing independently
On 1 July 2020, as the Irish economy was re-opening after the COVID-19 lockdown, Ireland's Competition and Consumer Protection (CCPC) warned businesses to act independently when setting prices and charges.
The CCPC issued the guidance because some trade or business associations had made statements guiding their members on how to price their goods or services particularly in regard to extra charges to deal with new health precautions.
The CCPC said that, the despite economic challenges, businesses they must act unilaterally in their commercial decisions, particularly when setting prices and charges.
This means that businesses must make their own decisions unilaterally and may not engage with other businesses whether in associations or otherwise.
Interestingly, the CCPC said that the warning followed "engagement between the CCPC and a number of trade associations after they made public statements about new potential charges and price increases, which their members may apply. Businesses are also reminded that they have additional responsibilities under consumer protection law, when setting new or additional fees, or making changes to business practices."
The CCPC has responsibility for both competition law and consumer law issues. It is therefore not surprising that the CCPC deal with both issues.
In regard to competition law, the CCPC stated that businesses may decide individually or unilaterally to introduce additional charges to cover the cost of providing a service which is in line with Government public health requirements. However, the CCPC reminded businesses that they must "make such decisions independently and advise consumers of these costs before they make a purchase. Similarly, trade associations are free to advise their members on how to address the challenges they are facing. However, the practice of trade associations suggesting future prices, or coordinating ways of passing on costs to consumers, could constitute an infringement of competition law. As a result the CCPC has engaged with a number of trade associations in recent weeks to remind them of their obligations under competition law."
Isolde Goggin, the CCPC Chair, commented that the "CCPC is acutely aware of the new challenges that businesses across the country are facing at this time, however, businesses must be mindful that the rules set out by competition law remain unchanged. Whilst the CCPC recognises the importance of businesses and representative bodies working collaboratively in such unprecedented circumstances, it’s important for them to know that competition law still applies, even during a global pandemic. We remind all representative bodies that they must not attempt to co-ordinate the pricing decisions of their members. To do so could be detrimental to consumers and in breach of competition law. As the economy starts to re-open, we are closely monitoring the activities of businesses and similar representative organisations and, if necessary, the CCPC will take appropriate action to deter or stop any potentially anti-competitive behaviour.”
In regard to consumer protection law, businesses making changes to their business practices, whether through changing their payment methods, adding additional charges or changing their prices, are required to adhere to consumer protection law. Businesses must provide adequate and accurate information so that consumers can make informed decisions and exercise their consumer rights when necessary.
While the content of the CCPC's statement is not surprising given that it reflects long-established principles of competition and consumer law, the statement is an extremely welcome, timely and important reaffirmation of fundamental principles.
For more information on this topic please contact Dr Vincent Power, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.
Date published: 8 July 2020