COVID-19 Montenegro Update

Montenegro Allows for a More Lenient Assessment of Cooperation Agreements in Response to Situations of Urgency Caused by COVID-19 Pandemic

The new COVID-19 reality did not only bring about the asymmetric demand characterised by a high rise in demand for certain essential (usually health-related) products and a steep decline in demand for other products that are considered non-essential in times of crisis but has also created various problems in supply chains and distribution of products and services.

Companies, as a result, may need to cooperate closely in order to ensure the undisturbed distribution of their products and services to consumers. Cooperation between companies, especially competitors, however, may amount to a breach of antitrust rules and therefore require careful consideration of applicable legal framework before implementation.

In response to the potential issues arising from such cooperation, the European Commission has already issued several sets of rules and guidelines helping the companies to self-assess whether their cooperation will comply with the EU antitrust rules and , now, follows the EU approach.

Even though Montenegro has not yet implemented a self-assessment regime of restrictive agreements, but rather a formal individual exemption by the competition authority is still required, Montenegro has recently adopted new rules allowing for certain types of cooperation between companies in response to the pandemic. The ultimate goal of the new rules is to ensure that consumers have access to a steady supply of essential products and services such as medicines and medical equipment. The new rules provide that changed market conditions due to the COVID-19 outbreak shall be taken into account by the authority in line with guidelines issued by the competition authority. The guidelines lay out conditions under which an information exchange or cooperation between competitors will most likely not be considered restrictive. However, it should be noted that the new rules and accompanying guidelines do not cancel the parties’ obligation to submit a formal request for an individual exemption of a restrictive agreement, but rather they acknowledge the need to allow a more lenient approach in analysing certain forms of cooperation between companies due to the COVID-19 crisis.

Under the new guidelines, exchange of commercially sensitive information and coordination between competitors will be allowed provided that such coordination pertains to measures for adjustment of production, supply management, and distribution as a response to the COVID-19 outbreak and subject to fulfilment of the following cumulative conditions:

  • The cooperation is required for an actual increase in production (in a most-efficient manner) in order to resolve shortages in the supply of products or services (e.g. the ones used in the treatment of COVID-19 patients);
  • The cooperation is temporary in nature (i.e. applied only when there is a risk of shortage or during the COVID-19 pandemic); and
  • The cooperation is undertaken in a manner necessary for resolving or avoiding shortages in supply.

The new rules and accompanying guidelines are modeled after the EU guidelines published here. Additionally, for the purpose of ensuring the full legal certainty with regards to the new rules, the companies may seek a confirmation that they are acting in line with the new rules, by asking for a comfort letter from the competition agency. This will allow undertakings to swiftly respond to the changed market conditions, and help the Montenegrin Competition Agency to issue decisions more efficiently, all to the ultimate benefit of citizens.

 

 

*The information in this document does not constitute legal advice on any particular matter and is provided for general informational purposes only.