EU/Competition: Transport and Shipping

Newsletter 4/2020

The Commission prolonged 24.03.20 the regulation outlining the conditions under which liner shipping consortia can provide joint services without infringing EEA antitrust rules that prohibit anticompetitive agreements between companies for another four years. This regulation known as the “Consortia Block Exemption Regulation” is therefore extended until 25.04.24. More specifically, liner shipping consortia are agreements between shipping companies to operate joint liner shipping services and engage in certain types of operational cooperation leading to economies of scale and a better utilisation of the space on vessels. EU law generally bans agreements between companies that restrict competition. However, the Consortia Block Exemption Regulation allows, under certain conditions, liner shipping operators with a combined market share of below 30% to enter into cooperation agreements to provide joint liner shipping services (known as “consortia”). These agreements, however, cannot include price-fixing or market-sharing.

The Norwegian government adopted 19.03.20 a regulation (forskrift) exempting cooperation in the transport sector related to critical services from the prohibition against concerted practices (Section 10 of the Competition Act). As such cooperation cannot go beyond that being necessary, the regulation does not seem to be an exemption in strict legal terms, i.e. such cooperation during a pandemic would seem to be legal already based on the general rules, however, it does create a safe harbor. Such cooperation has to be notified to the Competition Authority “without undue delay”. The regulation has specifically the Norwegian domestic air transport industry in mind, i.e. it creates the possibility to align critical flight schedules/routes amongst competitors, however it is not limited to air travel. Currently, the only scheme notified is that between SAS and Norwegian on domestic air travel routes. Read more (in Norwegian) here.

ESA has approved a guarantee scheme in Norway for airline operators facing a shortage of liquidity due to the economic effects of the COVID-19 pandemic. The demand for passenger travel by air in Norway has dropped significantly due to the containment measures adopted. This has severe consequences for the airline operators, which face serious and acute liquidity shortages. The aviation sector is an important part of Norway’s critical infrastructure, and a major contributor to the country’s economy. The scheme was notified by the Norway 30.03.20, and approved by ESA the same day. ESA has approved the scheme taking into account the State Aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted by the Commission on 19.03.20. Visit the decision here.

The EU Council decided 30.03.20 to suspend the airport slot requirements which oblige airlines to use at least 80% of their take-off and landing slots in order to keep them the following year. The waiver will apply retroactively from 01.03.20 to 24.10.20. It will also apply retroactively from 23.01.20 to 29.02.20 for flights between the EU and China or Hong Kong. The start date of 23.01.20 reflects the date when the first airport was closed by the authorities in China. Read more here.

In a decision of 12.03.20 the Norwegian Competition Authority (NCA) fined the VY Group NOK 7.5 million for providing incorrect information in a merger filing. The Vy Group and Fjord1 submitted a notification to the NCA in 2019 regarding the creation of a joint venture in the tourism industry and the acquisition of control of the tour operator Fjord Tours. In the notification, the VY Group stated that it could not get in a position to refuse competitors of Fjord Tours access to the Flåm Railway. During its investigation of the notified transaction, the NCA was made aware that the VY Group had given notice that it would terminate a contract regulating the Flåm Railway ticket sales. This information was relevant for the NCA’s assessment of whether the VY Group could get in a position to control ticket sales to the Flåm Railway.

The Norwegian government and the Norwegian Competition Authority have adopted several procedural positions related to the Covid-19 pandemic, the three key positions being: (i) Extension of all deadlines in merger cases with 15 working days – currently a proposal expected to enter into force very soon. (ii) The Norwegian Competition Authority has stated that they may revive and adopt price regulation pursuant to the Price Policy Act if necessary to prevent that someone takes advantage of the crisis by charging unreasonable prices for important goods and services. (iii) The NCA and ESA have subscribed to the ECN joint statement on enforcement of 23.03.20 stating inter alia: “The ECN understands that this extraordinary situation may trigger the need for companies to cooperate in order to ensure the supply and fair distribution of scarce products to all consumers. In the current circumstances, the ECN will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply. […] At the same time, it is of utmost importance to ensure that products considered essential to protect the health of consumers in the current situation (e.g. face masks and sanitising gel) remain available at competitive prices. The ECN will therefore not hesitate to take action against companies taking advantage of the current situation by cartelising or abusing their dominant position.”

The Commission released 01.04.20 new guidance for public buyers to help public authorities use the flexibility provided by the EEA’s public procurement framework to ensure rapid and efficient purchases. The possibilities range from considerably shortening the public procurement process to emergency procurement that is not subject to EEA procedural requirements and does not require the prior publication of tender notices. The guidance also recommends that public buyers consider alternative innovative solutions and ways of engaging with the market. Visit the guidance paper here.

The ESA will follow three main rules in assessing state aid: (i) Article 61(2)(b) EEA enables the EEA EFTA States to compensate specific companies or specific sectors (in the form of schemes) for the damage directly caused by exceptional occurrences, such as those caused by the Covid-19 outbreak. This includes measures to compensate companies in sectors that have been particularly hard hit (such as transport, tourism and hospitality) and measures to compensate organisers of cancelled events for damages suffered due to the outbreak. The Commission has made a template for notifications under Article 61(2)(b). (ii) In case of particularly severe economic situations, such as that resulting from the Covid-19 outbreak, the state aid rules allow the EEA EFTA States to grant support to remedy a serious disturbance to their economy. This is foreseen under Article 61(3)(b) EEA. The Commission has adopted a Temporary Framework to enable the EU Member States to further support the economy during the current outbreak. The Commission has also made a template for notification under the Temporary Framework. ESA will apply the conditions set out by the Commission in the Temporary Framework when assessing the compatibility under Article 61(3)(b) EEA. (iii) The Rescue Aid and Restructuring Guidelines, which are based on Article 61(3)(c) EEA, enable states to help companies cope with liquidity shortages and needing urgent rescue aid. In addition, companies that are not (yet) in difficulty can also receive such support, if they face acute liquidity needs due to exceptional and unforeseen circumstances such as the Covid-19 outbreak. Visit the ESA Covid-19 webpage (with links to the Commission’s framework) here.

ESA approved 26.03.20 a guarantee scheme in Norway to ensure access to liquidity for micro, small and medium-sized enterprises (SMEs). Through the scheme, the Norwegian authorities will provide public guarantees on investment and working capital loans granted to SMEs by credit institutions in order to meet immediate liquidity needs. The total amount of loans secured by the guarantees can be up to NOK 50 billion. The Norwegian authorities notified the scheme on 25.03.20. ESA approved the scheme taking into account the State Aid Temporary Framework to support the economy in the context of the COVID-19 outbreak adopted by the Commission on 19.03.20. Visit the decision here.

The European Data Protection Board adopted 19.03.20 a Covid-19 statement stressing that “…data protection rules (such as the GDPR) do not hinder measures taken in the fight against the coronavirus pandemic. The fight against communicable diseases is a valuable goal shared by all nations and therefore, should be supported in the best possible way. It is in the interest of humanity to curb the spread of diseases and to use modern techniques in the fight against scourges affecting great parts of the world. Even so, the EDPB would like to underline that, even in these exceptional times, the data controller and processor must ensure the protection of the personal data of the data subjects“. The statement touches on the following issues: (i) Lawfulness of processing, also in an employment context, and (ii) The use and lawfulness of the processing of telecom data, such as location data. Visit the statement here.

The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, issued 27.03.20 a Statement on the implications of the COVID-19 pandemic on the deadlines for publishing financial reports which apply to listed issuers under the Transparency Directive. The Statement recommends National Competent Authorities to apply forbearance powers towards issuers who need to delay publication of financial reports beyond the statutory deadline. At the same time, the Statement underlines that issuers should keep their investors informed of the expected publication delay and that requirements under the Market Abuse Regulation still apply. Read more here.