The Competition and Markets Authority (CMA) is investigating four pharmacies and convenience stores for suspected breaches of competition law. The investigations, under Chapter II of the Competition Act 1998 (CA 98), relate to suspected charging of excessive and unfair prices for hand sanitiser products to consumers during the COVID-19 pandemic.
On 20 March 2020, the CMA sent an open letter to the pharmaceutical and food and drinks industries following reports that a minority of companies in this sector were "seeking to capitalise on the current situation by charging unjustifiably high prices for essential goods or making misleading claims around their efficacy". The CMA warned that it would use its wide-ranging competition and consumer powers to tackle what the CMA described as "bad behaviour".
The CMA received a huge number of COVID-19 related complaints and set up a specific COVID-19 taskforce to tackle issues relating to the pandemic. Updates from the taskforce revealed that numerous complaints arose from unjustifiable price increases, with the largest price increases concerning hand sanitiser, which had a median rise of just under 400%. The CMA has already started its initial investigation, comprising information gathering, information requests and analysing and reviewing information gathered and this will continue to run through July.
What does competition law say?
The Chapter II prohibition of the CA 98 prohibits undertakings from abusing a dominant position in a market if it may affect trade within the UK. Conduct may constitute such an abuse if it consists in "directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions". It is not clear at this stage on what basis the companies concerned are suspected of dominance in a market. It will also be interesting to see how the CMA approaches the question of excessive pricing: such cases are notoriously difficult to bring.
What happens next?
The investigation is still at an early stage and the CMA has not made a finding of abuse, or even issued a statement of objections setting out its preliminary view. Any such action is unlikely before the end of the year, if it occurs at all. It is also possible that the CMA will not take the matter any further.
Click here for the case update.
For more information contact Peter Willis or Patricia Wing.