Navigating the new normal

COVID-19: competition, procurement and state aid


All content on this page is correct as of April 7, 2020

Understandably it might not be at the forefront of your minds but we thought it important to highlight that there have been some public announcements regarding UK competition law, the EU public procurement and State Aid frameworks during the COVID crisis.

The public announcements provide guidance and may go a little way to ease pressure on organisations which need to operate in compliance with these legal regimes. Charities, social enterprises and not-for-profits should be aware of these positive developments and apply them to their specific circumstances if possible.

The UK’s Competition and Markets Authority (CMA) has issued guidance on permissible collaboration between competing organisations in the context of COVID-19 and the supply and delivery of essential goods and services. The initial press focus was on permitted supermarket collaboration following the initial panic regarding security of food and home supplies. However, the generic CMA guidance sets out the criteria for compliant collaboration/cooperation between competing organisations, and makes clear that necessary joint working for key goods and services will generally be deemed compliant with competition law. This is an area of law where competitors might have gone through a deal of hand-wringing absent a clear steer from the CMA. The guidance equally applies to charities and other organisations which may usually see themselves as competitors for funding but share common objectives and want to make a positive difference.

The European Commission has released a Communication aimed at public authorities to highlight the flexibility provided by the EU’s public procurement framework to ensure the quick and efficient purchases of necessary equipment, services and works in emergency situations such as the COVID-19 public health crisis. The ‘extreme urgency’ route has been difficult to justify in the past but here can enable rapid solutions from a considerable shortening of the public procurement process to emergency procurement that is not subject to EU procedural requirements at all (such as the prior publication of tender notices). The Communication also recommends public buyers considering alternative innovative solutions with direct market engagement. Charities and social enterprises providing services into the health and social care sector in particular might find that they are being asked to supply in different ways and could consider approaching purchasing bodies directly particularly if they have an innovative proposal to assist with pressure points.

Turning to EU state aid, central Government and local authorities are still very mindful of their own continuing compliance with the EU state aid regime during the post Brexit transition period. It seems COVID-19 does not change that. In particular, we understand charities and social enterprises are being asked in turn to confirm compliance with receipt of de minimis levels of public funding. This is possibly set against the backdrop of evolving Government policies regarding public financial support for all businesses but with a focus on grants and other financial benefits to SMEs which are currently particularly vulnerable to impacted cash flow.

In the meantime, the European Commission has approved the UK’s “Coronavirus Business Interruption Loan Scheme” (or CBILS) under a temporary framework to support the EU economy as a whole (the Temporary Framework) in the context of the COVID-19 outbreak. The Temporary Framework is in addition to the existing flexible application of the State Aid rules in times of crisis. For example, Member States (and still including the UK) can make changes in favour of organisations by offering loans at favourable interest rates, deferring taxes or subsidising employee salaries on a temporary basis. In the UK we are seeing the widespread ‘furloughing’ of staff at 80% of salary which has provided much needed relief for charities in the immediate terms. CBILS itself offers direct grants to support SMEs affected by the coronavirus outbreak (initially up to the end of September 2020) and the scheme has an overall budget of £600 million.

A sector-specific package for charities had not been announced at the time of writing this article but might yet be forthcoming.

For further information, see:

https://www.gov.uk/government/publications/cma-approach-to-business-cooperation-in-response-to-covid-19

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52020XC0401(05)&from=EN

https://ec.europa.eu/commission/presscorner/detail/en/ip_20_527


This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of April 7, 2020.

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