Collaborative Agreements in Times of Crisis

Abstract

This master thesis deals with cooperation agreements formed during economic times of crisis. These are referred to as crisis cartels and aim to find a collective solution to challenges associated with periods of crisis, particularly focusing on issues like excess capacity. The thesis aims to assess whether crisis cartels can be compatible with TFEU Article 101. The study is theoretical in nature and uses the COVID-19 pandemic as a case study to analyze and understand certain aspects related to it and crises in general. This thesis is conducted using the legal doctrine method to determine the current legislation in TFEU Article 101(1) and 101(3). Additionally, a comparative method has been applied to compare the outcomes of relevant cases and the reasoning behind them in order to elucidate the factors used as the basis for the exemption in TFEU Article 101(3). The thesis examines the conditions that must be met for a crisis cartel to be exempted from the prohibition in TFEU Article 101(1). In this context, it investigates whether the application of the provision has been consistent over time. Furthermore, it explores how economic crises, especially the COVID-19 pandemic, affect the internal market and whether crisis cartels can promote welfare. Finally, it investigates how the procedure for evaluating crisis cartels during times of crisis can be optimized to reduce uncertainty and transaction costs for companies. The thesis concludes that crisis cartels can, in principle, be considered within the scope of TFEU Article 101(1) since they typically aim to restrict competition. The legal analysis also concludes that crisis cartels can be exempted under TFEU Article 101(3) if certain conditions are met, making them compatible with TFEU Article 101. Furthermore, it is concluded that the assessment of the legality of crisis cartels today is likely to undergo a more stringent and comprehensive analysis of the economic benefits associated with such agreements. The economic analysis suggests that economic crises like COVID-19 can lead to significant shifts in supply and demand, potentially resulting in structural overcapacity. Crisis cartels are considered capable of restoring market balance and promoting welfare during crises. The integrated analysis finds significant transaction costs associated with the uncertainty in assessing the legality of crisis cartels. Finally the thesis presents a policy recommendation encouraging the Commission to adopt a general group exemption regulation aimed to facilitating the establishment of crisis cartels and ensuring greater legal certainty. This would ensure a more efficient assessment process of crisis cartels.