ACCC relaxes rules for medical equipment suppliers and supermarkets

Charles McConnell

25 March 2020

Australia’s competition authority will allow medical technology companies to coordinate the supply and potential manufacture of medical equipment needed to deal with the COVID-19 pandemic.

The Australian Competition and Consumer Commission today granted interim authorisation to the Medical Technology Association of Australia, allowing “its members and other groups, such as suppliers or distributors of medical equipment, to share information between each other, coordinate orders and supply requests, prioritise requests, and jointly tender to supply COVID-19 medical equipment.”

The association’s members include about 100 companies across the medical technology sector and the authorisation applies to ventilators, testing kits, personal protective equipment and other supplies needed to handle the COVID-19 pandemic.

“Our decision will help companies urgently address potential shortages or other constraints on the supply of crucial medical equipment,” ACCC chair Rod Sims said. “This supports government efforts to ensure governments and health services are able to provide a coordinated response to the pandemic.”

The authority explained that the MTAA members and others will also be able to keep the federal, state and territory governments, as well as relevant health agencies, up to date on supply issues.

“Medical technology companies will now be able to roll out a coordinated plan for supplies of medical equipment nationwide, which is likely to be crucial in assisting Australia’s response to COVID-19,” Sims said.

The ACCC granted interim authorisation on Wednesday morning, just one day after receiving the association’s application. The authority said it will now seek feedback on that decision, as well as the application for final authorisation for a period of 12 months.

Clayton Utz partner Michael Corrigan, who acted for the association, said it seems “sensible in the circumstances to allow the various suppliers to coordinate to meet the urgent needs at the moment.”

Supermarkets

The ACCC on Monday granted interim authorisation to supermarket chains Coles, Woolworths, Aldi and Metcash – as well as any other grocery retailer that wants to participate – allowing them “to coordinate with each other when working with manufacturers, suppliers and transport and logistics suppliers” during the health crisis.

The supermarkets will not be allowed to agree on retail prices for products, the ACCC noted.

The authorisation aims to ensure that consumers, “including those who are vulnerable or live in rural and remote areas” have reliable and fair access to fresh food, groceries and other household items, the authority said in a statement.

“Australia’s supermarkets have experienced unprecedented demand for groceries in recent weeks, both in store and online, which has led to shortages of some products and disruption to delivery services,” Sims said. “This is essentially due to unnecessary panic buying, and the logistics challenge this presents, rather than an underlying supply problem.”

The ACCC chair noted that individual supermarket chains have individually taken several steps to mitigate issues caused by panic buying, but he said allowing them to collaborate “to discuss further solutions is appropriate and necessary at this time”.

The interim authorisation applies to agreements that result from recommendations by a new “Supermarket Taskforce”, which the Department of Home Affairs has convened to resolve issues impacting supermarkets. The taskforce includes representatives from government departments, supermarkets, the grocery supply chain and the ACCC.

The authority explained that grocery retailers, suppliers, manufacturers and transport groups can opt out of any agreement.

The ACCC will conduct a public consultation period on the interim authorisation, as well as the application for final approval to engage in the collaborative conduct for six months.

Last week the authority granted interim authorisation to allow Australia’s banks to work together in providing a relief package for small businesses hit by the COVID-19 pandemic, which includes deferring of loan payments for those owing less than A$3 million (€1.67 million).

Paul Schoff, a partner at MinterEllison in Sydney, said “the ACCC has geared up very quickly to process COVID-19-related urgent interim authorisation applications in much shorter time frames than normal, to reflect the rapid and urgent responses that are required where coordination replaces competition.”

“This has been a very welcome development,” he added.

While the ACCC’s approach is more restrictive than in some other jurisdictions, where competition laws have been more broadly suspended, it “has been pretty well-signalled to antitrust professionals and the business community generally,” Schoff said. “We have seen little sign of antitrust concerns ‘chilling’ socially-valuable cooperation.”

Sharon Henrick, a partner at King & Wood Mallesons in Sydney, said the ACCC has granted the interim authorisations for “suppliers to cooperate for the public good in a challenging economic environment”, noting that the authorisations are only temporary.

Counsel to the Medical Technology Association of Australia

Clayton Utz

Partner Michael Corrigan in Sydney is assisted by Justin Chen

Counsel to Coles Group

Allens

Partner Rosannah Healy in Melbourne

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