Covid-19: Expansion of block exemption for the healthcare sector

On 8 April 2020, the Minister of Trade, Industry and Competition published amendments to the Covid19 Block Exemption for the Healthcare Sector 2020 Regulation issued on 19 March 2020.

The key purpose of the amendments is to expand the current categories of practices and agreements that have been exempted from section 4 and 5 of the Competition Act to also apply to manufacturers and suppliers of medical and hygiene supplies used in the testing, prevention or treatment of Covid-19.

This is an important development in light of the number of firms that manufacture and supply these products (or inputs used to manufacture these products), as well as the large number of firms that have chosen to enter into this market in response to the pandemic. As demand has grown exponentially for these products in the last few weeks, it appears that market participants may have proactively approached the relevant Ministers to request that the scope of the original exemption be expanded.

In terms of the amendment, "medical and hygiene supplies" refers to goods and services that are used to maintain hygiene in order to preserve health and prevent the spread of diseases and include, but are not limited to, the goods and services that are used for the sterilisation of equipment, safe disposal of medical waste, hand hygiene and water sanitation, prescription and non-prescription medication, bandages, gauze, isopropyl alcohol, ethyl alcohol, disinfectants and anti-bacterial products.

The exemption applies to agreements or practices between manufacturers and suppliers of medical and hygiene supplier with the sole purpose of:

  • communicating with each other in relation to the availability of medical and hygiene supplies; and

  • coordinating the procurement and distribution of medical and hygiene supplies.

In line with the Healthcare Block Exemption issued in March, this exemption only applies if the agreement or practice is undertaken at the request of, and in coordination with, the Department Trade, Industry and Competition or the Department of Health, and specifically excludes communication and agreements in respect of prices unless specifically authorised by the Minister of Health. Furthermore, all relevant players in the healthcare sector who participate in any agreements or practices falling within the scope of the Healthcare Block Exemption must keep minutes of meetings held and written records of such agreements or practices.