Covid-19 and crisis cartels – can cartels be good for recovery?

THE fact that this question is being asked may come as a surprise to those who have witnessed stringent anti-cartel enforcement since the inception of the Competition Act 2010 (CA 2010).

However, in light of the pronounced global downturn brought on by the Covid-19 pandemic and the prospect of high levels of unemployment, potential social instability and low or volatile levels of demand, should the government facilitate the formation of crisis cartels by distressed firms as a temporary measure to weather the crisis? Where governments do not have the capacity and resources to fully support alternative public policy measures to improve market outcomes (such as subsidisation), crisis cartels could be an additional or alternative strategy to aid firms and sectors in distress.