The Legal Impacts of COVID-19 in the Travel, Tourism and Hospitality Industry

THE IMPACT OF COVID-19 ON COMPETITION LAW 103 II. THE OLD WORLD: PRE-COVID-19 Let us begin with a quick look at the tourism industry before COVID-19, from a competition law point of view: the tourism sector is one of the most important sectors of the globalised economy with roughly 10% of GDP. It has been a well-oiled machine in a reasonably competitive state. Many players have offered affordable holiday packages, allowing up to 1.6 billion people to travel for holidays. It has an international agency watching over it. The democratisation of foreign holidays is a welcome phenomenon, but it has also raised questions unrelated to competition law and policy. Notably, mass tourism is accused of harming the environment, and, as we know, sustainability is one of the essential policy goals, especially under the current European Commission. There were (and still are) competition investigations in the sector, targeting Internet platforms and air travel reservation systems. Generally, however, the industry is in a very competitive state, with many players and pressure on prices, which benefits consumers. Accordingly, protecting consumer welfare is the key objective of any competition law and policy. II.1. Methodology A few words on methodology, for those who do not deal with competition matters on a daily basis: competition law is case-law. It is case–specific and developed by regulators and competition authorities through work on individual cases. From time to time, they issue guidelines that summarise the practice or guidance for specific situations, such as the Temporary Frameworks that the European Commission has been releasing in recent weeks. Competition law is also very fact-specific, which explains why there is rarely one case resembling another. What does this mean for companies in the tourism industry? Whenever a company plans to engage in a new pattern of conduct, whether alone or with others, it should ascertain compliance with competition rules. The fact that there has never been a decision prohibiting exactly that pattern of conduct is no guarantee of lawfulness. Given that competition law is fact-specific and driven by economics, it is very dynamic in evolving. A company can easily create its own precedent if it is not careful in assessing its conduct in advance. An example from practice albeit from a different sector: in recent years, competition authorities in the US and Europe have adopted a position that socalled “reverse payment patent settlement agreements” between the supplier of a branded pharmaceutical drug (“originator”) and a generic undertaking are anticompetitive. The underlying scenario was quite simple: the originator

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