The COVID-19 pandemic has required higher education providers, in particular universities, to act in unprecedented ways to protect the health and safety of their staff, students and wider communities and to mitigate the long-term effects of the pandemic on their ability to provide education services.

There are a wide range of potential circumstances in which cartel risks might arise, and higher education providers should be conscious of these in any conduct, interaction or sharing of information among providers, even where it is perceived to be for the 'public good'.

We have outlined some of the key cartel risk considerations for Australian higher education when responding to COVID-19 pandemic impacts.

Challenges faced by education providers and measures taken

Higher education providers, in particular universities, are facing significant risks to their financial viability as a result of the COVID-19 pandemic. University student numbers are uncertain as a growing number of people throughout Australia and overseas face financial hardship. In addition, higher education providers are facing increasing social concern regarding physical contact and proximity in an on-campus learning environment.

Universities are exempt from the present bans on gatherings, with the National Cabinet expressing the view that universities and higher education 'should continue at this time' (with appropriate social-distancing principles in place). However remote and online learning is being encouraged. In the face of growing concerns from staff, students and the wider community about social distancing needs and the rate of infection of the COVID-19 virus, a number of universities across Australia put in place 'emergency measures'.

Examples of emergency measures implemented by universities include:

• Moving lectures and tutorials online, so that staff and students are no longer required to attend those classes in person;
• Restricting access to campuses to essential staff only;
• Postponing major student events, including graduations;
• Offering alternative assessments for supervised exams requiring personal attendance;
• Implementing changes to grading systems (for example, by introducing 'non-graded pass' outcomes);
• Suspension of student placements and clinics;
• Rescheduling term, semester and holiday dates;
• Waiving administrative fees related to the deferral of study;
• Establishing support funds to support students experiencing financial hardship; and
• Cancelling global study and student exchange experiences.

Though many universities are shifting to online delivery of courses, it has been stressed that education must still meet high quality standards, regardless of the location of the student and the mode of delivery. For more information, see our article on the regulatory issues that universities must consider in a move from face-to-face delivery to online and distance learning modes of study.

It is anticipated these and any additional measures will continue until the COVID-19 pandemic has passed, and the social distancing and mass gathering restrictions that imposed by the Australian Government and state and territory governments are lifted.

Higher education providers must be aware of risks of cartel conduct through any discussion or coordination of COVID-19 responses

It is critical to remember that, certain arrangements between higher education providers, including public universities, are at risk of constituting cartel conduct under the Competition and Consumer Act 2010 (Cth) (CCA). There is no automatic 'public interest' exemption to Australian competition law where businesses coordinate or act collectively, so higher education providers must be aware of the legal position, types of conduct raising risks and the options for managing cartel risks.

The legal position remains that, absent a relevant exemption, defence or authorisation, any of the following types of arrangements or understandings between competitors remain a criminal offence under the CCA:

• Price fixing
• Dividing or allocating customers, suppliers or territories
• Rigging bids
• Restricting the production, supply or acquisition of goods / services.

In the ordinary course of business, higher education providers, including public universities, operate at arms-length from each other, and act independently and as competitors.

Unilateral decisions to take particular actions that are not the result of communication and agreement with a competitor are not cartel conduct. For example, an individual voluntary decision by a provider to defer fees will not amount to cartel conduct. Alternatively, is the provider complying with a law or direction from the government or a relevant authority in taking the relevant action? If this is the case, even if competitors are also required to take the same or similar action, it cannot without more amount to cartel conduct.

However, higher education providers must exercise caution with respect to any coordination or collective arrangements between themselves to respond to or mitigate the impacts of the COVID-19 pandemic to ensure that they do not constitute any of the above types of cartel conduct. To the extent that conduct might involve a high degree of information sharing and other interaction (particularly where it involves a large number of competitors), higher education providers should also be cognisant of risks under the prohibitions against concerted practices and / or arrangements which have the purpose, effect or likely effect of substantially lessening competition

Examples of competition issues arising in relation to discussing or implementing COVID-19 responses include:

• Information sharing between higher education providers, for example the incidence of financial difficulties faced by fee payers, whether they be students or parents, and which classes of students would benefit most from financial relief arrangements;
• Discussions between higher education providers about arrangements they have, or are proposing to put in place in response to the COVID-19 pandemic, including any discussions or arrangements to offer concessions or relief (including fee deferrals and waivers) to students or parents who may face financial distress or hardship;
• Any agreement or understanding between higher education providers about whether or not they will participate in arrangements in response to the COVID-19 pandemic (ie one provider agreeing not to participate so that another provider will benefit);
• Any agreement or understanding between higher education providers about how they will continue to provide and deliver education services when students are unable to congregate (eg through online delivery);
• Any agreement or understanding between higher education providers to cease providing education services for a period of time (ie all providers in one location agreeing to close down for a term or semester) or that providers will restrict their offering to particular types of services or to particular types of students.

Mitigating risks

If a cartel risk applies and there is no obvious exemption or defence applicable, it is possible to apply to the ACCC for authorisation of conduct if it would result in a 'net public benefit' (ie, if the public benefit is likely to outweigh any anti-competitive detriment). Authorisation provides protection to businesses to engage in activities that would otherwise be illegal cartel conduct, and can also be used to offer additional protection for other competition law prohibitions that may be triggered by the same conduct.

The ACCC has discretion to grant 'interim authorisation' to permit conduct to occur before a decision on final authorisation is reached. In the midst of this global health crisis, the ACCC is authorising on an urgent basis coordination between competitors that is necessary and in the public interest at this time that would ordinarily be prohibited under the Competition and Consumer Act 2010 (Cth).

The ACCC is 'highly conscious' of the impact of the COVID-19 pandemic on Australian consumers and businesses and has 'adjusted the focus of its regulatory activities accordingly'. Given the extraordinary circumstances the community faces, the ACCC has quickly responded and commenced processing COVID-19 related urgent interim authorisation applications in much shorter time frames to reflect the rapid and urgent responses that are required. This is a welcome development. The ACCC has been processing and making decisions on appropriate interim authorisation applications in a few days and, if the circumstances warrant, as little as 24 - 48 hours.

Urgent interim authorisations have been granted in a range of contexts across industries including banking and finance, energy, life sciences and pharmaceutical sectors, to enable businesses to coordinate and cooperate to ensure the continuity of supplies and services and the protection of consumers against the effects of the COVID-19 pandemic.

Higher education providers may wish to explore interim authorisation where potential coordination of conduct and information sharing is necessary to respond to the COVID-19 emergency, and where that conduct gives rise to identifiable public benefits.

The types of interim authorisations likely to be granted on an urgent basis to facilitate coordinated responses to COVID-19 issues include applications that:

• Do not go further than necessary to achieve the public benefit – it may be difficult, for example, to convince the ACCC of the necessity for conduct involving price fixing;
• Cannot easily be achieved through alternative means not requiring co-ordination between competitors;
• Would give rise to relatively obvious and meaningful public benefit or benefits;
• Are directed towards things such as continuity of supply or parity of access and aid to the most vulnerable members of the community to COVID-19 related impacts;
• Are temporary and appropriately limited in time, in that it is only intended to be undertaken during the authorised period in which the COVID-19 pandemic continues in order to mitigate and/or reduce the effects of the pandemic (including for example on the viability of the provider(s); and
• Are voluntary, in that any participant may elect to opt out of the conduct at any time during the authorised period and they do not compel third parties that have not consented to engage in the conduct.

Providers should also be aware that interim authorisations being granted by the ACCC are in many cases granted subject to conditions, particularly relating to notification and reporting obligations.

The ACCC has confirmed urgent interim authorisation applications to allow organisation to coordinate some conduct during the crisis are an 'important priority', and has urged parties to engage with the ACCC as early as possible if they anticipate submitting an application.

If you would like further assistance in managing cartel and other competition law risks in relation to your COVID-19 responses, please contact one of our competition and consumer law experts who are advising clients in a broad range of sectors on managing these risks.