The Covington US and EU Competition/Antitrust teams will be updating you regularly, through the Covington Competition blog, on the competition/antitrust law implications – both procedural and substantive – of the COVID-19 crisis in the US and the EU. This is our update for Tuesday 14 April. Today’s new updates as compared to the previous update are highlighted – these are the headlines:
- Today’s US updates:
- On 13 April 2020, the agencies issued a joint statement announcing that they are on alert for collusion, coordination, and certain unilateral conduct that could harm workers, including doctors, nurses, first responders, and those who work in grocery stores, pharmacies, and warehouses. Prior to the COVID-19 emergency, the agencies have challenged such practices as wage-fixing, no-poach agreements, non-competes, and exchanges of competitively sensitive information that could harm competition for labor. The announcement emphasized that, while the DOJ and FTC continue to recognize the need for pro-competitive collaborations during the crisis, they will pursue action against those who “may use it as an opportunity to prey on American workers by subverting competition in labor markets“. Skip to relevant section.
- Today’s EU updates:
- In an interview with the Financial Times published on 12 April 2020, European Commission Executive Vice President Margrethe Vestager in charge of Competition declared that the Commission has “no issues” with EU Member States buying shares in companies to prevent takeovers by foreign acquirers, in particular of state-backed enterprises. She announced that the Commission is going to address this position in a guidance paper probably in June of this year. In a separate post, the Covington team will be commenting on how this statement impacts on key legal issues such as free movement of capital and State Aid. We will also seek to explore how this statement relates to the European Champions discussion and the debate that more “critical” goods need to be manufactured in the EU. Skip to relevant section.
- The Commission has cleared a further number of State aid requests by Member States. Skip to relevant section.
1. Mergers / Filings
- Early Termination Resumes: On Friday 27 March, the Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ) announced that they will resume processing requests for early termination of the 30-day waiting period under the Hart-Scott-Rodino (HSR) Act. The agencies have cautioned that early termination will be granted in fewer cases, and more slowly, than under normal circumstances. The announcement also emphasized that the agencies will continue to monitor circumstances, and may need to further modify the early termination policy.
- Electronic HSR Filings: The FTC and DOJ are continuing to accept HSR merger filings through a temporary electronic filing system that was launched on March 17th. Hard-copy filings will not be accepted during this period.
- Extended Timing Agreements: For mergers currently pending or that may be proposed, the DOJ is requesting, as part of any timing agreement, that merging parties afford it an additional 30 days to complete its review of transactions after the parties have complied with document requests. (Although the DOJ has not stated it expressly, this likely means 30 days in addition to whatever period of time the parties have agreed to delay their closing beyond the 30-day post-compliance period already provided for by the HSR Act itself. Thus, for example, if the parties have committed not to close for 60 days after compliance, the DOJ will request that they extend that commitment to 90 days.) The DOJ has cautioned that it may revisit its timing agreements with merging parties in light of further developments.
- No In-Person Meetings & Depositions: Meetings at both agencies will be conducted by phone or video conference (where possible). The FTC has announced that Bureau of Competition meetings, including Front Office meetings, will be held remotely until further notice. And, the DOJ has postponed all scheduled depositions, and they will be rescheduled using secure videoconferencing capabilities.
- DOJ Proposal to Extend Merger Timelines and Pause the Statute of Limitations for Price-Fixing Cases: According to a press report, the DOJ hopes to have included in the next round of pandemic legislation, a proposal that would let it and the FTC add 15 days onto merger timelines during emergencies, such as disease outbreaks, natural disasters, or government shutdowns. The proposal also seeks to toll the statute of limitations for price-fixing and bid-rigging cases for at least six months because of the pandemic.
2. Government Investigations / Compliance Considerations
- Antitrust Laws During Public Health Emergencies: The tremendous uncertainty created by the current public health crisis may increase the opportunity and temptation to coordinate with others in the industry or substantially increase prices – but the antitrust laws still apply in full. There is no collusion exemption for public health emergencies. For example, DOJ recently announced its intention to “hold accountable anyone who violates the antitrust laws of the United States in connection with the manufacturing, distribution, or sale of public health products.” Read more here.
- Antitrust Counseling: The antitrust laws allow for beneficial, pro-competitive collaborations and exchanges of information between competitors, and the needs of responding to a health crisis or other public emergencies are relevant to that determination. Nevertheless, the antitrust laws apply, and it remains prudent to obtain antitrust counsel regarding communications with competitors and other competitively sensitive activities.
- Justice Department and Federal Trade Commission Announce Expedited Antitrust Procedure and Guidance for Coronavirus Public Health Efforts: In a joint statement issued on March 24th, the DOJ and FTC announced that they will aim to respond expeditiously to all COVID-19-related DOJ Business Review Process and Federal Trade Commission Advisory Opinion Process requests, and resolve those addressing public health and safety within seven (7) calendar days of receiving all necessary information. The expedited procedure requires, among other things, that an applicant provide the agency an explanation of how the arrangement is related to COVID-19 and a description of the nature and rationale of the proposal. This expedited procedure is for use solely for coronavirus-related public health efforts and may be invoked at the option of the requestor, in lieu of the agencies’ standard procedures for handling requests for advice. The DOJ issued its first business review letter under the expedited procedure on 4 April 2020, five days after receiving a request related to a collaboration aimed at expediting and increasing manufacturing, sourcing, and distribution of personal-protective equipment and coronavirus-treatment-related medication. The agencies will also work quickly to process joint venture filings under the National Cooperative Research and Production Act (as amended by the Standards Development Organization Advancement Act).
- Ongoing Investigations: Both DOJ and FTC are conducting a matter-by-matter review of investigations to consider appropriate modifications of statutory or agreed-to timing. Parties and their counsel should expect the agencies to be in touch to discuss proposed modifications.
- FTC Reiterates that Emergency Conditions Will Not Alter Traditional Review Procedures: On 6 April 2020, the FTC published a new blog post that emphasized that the “substance of [their] work remains the same” and “’emergency’ exceptions to the antitrust laws are not needed.” In particular, the FTC stated that its analysis of remedies, including divestitures, will continue to focus on the ability of proposals “to maintain or restore competition in the markets of concern.” To aid parties in that analysis, the blog highlighted the guidance it published in 2019: “A Guide for Potential Buyers: What to Expect During the Divestiture Process.”
- Price Gouging: Several states have moved to limit price gouging during the COVID-19 pandemic. For example, the Massachusetts Attorney General issued an emergency regulation banning price-gouging in certain products necessary to public health and safety in light of the corona virus pandemic.
- DOJ and FTC Warn Against Anticompetitive Conduct in Labor Markets: On 13 April 2020, the agencies issued a joint statement announcing that they are on alert for collusion, coordination, and certain unilateral conduct that could harm workers, including doctors, nurses, first responders, and those who work in grocery stores, pharmacies, and warehouses. Prior to the COVID-19 emergency, the agencies have challenged such practices as wage-fixing, no-poach agreements, non-competes, and exchanges of competitively sensitive information that could harm competition for labor. The announcement emphasized that, while the DOJ and FTC continue to recognize the need for pro-competitive collaborations during the crisis, they will pursue action against those who “may use it as an opportunity to prey on American workers by subverting competition in labor markets”.
3. Antitrust Litigation
- Courts Slowing Cases: Courts around the country are reacting to the public health crisis by closing facilities and postponing court activities. The Northern District of California, for example, stopped the high-profile Capacitors antitrust case in the middle of trial out of concerns for the health of the jurors and other participants. That court, like many others, is also postponing new trials until 1 May 2020 at the earliest, and it also announced that all pending civil motions—including those in antitrust cases—will be decided without in-person hearings. The Chief Judge of the New York State Courts entered an order on March 22 that puts a stop to all non-essential filings effectively immediately. Additionally, the deadline for commencement, filing, service of any legal action, notice, motion or other process or proceeding prescribed by any procedural law of NY State, is tolled until 19 April 2020.
1. State Aid
- Process: As Member States are putting financial support measures in place to support their economies, a wave of state aid notifications and approvals materialised over the last weeks. DG COMP opened a 24/7 hotline for public authorities to raise questions or request advice.
- Substantive appraisal:
- On 19 March 2020, the Commission has adopted its Temporary State aid Framework to support the economy in the current COVID-19 framework. It will provisionally be in place until the end of December 2020. It provides for five types of aid:
- Direct grants, selective tax advantages and advance payments: Member States will be able to set up schemes to grant up to EUR 0.8 million (which is higher than the initially proposed EUR 0.5 million) to a company to address its urgent liquidity needs.
- State guarantees for loans taken by companies from banks: Member States will be able to provide state guarantees to ensure banks keep providing loans to the customers who need them.
- Subsidised public loans to companies: Member States will be able to grant loans with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.
- Safeguards for banks that channel state aid to the real economy: Some Member States plan to build on banks’ existing lending capacities, and use them as a channel for support to businesses – in particular to small and medium-sized companies. The framework makes clear that such aid is considered as direct aid to the banks’ customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.
- Short-term export credit insurance (which was not provided for in the draft proposals): The framework introduces additional flexibility on how to demonstrate that certain countries are not-marketable risks, thereby enabling short-term export credit insurance to be provided by the state where needed.
- On 27 March 2020, the Commission consulted Member States on a draft proposal to extend the state aid temporary framework by adding five types of aid measures:
- Three measures that are specific to the COVID-19 crisis : aid for COVID-19 related research and development; aid for the construction and upgrading of testing facilities for products relevant to tackle the COVID-19 outbreak, such as vaccines, medical equipment or devices, protective material and disinfectants; aid for the production of products relevant to tackle to coronavirus outbreak. Member States can also grant no-loss guarantees to provide incentives for companies to invest. The EC added that even more aid can be granted if Member States cooperate across borders;
- Deferral of tax payments;
- Suspension of employers’ social security contributions and wage subsidies for employees.
- On 27 March 2020, the Commission has temporarily removed all countries from the list of “marketable risk” countries under the short-term export-credit Communication. This enables Member States to make available public short-term export credit insurance in light of the increasing insufficiency of private insurance capacity for exports to all countries in the current coronavirus crisis.
- On 3 April 2020, the Commission amended the Temporary Framework to enable Member States to accelerate the research, testing and production of products relevant to tackle the COVID-19 outbreak, to protect jobs and to further support the economy in the context of the outbreak. It adds five types of additional State aid and expands on the existing types of support that Member States can give to companies in need:
- Support for COVID-19 related research and development (R&D);
- Support for the construction and upscaling of testing facilities;
- Support for the production of products relevant to tackle the COVID-19 outbreak;
- Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions;
- Targeted support in the form of wage subsidies for employees.
- On 9 April 2020, the European Commission has sent to Member States a draft proposal to further extent the scope of the Temporary Framework by enabling Member States to provide recapitalisations to companies in need. Since such public interventions may have a significant impact on competition in the Single Market, they should remain measures of last-resort. They will also be subject to clear conditions as regards the State’s entry, remuneration and exit from the companies concerned, strict governance provisions and appropriate measures to limit potential distortions of competition. The Commission aims to have the amended Temporary Framework in place by next week.
- The Commission is using the full flexibility of the provisions of the Treaty to assess State aid measures:
- The decisions will mainly be based on Article 107 (3) (b) TFEU which allows the Commission to clear state aid measures that intend to remedy a serious disturbance in a Member State’s economy. The State aid decisions adopted in the last 24 hours have been based on this provision;
- The Commission also refers to Article 107 (3) (b) TFEU which allows rescue and restructuring aid. There is already a framework in place for this aid. However, very importantly, the principle of ‘one time last time’ of these guidelines does not need to apply;
- In the new Framework, the Commission also refers to the less used Article 107 (2) (b) TFEU which allows the Commission to clear state aid on the basis of an “exceptional occurrence”. This provision has been used in the past in the context of the mad cow disease crisis and the financial crisis.
- The Commission is also using the options offered by the various EU funds to support the economy. On 6 April 2020, it unlocked EUR 1 billion from the European Fund for Strategic Investments (EFSI) that will serve as a guarantee to the European Investment Fund (EIF), part of the European Investment Bank Group. The EUR 1 billion unlocked from the EFSI under the COSME Loan Guarantee Facility and the InnovFin SME Guarantee under Horizon 2020 allows the EIF to provide guarantees worth EUR 2.2 billion to financial intermediaries, unlocking EUR 8 billion in available financing and thus providing liquidity to at least 100,000 European SMEs and small mid-cap companies hit by the crisis.
- On 19 March 2020, the Commission has adopted its Temporary State aid Framework to support the economy in the current COVID-19 framework. It will provisionally be in place until the end of December 2020. It provides for five types of aid:
- State aid clearances : Since the beginning of the COVID-19 crisis, the Commission has cleared following State aid requests by Member States:
- Austria: a EUR 15 billion liquidity scheme, for the provision of aid to all undertakings in the form of: (i) direct grants, repayable advances and guarantees; (ii) State guarantees for loans and (iii) subsidised public loans;
- Belgium: a EUR 3 billion guarantee scheme for working capital and investment loans, to support companies active in the Flemish region; a EUR 50 billion loan guarantee scheme in the form of State guarantees on new short-term loans covering the liquidity needs, and thus ensuring the continuation of companies’ activities; a deferral payment measure of the concession fees owed by the Walloon airports to the Walloon authorities to support those airport operators during and after the coronavirus outbreak;
- Bulgaria: a BGN 500 million (ca. EUR 255 million) public guarantee scheme on existing or new loans to support micro, small and medium-sized enterprises;
- Croatia: a HRK 6 billion (approximately EUR 790 million) liquidity guarantee scheme for companies affected by the coronavirus outbreak and whose exports represent at least 20% of their yearly revenue; two schemes, with an overall estimated budget of EUR 1 billion, to support companies affected by the COVID-19 outbreak – under the two schemes, the public support will take the form of zero-interest loans and loans with subsidised interest rates, respectively; two schemes of EUR 1 billion in the form of zero-interest loans and loans with subsidised interest rates, respectively. The schemes aim at enhancing access to liquidity;
- Denmark: a scheme to compensate organisers for the damage suffered due to the cancellation of large events with more than 1,000 participants; a EUR 1.3 billion scheme to partially compensate self-employed workers; and a EUR 130 million guarantee scheme for small and medium-sized enterprises; and a EUR 200 million loan facility in support of the Travel Guarantee Fund (“Rejsegarantifonden”) in support of travel organisers by providing reimbursement to travellers in case of travel cancellations due to the crisis; and a DKK 40 billion (approximately €5.4 billion) scheme that compensates companies particularly affected by the coronavirus outbreak, up to a maximum of DKK 60 million (approximately €8 million) per company, for companies whose revenues declined more than 40% in the period from 9 March to 9 June 2020. The Scheme was approved under 107(2)b TFEU;
- Estonia: EUR 1.75 billion schemes to support the economy in the form of public guarantees on loans and granting of loans on favourable terms.
- France: three aid schemes for a total amount of EUR 300 billion to support the French economy, a EUR 1.2 billion French “Fonds de solidarité” scheme to support small and micro-enterprises as well as self-employed, and a scheme deferring the payment by airlines of certain aeronautical taxes, to temporarily reduce the pressure on their cash flows; a EUR 10 billion State guarantee scheme supporting the insurance of domestic trade affected by the coronavirus outbreak;
- Germany: two aid schemes to support the German economy; and a direct grant scheme not exceeding EUR 800.000 per company; an extension of the schemes to enable support to be granted by other regional authorities and promotional banks not covered by the existing measures; a State guarantee scheme supporting the insurance of trade between companies affected by the coronavirus outbreak;
- Greece: EUR 2 billion guarantees scheme for working capital loans granted by commercial banks to support companies affected by the coronavirus outbreak; and a EUR 1 billion scheme providing repayable advances to support the economy. The repayable advances will be disbursed by the Independent Authority for Public Revenue (AADE) directly to the companies, without the intervention of banks; and a EUR 1.2 billion scheme to provide grants to cover interest up to €800 000 per company on existing debt obligations (fixed-maturity loans, bonds or bank overdrafts) for a period of 3 months, with an option for extension for another 2 months;
- Hungary: A HUF 50 000 million (approximately EUR 140 million) direct grants scheme to support medium and large companies affected by coronavirus outbreak;
- Italy: a EUR 50 million aid scheme to support the production and supply of medical devices and personal protection equipment; a guarantee scheme to support SMEs; a scheme in the form of (a) state guarantees on investment and working capital loans; and (b) direct grants in the form of waiving of the applicable fee on the guarantees awarded; a EUR 200 billion guarantee scheme for new working capital and investment loans granted by banks;
- Ireland: a EUR 200 million support scheme in the form of repayable advances, to support companies;
- Latvia: a EUR 250 million loan guarantee scheme and subsidised loan scheme;
- Lithuania: a EUR 110 million guarantee scheme for working capital and investment loans granted by commercial banks to support companies affected by the COVID-19 outbreak; two schemes of EUR 150 million offered by the national promotional institution INVEGA, aiming to provide liquidity in the form of subsidised loans to companies;
- Luxembourg: a EUR 300 million support scheme, and a EUR 30 million scheme to support coronavirus related research and development (R&D) and investments in the production of products relevant to the coronavirus outbreak. Aid will be granted in the form of direct grants to enhance and accelerate research and the production of products directly relevant to COVID-19;
- Malta: EUR 350 million guarantee scheme for working capital loans granted by commercial banks to support companies affected by the coronavirus outbreak;
- Netherlands: EUR 23 million scheme for direct grants to support certain providers of social support and health care in offering services at home during the coronavirus outbreak;
- Poland: EUR 22 billion guarantee scheme for medium and large Polish companies, on existing or new loans; a EUR 700 million scheme to grant guarantees on loans and subsidized interest rates for loans to support Polish companies (the scheme will be co-financed by European Union funds under shared management, notably the European Regional Development Fund and the European Social Fund); an approx. EUR 115 million (PLN 527 million) scheme in the form of direct grants, intended to partially cover interests on loans;
- Portugal: four guarantee schemes for small and medium-sized enterprises and mid-caps with a total budget of EUR 3 billion; two schemes totalling EUR 13 billion in either direct grants or public guarantees on loans to help SMEs and large companies cover investment and working capital needs; and a EUR 20 million scheme for credits at subsidized interest rates to support companies in the fishery and aquaculture sector affected by the COVID-19 outbreak;
- Romania: an approx. EUR 3.3 billion (RON 16 billion) scheme to support SMEs in the form of (a) direct grants; and (b) state guarantees for investment and working capital loans;
- Spain: a EUR 20 billion guarantee scheme for companies and self-employed; and an “umbrella” scheme to provide liquidity support to self-employed, small and medium-sized enterprises (SMEs) and large companies in the form of direct grants, repayable advances, tax and payment advantages, guarantees on loans and subsidised interest rates for loans;
- Sweden: EUR 9.1 billion guarantee scheme on new loans granted by commercial banks to support companies, mainly small and medium-sized enterprises (SMEs); an approx. EUR 455 million (SEK 5 billion) loan guarantee scheme to support airlines which hold a Swedish commercial aviation licence, except those operating non-scheduled passenger air transport services as their main activity;
- UK: two aid schemes providing direct grants and guarantees for SMEs; a EUR 57 billion (GBP 50 billion) “umbrella” UK scheme to support small and medium-sized enterprises (SMEs) and large corporates, using all available State aid options.
- We understand DG COMP has restarted allocating case teams for new matters but continues to urge companies to postpone notifications. This is, in part, driven by the fact that all non-essential DG COMP officials are now working from home, and, on the other hand, the fact that there is a high likelihood that third parties will not respond to RFIs. Case teams are continuing to engage with parties already in pre-notification, albeit at a slower pace. On 23 March, a number of merger notifications have been formally filed (three simplified and one non-simplified) which indicates DG COMP is again ready to accept notifications. Further – mainly simplified – notifications have been formally filed in the last couple of weeks. On 8 April 2020, DG COMP has announced that it has put in place a number of additional measures to ensure business continuity in relation to merger control filings. DG COMP encourages parties to discuss the timing of notifications of transactions with the relevant case team. DG COMP stands ready to deal with cases where firms can show compelling reasons to proceed with a merger notification without delay.
- In an interview with the Financial Times published on 12 April 2020, European Commission Executive Vice President Margrethe Vestager in charge of Competition declared that the Commission has “no issues” with EU Member States buying shares in companies to prevent takeovers by foreign acquirers, in particular of state-backed enterprises. She announced that the Commission is going to address this position in a guidance paper probably in June of this year. In a separate post, the Covington team will be commenting on how this statement impacts on key legal issues such as free movement of capital and State Aid. We will also seek to explore how this statement relates to the European Champions discussion and the debate that more “critical” goods need to be manufactured in the EU.
- There is currently no clear position on on-going merger cases so the timelines on those are running. We understand the Commission is assessing whether there are ways of pausing timelines on on-going cases (beyond stopping the clock on a case-by-case basis).
- We understand a number of national authorities are taking a similar approach (no new cases, on-going cases as per normal, including pressing ahead with hearings (using multi-party video calls)). More specifically,
- the French Competition Authority has announced that it will continue to progress its merger cases. However, the timeline for merger reviews has been suspended until up to one month after the end of the current state of emergency (date still to be determined). Legal recourse for parties under investigation will be delayed up to two months after the end of the state of emergency. Companies are advised to delay any non-urgent plans to notify;
- the Danish Competition Authority has further suspended deadlines for merger control until 13 April 2020;
- the Belgian and Irish Competition Authority are encouraging companies to delay non-urgent notifications;
- the CMA has announced it will continue to progress its cases, subject to the potential extension of statutory deadlines where necessary (read more here). Meetings and hearings will be conducted remotely;
- the Italian Competition Authority has suspended all deadlines (including for mergers) from 23 February until 15 April 2020; the clock will restart on Monday, 16 April 2020;
- the Austrian Competition Authority has decided that all time limits for merger review will start on 1 May 2020;
- all deadlines before the Portuguese Competition Authority have been suspended from 13 March 2020 although the Authority is still active and progressing merger cases.
3. Abuse and Cartel Investigations
- The tremendous uncertainty created by the current emergency may increase the temptation for employees to align with others in the industry, or substantially increase prices — but the antitrust laws still apply in full. A number of national competition authorities have already issued statements to remind companies of the full application of antitrust laws. Read more here.
- Some industries might be able to benefit from enhanced cooperation and coordination to raise efficiencies when addressing specific COVID-19 scenarios (such as the logistics and health care/life science sectors). This needs to be analysed on a case-by-case basis. In addition, antitrust agencies might be willing to grant comfort for such projects on a temporary basis. For example, the CMA announced it is relaxing some elements of competition law to help supermarkets work together to the extent that this is necessary to protect consumers – for example, by ensuring security of supplies. Read more about this here.
- The European Competition Network (composed of the European Commission and NCA’s) issued a statement recognising that additional industry cooperation might be needed given the crisis, for example to ensure continued supplies, but warns against price gouging. Competition authorities will be quick to act against perceived cartels or abuses of dominance. The statement also notes that producers can set maximum prices to reduce the risks of price increases by distributors or retailers.
- DG COMP has launched a dedicated page on its website aimed at companies cooperating with each other during the COVID-19 crisis. The website brings together the key legal competition instruments that impact on the concrete cooperation initiatives between companies seeking to effectively tackle the COVID-19 crisis. A dedicated mailbox has also been set up for companies to seek informal guidance from DG COMP;
- On 8 April 2020, the European Commission published a temporary framework communication to provide antitrust guidance to companies cooperating in response to emergency shortages in critical medical goods related to the COVID-19 outbreak. The Commission recognizes that tackling these exceptional shocks and avoiding shortages in a timely manner may require the swift coordination of companies in order to overcome the effects of the crisis to the ultimate benefit of citizens. This might, in turn, require either switching or up-scaling production in the most efficient way. Such coordination would normally be contrary to antitrust rules. However, in the context of a pandemic, such coordination can, with appropriate safeguards, bring important benefits to citizens. The temporary framework is meant to provide antitrust guidance to companies willing to temporarily cooperate and coordinate their activities in order to increase production in the most effective way and optimize supply of urgently needed hospital medicines. Mindful of the exceptional situation, the EC has been engaging with companies and trade associations to help them in assessing the legality of their cooperation plans and putting in place adequate safeguards against longer-term anti-competitive effects. In most situations, the oral guidance that the EC has been giving to companies during the last weeks is sufficient. However, the EC is also ready to exceptionally provide companies with written comfort letters concerning specific cooperation projects that need to be swiftly implemented, especially where there is still uncertainty about whether such initiatives are compatible with EU competition law.
- On 8 April 2020, the EC has issued such a comfort letter – to Medicines for Europe (formerly European Generics Medicines Association). The comfort letter addresses a specific voluntary cooperation project among pharmaceutical producers that targets the risk of shortage of critical hospital medicines for the treatment of COVID-19 patients. Generic pharmaceutical companies produce the largest part of the critical hospital medicines that are now urgently needed in large scale volumes to avoid shortages. In the current circumstances, this temporary cooperation appears justifiable under EU competition law, in view of its objective and the safeguards put in place to avoid anti-competitive concerns.
- The UK’s CMA issued guidance which mirrors some of the points made by the ECN. The CMA will not take enforcement action in cases where temporary coordination between businesses is appropriate and necessary in order to avoid a shortage, or ensure security of supply. The CMA will not tolerate businesses exploiting the crisis as a ‘cover’ for non-essential collusion, such as the exchange of commercially sensitive information or denying rivals access to supplies or services. Manufacturers can also take steps to help combat ‘price gouging’ or excessive pricing, by setting maximum prices at which retailers may sell their products. Read more here.
- The cases that are close to finalisation are still being progressed.
- Some on-going cases are on hold. Others are being progressed but at a substantially lower pace.
4. Private Enforcement
- A number of courts around Europe are postponing hearings and halting the progress of damages cases. In the UK, The Courts remain open but are encouraging the use of remote hearings where possible.
- The staff at most major arbitral institutions are working remotely but remain operational.
5. General Court and CJEU
- The General Court and CJEU have suspended all hearings.