The European Commission Includes Recapitalisation Measures in the Temporary Framework for State Aid Measures to Support the Economy During the COVID-19 Outbreak

On 8 May 2020, the European Commission (“Commission”) adopted a second amendment (the “New Amendment”) to the Temporary Framework for State aid measures to support the economy during the COVID-19 outbreak (the “Temporary Framework”) (see our previous post on the Temporary Framework here and on the first amendment here). The New Amendment sets out the conditions under which Member States may provide equity and/or hybrid capital (“Recapitalisation Measures”) as well as subordinated debt to non-financial undertakings that face serious economic difficulties as a result of the COVID-19 outbreak.

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COVID 19 – US and EU Competition Law Implications (6 May 2020)

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 Wednesday 6 May 2020. Today’s new updates as compared to the previous update are highlighted – these are the headlines:

  • Today’s EU updates:

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The UK Court of Appeal Clarifies the Legal Test for Excessive Pricing

Under Article 102 of the Treaty on the Functioning of the European Union (“TFEU”), an undertaking may abuse its dominant position by “directly or indirectly imposing unfair purchase or selling prices”.  The UK Court of Appeal recently provided guidance regarding the legal test to determine whether pricing is excessive and unfair.  In March, it dismissed the UK Competition and Markets Authority’s (“CMA”) appeal in the Phenytoin case. Continue Reading

COVID 19 – US and EU Competition Law Implications (30 April 2020)

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 Thursday 30 April 2020. Today’s new updates as compared to the previous update are highlighted – these are the headlines:

  • Today’s EU updates:
    • The Court has announced that it intends to resume hearings on 25 May 2020.
    • The Commission has cleared a further number of State aid requests by Member States.  Skip to relevant section.

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European Commission Goes “Live” on FDI Coordination Six Months Early, Proposing Cooperation on an Informal and Voluntary Basis

The European Commission has added to its call to Member States to act on foreign direct investment (“FDI”) by announcing that it is ready to support EU-level cooperation on FDI now. Spurred on by the COVID-19 crisis and the perceived vulnerability of key EU assets, the informal cooperation announced by the Commission will bring into effect early certain elements of the EU-level screening mechanism under the EU FDI Regulation that would otherwise have come into force in October 2020.

We consider what this announcement means and share some additional insights into the current approach of the Commission and Directorate-General Trade (“DG Trade”) to the subject of FDI based on a recent forum including senior officials. Continue Reading

German Competition Authority Provides Guidance on the Interplay of Merger Control and FDI Screening

On 27 April 2020 the Federal Cartel Office in Germany (“FCO”) cleared the acquisition of Vossloh Locomotives GmbH (“Vossloh Locomotives”) by Chinese manufacturer CRRC Zhuzhou Locomotives Co. Ltd. (“CRRC”). FCO President Andreas Mundt stated that the in-depth investigation found that initial concerns were not serious enough to justify prohibiting the transaction.

The FCO released a press report and a case summary (exclusively available in German) one week before expiry of the review period. The detailed clearance decision will be published at a later stage.

By acquiring Vossloh, CRRC takes over a key manufacturer of shunters in Europe. The FCO determined that Vossloh Locomotives is the leader for the manufacture of diesel-powered locomotive shunters with a share between 40-50% in the European Economic Area and Switzerland. The FCO found that this area constituted a relevant geographic market. CRRC is the world’s largest manufacturer of rolling stock, albeit with only limited activities in Europe.

The decision should be read in the context of the interplay between merger control and Foreign Direct Investment (“FDI”) screening. It contains significant and novel decisional guidance on the competitive assessment under German merger control law of acquisitions by State-owned companies originating from centrally planned economies. It also clarifies that a merger control analysis only covers some of the concerns raised by acquisitions by state-owned companies. Continue Reading

COVID 19 – US and EU Competition Law Implications (24 April 2020)

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 Friday 24 April. Today’s new updates as compared to the previous update are highlighted – these are the headlines:

  • Today’s EU updates:
    • The German government intends to prolong merger procedure time periods, extending phase I investigations to two months and in-depth phase II investigations to six months. The new law will apply to all mergers notified between 1 March 2020 and 31 May 2020. The underlying reason is the significant impact of COVID-19 on the Federal Cartel Office’s daily operations. Due to contact bans and the temporary closure of businesses, merger control investigations may not be concluded within the usual time periods, which might result in a clearance of concentrations which may significantly impede effective competition. The proposed changes aim to allow the authority to further investigate the markets concerned. Skip to relevant section.
    • The Commission has cleared a further number of State aid requests by Member States.  Skip to relevant section.

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Competition Enforcement Under the COVID-19 Crisis: DG COMP Staff’s Views

In two recent webinars covering antitrust, mergers and state aid, DG COMP senior officials shared their views on how DG COMP is operating under the current COVID-19 crisis.

Antitrust: More Flexible Enforcement

Maria Jaspers, head of unit for antitrust case support and policy, gave the following key messages:

  • The absence of legal deadlines creates certain flexibility with regard to time-tables in pending investigations;
  • The crisis may have an influence on pending policy reviews (including the vertical and horizontal block exemption regulations);
  • Several actions have been put into place: these measures include the European Competition Network’s (the “ECN”) joint statement of 23 March 2020, indicating that the Commission (and the competition authorities of the Member States) will not actively intervene against necessary and temporary measures between businesses aimed to avoid a shortage of supply;
  • She pointed to the information on DG COMP’s website titled “Antitrust Rules and Coronavirus” providing dedicated guidance to businesses. Additionally, DG COMP has set up a dedicated mailbox that can be used to seek informal guidance on specific initiatives;
  • She recalled that, on 8 April 2020, the Commission published a “Temporary Framework for assessing antitrust issues related to business cooperation in response to situations of urgency stemming from the current COVID-19 outbreak” (the “Temporary Framework”). Read more on the Temporary Framework in this blogpost. Rainer Becker, head of unit in antitrust for pharma and health services added that DG COMP is vigilantly monitoring the markets to ensure that there are no breaches on the back of the crisis and that DG COMP will continue to progress opened proceedings, including by assessing complaints and market information. However, he indicated that competition rules may in certain circumstances be applied in a more flexible manner (read more on the flexible application of competition law rules here).

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COVID 19 – US and EU Competition Law Implications (16 April 2020)

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 Thursday 16 April. Today’s new updates as compared to the previous update are highlighted – these are the headlines:

  • Today’s US updates:
    • The FTC has temporarily halted proceedings in three administrative antitrust merger challenges — Axon, Juul, and Arch Coal — until June, due to the public health emergency associated with COVID-19. Skip to relevant section.
  • Today’s EU updates:
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    “No Issues” with Member State Participations – State-backed EU Companies as the New Normal?

    With a remarkable statement in an interview with the Financial Times published on 12 April 2020, the Commission Vice President Margrethe Vestager in charge of Competition was cited to have declared that the Commission has “no issues” with EU Member States buying shares in companies to prevent takeovers by foreign acquirers, in particular by State-backed enterprises.

    Coming at a time of increased attention to Foreign Direct Investment (FDI) limitations in the wake of the COVID-19 pandemic, this takes up discussions about “Golden Shares”, a mechanism allowing a Member State to veto certain “critical” decisions such as takeovers on the basis of a minority shareholding in a company, and adds a new dimension to the discussion that has been raging across Europe, covering FDI, but also State aid and the principle of free movement of capital. Continue Reading

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