We have already reported on how antitrust law and practice adapted to the current extraordinary situation over the past weeks. Following these reports, further developments relevant to antitrust law have taken place. Internationally, governments and authorities have so far reacted to the challenges posed by the spread of the coronavirus with diverging signals (see below). The announcements and measures range from the loosening of antitrust regulations in certain areas directly related to supply, transport, and healthcare, via increased financial aids, to a particularly tightened monitoring of the ban on cartels.
Yesterday, the German government published plans to further react to the crisis with legislative changes shortly and to (i) suspend the obligation to pay interest on fines to mitigate financial burdens for companies and (ii) extend deadlines for the review of merger control notifications.
Besides the proposed ease of the payment obligations for cartelists (interest on antitrust fines are deferred until 30 June 2021), the new rules for M&A transactions are of particular interest.
According to the current draft law of the German government, the review deadlines for merger control proceedings are to be extended for transactions notified in the period from 1 March to 31 May 2020. It is proposed to extend the deadline from currently
This is in line with similar legislation recently enacted in other countries, such as Austria, Denmark and Norway.
The extension of the review deadline may have a significant impact on existing transactions which are only economically viable within a narrow time frame. Therefore companies should consider whether it is possible and reasonable to notify a planned merger at a later date to avoid extended review periods. On the other hand further legislation might be enacted in the near future.
The European Commission issued a temporary framework in order to give companies that provide essential products and services, guidance regarding business cooperation in response to the current COVID-19 outbreak. At the request of companies, the European Commission may provide a “comfort” letter on short notice to essentially allow those companies to form cooperation that would normally be considered a violation of the ban on cartels (Article 101 TFEU).
As of today, the European Commission issued a first “comfort” letter to companies in the healthcare sector.
In addition, an implementing act of the European Commission is due to come into force next week, which should enable companies from certain agricultural sectors to cooperate for a limited time period. Farmers will be allowed to plan production or withdraw and store products from the market to stabilize the market and maintain the supply for consumers.
In response to the current extraordinary situation, many competition authorities and governments – especially in Europe – have increasingly indicated they will loosen the competition rules in cases where the pandemic is of relevance:
Contrary to the loosening of antitrust regulations described above, however, the exact opposite approach is being taken by some competition authorities, particularly the announcement that they will monitor the ban on cartels in a specifically strict way during the crisis:
In addition to or as an alternative to a more generous (or stricter) application of the ban on cartels, the loosening of the rules on state aid seems to be the currently preferred measure to mitigate the economic impact of the coronavirus:
For further details please go to our website article on "State Aid and the Corona Pandemic".
Moreover, the coronavirus is also having an initial effect on antitrust law related aspects of transactions. Besides the somewhat hesitant investment behaviour of some investment companies that has been observed, there is a particular risk that competition authorities will be unable to smoothly carry out their work in transactions:
Several governments and authorities have identified antitrust law or the amendment of existing regulations as a measure to deal with the economic consequences of the coronavirus. With the duration of the corona pandemic, antitrust relevant topics in the crisis period and the way of dealing with them are increasing. On the one hand, cartel prohibitions have been loosened (temporarily) in individual cases, on the other hand, existing competition rules will be enforced more strictly. For companies, this leads to both opportunities and risks.
Accordingly, companies should review whether, to what extent and for how long they may benefit from the newly created legal opportunities in antitrust law. In the worst case, an incorrect assessment of the current legal situation could even transform an initially foreseen economic benefit into a disaster (e.g. through fines due to a subsequently identified antitrust infringement). As the example of Expedia and Booking.com shows, companies can be brought directly into the focus of competition authorities – even if their actions initially appear to be quite consumer-friendly. In view of the current special situation, due caution should also be taken with regard to transactions.
Thus, obtaining antitrust law related advice is of particular relevance in times of the coronavirus – and in the event of similar exceptional circumstances in the future.