The Covington EU Competition team will be updating you regularly, through the Covington Competition blog, on the competition law implications – both procedural and substantive – of the COVID-19 crisis. This is our update for Tuesday 17 March.
1. State Aid
- Process: As Member States are putting financial support measures in place to support their economies, we are expecting a wave of state aid notifications in the next few days/weeks. DG COMP opened a 24/7 hotline for public authorities to raise questions or request advice.
- Speed of dealing with notifications: The Commission approved the first state aid scheme (Danish compensation mechanism for organisers of major events) within 24 hours of notification.
- Substantive appraisal: The Commission will be using a number of provisions of the Treaty to assess state aid measures:
- Article 107 (2) (b) 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, and is now front and centre of the state aid analysis in the context of the COVID-19 crisis;
- Article 107 (3) (b) which allows the Commission to clear state aid measures that intend to remedy a serious disturbance in a Member State’s economy. That is what they are considering using to deal with the specific situation in Italy;
- The Commission also refers to Article 107 (3) (c) which allows rescue and restructuring aid. There is already a framework in place for this aid.
- The Commission is in the process of preparing a special legal framework to deal with the state aid issues following COVID-19 (similar to the framework they set up following the financial crisis).
- We understand DG COMP is no longer allocating case teams for new matters and has urged 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.
- 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)).
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.
- The cases that are close to finalisation are still being progressed (see the recent 1.1 billion fine on Apple by the French Competition Authority).
- 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.
5. General Court and CJEU
- The General Court and CJEU have suspended all hearings.