Topics include (i) further guidance on cooperation – this time prepared by the Mexican Competition Authority, (ii) further antitrust guidance for medical companies regarding the Covid-19 outbreak, (iii) credit holidays given by banks under scrutiny of the Polish Competition Authority, (iv) court hearings before the EU courts are cancelled, (v) measures protecting strategic industries from foreign takeovers, (vi) Pay-TV operators call for flexible state aid rules.
Guidance on cooperation – Mexico
Another competition regulator has issued guidance for companies' cooperation during the pandemic. Last week, the president of the Mexican agency announced that competitors may work together to ensure the supply of essential services and products during the coronavirus contingency in Mexico, with the proviso that they notify the antitrust authority.
- the agency will be more flexible in reviews of temporary, “short-term agreements” to the extent that consumer well-being improves,
- the flexibility will apply to medical services as well as other industries,
- the agreements must be indispensable,
- while having an anti-competitive component, the agreements must be necessary to ensure supply of essential products and to protect the supply chain,
- the agreements must last no longer than is necessary to address these critical issues.
Further possible antitrust guidance for medical companies regarding Covid-19 outbreak
- The draft "roadmap" addressed to national governments containing guidance on lifting Covid-19 containment measures notes that the EU does not exclude the possibility to provide further antitrust guidance and legal assurances to medical companies to avoid shortages of key suppliers.
The latest draft stresses that a number of “accompanying measures” will be required to lift the lockdown safely — among these, antitrust assurances for businesses that may need to coordinate activities further than is usually allowed under the bloc’s antitrust rules, it also suggests that the first "comfort letter" for Medicine of Europe issued last week won’t necessarily be the last. It at last underlines that the European Commission and national antitrust regulators will, via the European Competition Network, ensure a coherent application of the guidance in their respective enforcement actions.
Credit holidays under scrutiny of the President of the OCCP
The President of the OCCP initiated a probe in order to check the rules upon which banks are offering credit holidays during the pandemic. Questionable practices include annexes that contain provisions suggesting consumers' recognition of debt, provisions enabling the collection of compound interest as well as the lack of proper information.
Court hearings before the EU courts are cancelled
Companies challenging European Commission decisions are getting offers to drop hearings before judges at the EU courts so proceedings can advance more quickly during the Covid-19 pandemic. Some hearings have already been cancelled so that judges can process cases without waiting for a formal day in court.
The court postponed all the hearings planned for March and April, in line with restrictions on gatherings of people. No decision has been announced on whether to carry on with hearings in May. Certain parties have been approached over whether they would prefer to advance the case through another round of written pleadings rather than pushing for a hearing, which is difficult to organize during the current travel restrictions. But it is only possible if all the parties agree, as some companies may wish to insist on the hearing taking place.
Measures protecting strategic industrial from foreign takeovers
European governments have acknowledge the risk of seeing foreign companies buying national strategic industrial and tech assets on the cheap as a result of the Covid-19 crisis.
Trade Commissioner Phil Hogan stressed that the Commission could coordinate monitoring of “ongoing and planned foreign acquisitions and sharing the relevant information among member states”, as a stopgap arrangement until the EU framework for coordinating FDI will fully apply. A new EU framework for coordinating FDI was agreed a year ago. It was designed as a cooperation mechanism so governments could keep an eye on investments, from countries such as China, in strategic industries including infrastructure, critical technology or raw materials.
But EU governments decided to have an 18-month delay in bringing the vetting mechanism into force, to allow for the necessary legislative adjustments at the national level. Keeping this in mind the Trade Commissioner invited EU governments to share information with the commission, and offered assistance in exchanges between member states on strategic FDI. The EU governments unanimously supported the commission’s initiative, however Denmark and the Netherlands indicated that the approach should be balanced to allow a continued inflow of FDI into the bloc and support the process of creating new jobs.
France has already prepared protection measures on a national level. To protect listed companies in which the state holds stakes from hostile takeovers, the government has proposed to make an additional €20 billion fund available to the state agency that manages those stakes. APE (special agency of the French Republic managing the state's holding) holds about €75 billion worth of stakes in 70 strategic companies including the carmaker Renault and Franco-Dutch airline Air France-KLM, which are being severely hit by the pandemic.
The extra money is aimed to help protect those companies through either direct aid, increased state participation or temporary nationalisations. The French economy minister also stated that he does not exclude the possibility of using expanded veto powers over M&A deals in strategic industries in order to block problematic transactions like the acquisition of night-vision startup Photonis by US defence manufacturer Teledyne.
Measures protecting strategic industrial from foreign takeovers
Airlines have been particularly hard hit by the measures implemented by governments to counter the Covid-19 pandemic. The shutting of borders as well as orders for people to stay home have grounded planes, with the International Air Transport Association predicting that global passenger revenues will drop by $314 billion in 2020.
Governments in Europe have provided state aid schemes to support airlines. Ryanair in a letter is however making accusations that these emergency measures are favouring national carriers.
The low-cost airline has threatened European governments with legal actions before the EU courts, indicating it would appeal the European Commission decisions approving the schemes. Ryanair especially addressed the government in Stockholm following the announcement of its plan to offer loan guarantees worth some €455 million to airlines that hold a “Swedish commercial aviation license", which in Ryanair's view would be almost only to the sole benefit of the "chronically loss-making SAS."
Pay-TV operators call for flexible state aid
The Association of Commercial Television in Europe representing the interests of 29 leading commercial broadcasters across Europe has called on the European Commission to show more flexibility to allow national governments to support broadcasters facing a major drop in revenue due to the Covid-19 pandemic.
According to ACT such measures should include tax credits for advertising investments, a direct stimulus to the entire economy via the promotion of products and services during the recovery. In addition, ACT indicated that the European Commission can directly help, by extending and reorienting the Media Programme to ensure better access for operators most suited to restart productions across Europe. It was emphasised that Broadcasters will also struggle to meet the strict and broad financial and content commitments they would perform in normal circumstances. In this regard, the crisis will only aggravate the lack of a level playing field with the digital sphere.
In view of ACT, the European Commission in close cooperation with the European Regulators Group for Audio-visual Media Services, should thus develop guidance to enact leniency (such as standstill periods for quota obligations) and liberalisation measures to ensure Broadcasters can rebound from the crisis.
Approval of state aid schemes
In recent days the European Commission has continued to grant approval to national staid aid schemes under the Temporary Framework aimed at supporting the national economy during the coronavirus outbreak.
- € 88 million Hungarian wage subsidies support scheme for researchers and developers active in all sectors affected by the coronavirus outbreak,
- €140 million Portuguese aid scheme to support investment in research and development, testing and production of products that are relevant to the coronavirus outbreak, including vaccines, ventilators and personal protective equipment,
- €4 million Croatian scheme to support the fishery and aquaculture sector,
- € 35.5 million Latvian grant program aimed at supporting the agricultural, fisheries, food and school catering. The program, open to companies of all sizes, is aimed at helping companies cope with liquidity problems caused by the pandemic,
- Austrian guarantee schemes to support SMEs by providing guarantees for underlying loans up to an amount of € 500,000,
- €1 billion Hungarian scheme helping Hungarian companies through direct grants, loans and equity measures financed by the European structural funds,
- €137 million Danish State guarantee on a revolving credit facility in favour of Scandinavian airline SAS.
- €453 million Swedish rent rebate scheme in support of tenants operating in the sectors for hotels, restaurants, retail and certain other activities,
- France's extension and modification of a previously approved Fonds de solidarité scheme to support small and micro-enterprises as well as the self-employed. The measure has an estimated budget of €1.7 billion for March 2020 and €2.9 billion for April 2020,
- €37 million Czech aid scheme to support SMEs in the production of goods that are relevant to the coronavirus outbreak,
- Italian aid scheme to support self-employed workers and companies with up to 499 employees,
- €770 million Bulgarian wage subsidies support scheme for preserving employment in the sectors most affected by the confinement measures.