This regular alert covers key regulatory EU developments related to the COVID-19 situation. It does not purport to provide an exhaustive overview of developments and contains no analysis or opinion.

COMPETITION & STATE AID

Competition

Multilateral Working Group on pharmaceutical company mergers launches a joint public consultation (see here)

On 10 May 2021, the Multilateral Pharmaceutical Merger Task Force launched a joint public consultation in the field of pharmaceutical company mergers.

Created in March 2021, the Task Force brings together the European Commission's Directorate General for Competition, the Canadian Competition Bureau, the UK's Competition and Markets Authority, the U.S. Federal Trade Commission ("FTC"), the U.S. Department of Justice and three Offices of Attorneys General (see also Jones Day COVID-19 Update No. 40 of 17 March 2021).

The Task Force seeks to assess and update, through concrete and actionable steps, approaches to analyzing the effects of pharmaceutical company mergers. In recent years, the volume of mergers in the pharmaceutical sector has increased, and a number of authorities have argued that closer inquiry is needed to detect those transactions that could lead to elevated drug prices, diminished innovation, or anticompetitive conduct.

The COVID-19 pandemic has also increased pressure on healthcare budgets, and various stakeholders have raised questions about drug pricing, drug supply chain resilience, and other issues.

The public consultation includes questions such as:

  • "In pharmaceutical merger review, how should authorities consider the risks or effects of conduct such as price setting practices, reverse payments, and other ways in which pharmaceutical companies respond to or rely on regulatory processes?"
  • "What is the full range of a pharmaceutical merger's effects on innovation? What challenges arise when mergers involve proprietary drug discovery and manufacturing platforms?"

The Task Force will receive and make available all submissions through the FTC's portal on www.regulations.gov. The public consultation is open until 25 June 2021. Contributions will serve to inform a public workshop envisaged for later in 2021.

State Aid

European Commission receives Recovery and Resilience Plans from 18 Member States (see here)

As of 26 May 2021, the Commission has received Recovery and Resilience Plans from an additional 4 Member States, for a total of 18 Member States (see also Jones Day COVID-19 Update No. 46 of 5 May 2021).

These Member State plans set out the reforms and public investment projects foreseen for implementation with the support of the Recovery and Resilience Facility (RRF), the key component of NextGenerationEU, the EU's plan for rebounding from the COVID-19 crisis. The RRF will provide up to €672.5 billion to finance reforms and investments (i.e., grants totaling €312.5 billion and €360 billion in loans).

The latest Member State plans request the following total amounts under the RRF:

  • Croatia (€6.4 billion)
  • Cyprus (€1.2 billion)
  • Hungary (€7.2 billion)
  • Lithuania (€2.2 billion)

14 Member State plans had already requested the following total amounts under the RRF: Austria (€4.5 billion); Belgium (€5.9 billion); Denmark (€1.6 billion); France (€40.9 billion); Germany (€27.9 billion); Greece (€30.5 billion); Italy (€191.5 billion); Latvia (€1.8 billion); Luxembourg (€93 million); Poland (€23.9 billion); Portugal (€16.6 billion), Slovakia (€6.6 billion); Slovenia (€2.5 billion); and Spain (€72 billion).

Commission assessment of plans. The Commission will assess the Member State plans within the next two months.

The RRF guidelines, notably, make clear that the investment projects included in Member State recovery plans must comply with State aid rules. The Commission published practical guidance for swift treatment of projects under State aid rules, as well as a number of sector-specific templates to help Member States design and prepare the State aid elements of their recovery plans (Jones Day Commentary, "EU Member State COVID-19 Recovery Plans Must Comply with State Aid Rules," March 2021, see here).

In assessing the Member State plans, the Commission will also, in particular, determine whether the plans dedicate at least 37% of expenditure to investments and reforms that pursue climate objectives and 20% to the digital transition.

Based on the Commission's proposals, the Council will then have four weeks to approve the Member State plans.

The Commission will continue to closely engage with the remaining Member States to deliver robust national recovery plans.

EU approves new and amended Member State measures to support the economy (see here and here)

Since the onset of the coronavirus outbreak, the European Commission has adopted a significant number of State aid measures under Article 107(2)b, Article 107(3)b and under the Temporary Framework.

The most recent measures adopted to support the economy and companies affected by coronavirus outbreak include:

  • €500 million Greek scheme to support food service companies affected by the coronavirus outbreak
  • €100 million French aid scheme to mitigate the economic consequences of the cessation of glyphosate use, amplified by the pandemic
  • €12.5 million Belgian scheme for the passenger transport sector in Wallonia affected by the coronavirus outbreak
  • €44 million Estonian scheme to support companies active in the tourism and retail sectors in the context of the coronavirus outbreak
  • €6 million Latvian scheme to support companies in the arts, entertainment and recreation sectors in the context of the coronavirus outbreak
  • €12.835 million Italian aid measure to compensate Alitalia for further damages suffered due to the coronavirus outbreak
  • €793 million Greek subsidized loan scheme to support micro, small and medium-sized companies affected by the coronavirus outbreak
  • €63.2 million modification of Hungarian scheme to support selfemployed individuals in the context of the coronavirus outbreak
  • €27.8 million Belgian scheme for companies and self-employed workers in Wallonia indirectly affected by closure decisions in the context of the coronavirus outbreak
  • €255 million Belgian scheme to support companies and selfemployed people in Wallonia who make a significant part of their turnover with companies affected by closure decisions due to the coronavirus outbreak
  • €20 million Italian scheme to support companies managing passenger port terminals in the context of the coronavirus outbreak
  • €820,000 Slovenian scheme to support sheep and goat breeders affected by the coronavirus outbreak
  • €392,000 Belgian support to compensate Waterloo 1815 Memorial concession holder for damage caused by the coronavirus outbreak
  • €90 million Dutch scheme to support SMEs in context of the coronavirus outbreak
  • €46 million Romanian scheme to support the activity of cattle breeders affected by the coronavirus outbreak
  • Modification of existing German scheme to support rail freight operators and mitigate effects of the coronavirus outbreak on the sector. The modification includes an increase in budget for the year 2021, from €350 million to €567 million
  • €5.2 million Danish scheme to support local newspapers affected by the coronavirus outbreak
  • €6.8 million Lithuanian scheme to support pig and poultry sectors affected by the coronavirus outbreak
  • €8 million Latvian aid measure to support sports centers in the context of the coronavirus outbreak
  • €20 million Latvian measure to support shopping centers in context of the coronavirus outbreak

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