State aid and Antitrust COVID-19 update

In the fight against COVID-19, the Life Sciences & Healthcare industry is crucial. Governments want to incentivize companies to contribute at every level of the COVID-19 relevant supply chain, be it R&D, testing, or manufacturing.

In addition, it is clear that competitors at times need to co-operate more closely in order to ensure a near-perfect allocation of scarce resources. For this purpose, competitors may need to share more sensitive information than they would typically do, or they may need to coordinate their production. Under normal circumstances that would not happen for fear of infringing antitrust laws, risking crippling fines, and having to face damage claims in court.

The European Commission has created the overall framework for governments and for companies to meet these needs, spelling out:

• Which government aid will be approved by the European Commission if the Member State notifies the aid measure;
• Which forms of cooperation between competitors the Commission will allow in order to ensure the supply and adequate distribution of essential scarce products and services, most notably medicines and medical equipment that are used to test and treat COVID-19 patients or are necessary to mitigate and overcome the outbreak;
• Guidelines for governments focusing on rational supply, allocation and use of medicines to treat COVID-19 patients in order to protect public health and preserve the integrity of the single market. The guidelines explicitly mention that they rely on the EU pharmaceutical industry acting responsibly and with solidarity.

Main highlights of the article:

1.       The Temporary State Aid Framework explaining which government aid measures specifically related to COVID-19, be it R&D, testing or production will be allowed, created by the European Commission April 3, 2020.

• Types of aid available to Life Sciences & Health Care companies:

o   Aid for COVID-19 relevant R&D;

o   Aid for testing and upgrading infrastructures;

o   Aid for the production of COVID-19 relevant products.

2.       The Antitrust Temporary Framework for COVID-19 related business cooperation, created by the European Commission on April 8, 2020.

• The Commission will help companies by issuing “comfort letters”

o   In its COVID-19 Temporary Framework for assessing antitrust issues, the European Commission commits to provide antitrust guidance and support to businesses and trade associations to facilitate the proper and swift implementation of cooperation with an EU dimension that is needed to effectively tackle the COVID-19 outbreak.

3.       The Guidelines on optimal and rational supply of medicines to avoid shortages during the COVID-19 outbreak, issued the European Commission on April 8, 2020.

• The Guidelines the Commission issued first and foremost are addressed to the Member States. However, in order for them to work, the Life Science & Healthcare industry will need to cooperate closely with the Member States