Failing firm defence in times of COVID-19 economic crisis

• Robert Schuman Centre for Advanced Studies
• FCP: Florence Competition Programme

The question discussed during the webinar is whether, and to what extent, the competition agencies should modify the current approach to the application of the failing firm defence, in view of the economic crisis caused by COVID-19

Under the EU merger control rules, a concentration that involves the acquisition of a ‘failing firm’ is subject to a ‘more lenient’ assessment by the competition agency. Since the outbreak of COVID-19 pandemic, the European economy has faced the deepest economic recession since World War II. In the medium term, the current aid schemes will end and a large number of firms will probably face insolvency proceedings. In order to safeguard employment, the European Commission and the NCAs will probably face strong political pressures to make ‘more lenient’ the review of acquisitions involving failing firms.

The question discussed during the webinar is whether, and to what extent, the competition agencies should modify the current approach to the application of the failing firm defence, in view of the economic crisis caused by COVID-19.