The COVID-19 pandemic has unprecedentedly impacted economies throughout the world. Billions of Euros have been spent on measures of state aid to keep companies and whole industries alive. However, the dust is not yet settled. Many industries will need years to recover. Those that suffered the worst may seek a merger to survive. Others that weathered the pandemic crisis more successfully are likely to watch out for acquisition opportunities.
Against this background, voices are raised that call for a more lenient merger control treatment of transactions that involve firms in financial difficulties, including a more generous application of the failing firm defense. This client alert provides a summary of the European Commission’s approach to the failing firm defense in its recent Flybe decision and outlines potential prospects for the failing firm defense under the impact of COVID-19.