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Delphi insights: Covid-19 – Legal Aspects
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More Employment & Labor | Government & Public Sector | Telecommunications Aricles → Latest Firm's PressDelphi Delphi has established local task forces at all our offices responsible for gathering knowledge, analyzing and continuously cover legal issues arising as a result of the corona virus and Covid-19.
We advise on a number of different issues and also offer backup resources to facilitate businesses continuity planning if key persons who are lawyers are directly affected by the virus. We regularly publish information and host webinars regarding legal aspects of Covid-19 at ourCorona resource center. Contractual Issues – force majeure and MAC clauses As a consequence of Covid-19, many contractual issues and questions have arisen. What happens if an event has to be canceled or a supplier cannot deliver – how should these issues or delays be handled? How far-reaching is the responsibility for what is within your own control – may (and should) a subcontractor be replaced? Who will carry the extra costs? Another issue is the so-called MAC-clauses (Material Adverse Change), commonly used in M&A transactions. Force Majeure
MAC clauses
Labor law There are many labor law issues arising from Covid-19 and its consequences – for example: what constitutes applicable law in relation to forced and voluntary quarantine? What about the employees’ obligation to work?
GDPR What considerations should be made by employers when processing employees’ personal data because of the Corona virus?
Be wary when discussing with competitors – competition law prohibitions on cartels and abuse of dominant position apply even in times of crisis Both EU and national competition law prohibits cartels, i.e. companies coordinating their prices, discounts etc. and market division – geographically or between customers. This means that even in times of crisis (like the current situation due to Covid-19, which hits hard on many companies), companies are not allowed to cooperate with competitors for the purpose of attempting to increase prices or divide customers between them. According to EU Commission practice and several national competition authorities, a crisis is not a valid reason for companies to coordinate, for example, prices. This has inter alia been confirmed in connection with the mad cow disease outbreak. We would also like to point out that companies do not have to go as far as to agree on (for example) coordination of prices. Sometimes it is enough to disclose confidential information about (for example) prices to a competitor in order for it to be considered a violation of competition law. However, in certain exceptional cases it may be permitted for competitors to cooperate, but it is then important that you are able to show that it leads to lower prices or better products or services for the consumers. Media has in the past reported about abnormally high prices for certain products in times of crisis. It should therefore be reminded of that companies having a so-called dominant position, oftentimes defined as having a market share exceeding 40 % (however, a complex assessment is required to establish it), are inter alia not allowed to use overpricing. Determining what constitutes such unreasonably high prices is a complex matter. However, in recent years several cases from various industries have been examined by multiple national competition authorities – especially where pricing of pharmaceuticals has been increased by several thousand percent. Violations of competition law could lead to extensive sanctions in the form of huge fines, damage claims, exclusion from procurements, ban on trade activity, extensive bad will, etc. As always, it is therefore important to carefully analyze the contemplated measures before they are taken in order to ensure that they are consistent with competition law. Public procurement and state aid Public entities, such as municipalities, regions, public authorities and publicly owned companies are bound by the public procurement legislation when purchasing goods, services and contract work. But what happens to public procurement in a situation of crisis? How can the state provide aid to businesses severely affected by the outbreak of the corona virus?
There is no general exemption facilitating direct procurements in crisis situations. However, there are other exemptions that may be applicable, primarily the exemption for extreme urgencies. This exemption can be used in an emergency if the procured goods, services or contract works are absolutely necessary.
Shareholders’ meetings and listed companies’ obligation to share information The spread of the corona virus has led to several companies taking measures in advance of their shareholders meetings’, an event which usually results in a large gathering of people in the case of a listed company. What are the options for companies to let their shareholders participate on site, or for a shareholder that does not want to be physically present at the meeting? Further, Covid-19 risks affecting listed companies’ continuous disclosure of information and the information made public in financial statements in the future.
Summary: Try to avoid disputes
You are welcome to contact our corona task force if you have any questions.
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