M&A COVID-19 Wire XIII

1. State Aid

• On 29 July 2020, the German Federal Cabinet adopted the draft of the European Recovery Plan (ERP) Economic Plan Law 2021. On this basis, small and medium-sized enterprises will be able to obtain low-interest financing and equity capital with a total volume of around EUR 7.9 billion in the coming year. The funding priorities are venture capital and equity financing, the establishment and modernisation of existing companies in struc-turally weak regions, and the promotion of innova-tion and digitalisation. The ERP Digitalisation and Innovation Loan provides medium-sized compa-nies with a total loan volume of EUR 2 billion for 2021 to promote digitalisation and innovation pro-jects. The ERP Special Fund comes from re-sources of the Marshall Plan, which were provided by the USA for reconstruction after the Second World War. It is managed and used by the Kreditanstalt für Wiederaufbau on behalf of the BMWi.

2. COVID-19 Pandemic and Business Closure Insurance

• In our COVID-19 Wire IX dated 28 May 2020 we have reported on a ruling by the Regional Court of Mannheim on a business interruption insurance in the context of the COVID-19 pandemic. In this case, the court has ruled that a reference to the German Infection Protection Law without listing specific diseases basically covers the diseases and pathogens reportable under the German Infection Protection Law at the time of the insured event, and thus also the COVID-19 pathogen.
• Now the Higher Regional Court of Hamm has expressed its opinion on a business closure insurance. In its decision of 15 July 2020 (Case No. 20 W 21/20) it has decided that no insurance cover exists if the cover "only applies to the diseases and pathogens listed below (cf. §§ 6 and 7 IfSG)", but COVID-19 and Sars-Cov-2 are not mentioned. In this case, the reference to the German Infection Protection Law does not constitute a dynamic reference, so that no reference is made to subsequent amendments to the German Infection Protection Law. The detailed listing of a large number of diseases and pathogens makes it clear to the average policyholder that the insurer only wants to be liable for the named assessable risks.
• For (portfolio) companies, therefore, in the event of business closures or interruptions due to the COVID-19 pandemic, it depends on how the insurance conditions are structured in the individual case.

3. COVID-19 Pandemic and Supply Chain Law

• With the Supply Chain Law, the German government has been planning for some time a legal regulation to oblige companies to observe human rights and environmental protection in trade and production in global value and supply chains. The law is expected to come into force in 2021.
• The law aims to improve the social and environmental conditions in the production countries and to expose companies to (civil) liability for non-compliance with minimum social and ecological standards within the production chain (duty of care). These include, for example, forced and child labour, discrimination, infringements of freedom of association, occupational health and safety or land rights and damage to health and the environment.
• According to the first drafts and a key issues paper, companies with (according to the current status) more than 500 employees must in future examine whether their activities have an adverse effect on human rights and take appropriate measures for prevention and remedy. Companies will have to develop risk assessment procedures and establish a complaints procedure to ensure that business relationships comply with the law.
• The COVID-19 pandemic in particular has brought the Supply Chain Law further into the focus of general discussion. This means that companies in many (European) countries can rely on government support in times of crisis. The new law is intended to oblige these companies to take responsibility for their entire supply chain in a solidarity-based manner.

4. The Meat Industry and Labour Law

• There have been several large COVID-19 outbreaks in meat industry companies with many cases of infection, which has led to a public and political discussion about working conditions and occupational safety. In particular, the system of so-called work contracts and the employment and accommodation of foreign workers has come into focus. The German Federal Ministry of Labour and Social Affairs has published a key issues paper "Occupational Safety and Health for the Meat Industry" (in German), which may also have an impact on companies outside the meat industry. Companies should therefore keep an eye on the draft laws and developments.
• According to the key issue paper, an amendment to the Occupational Safety and Health Law is to follow by which better control of working time recording and compliance with occupational safety, infection and health protection in the meat industry shall be ensured. However, the wording suggests that companies from other sectors (especially those with a higher risk to the safety and health of employees) could also be covered.
• In addition, minimum standards for the accommodation of (foreign) employees (provided or arranged by the company) shall be ensured.
• As of 1 January 2021, the slaughtering and processing of meat in companies in the meat industry will only be permitted for the company's own employees. So-called work contracts and the temporary employment of workers would no longer be permitted. It is being discussed whether such a restriction of single companies in one sector is (constitutionally) permissible.
• The fine range of the Working Hours Law is to be increased from EUR 15,000 to EUR 30,000. This change is expected to apply to all companies.

If you have further questions, please contact us:

Tobias Jäger – tobias.jaeger@pplaw.com
Nemanja Burgić – nemanja.burgic@pplaw.com