Competition Guardrails for Collaborating in Response to COVID-19

By Covington Team on Posted in Competition, Compliance Issues, Health Issues

COVID‑19 has caused a public health crisis and extreme disruption to economic markets.  As communities, governments, and businesses come together to combat these challenges, questions are naturally arising about how to comply with the antitrust laws under such extraordinary circumstances.

The United States antitrust agencies have advised that, with limited exception, companies should rely on a traditional application of the antitrust rules and guidelines.  Even well-intentioned collaborations can run afoul of the antitrust rules, so it is important to seek legal counsel prior to entering into new collaborations or expanding the scope of existing ones, especially with competitors. Importantly, companies must continue to be mindful that:

  • Antitrust laws apply—there is no blanket exemption in a public health or economic crisis;
  • While pro-competitive competitor collaborations, including information exchanges, can be lawful, and the needs of responding to a crisis are relevant to that determination, such collaborations continue to pose legal risk;
  • Information related to pricing, costs, and outputs remain competitively sensitive and sharing such information carries additional antitrust risk;
  • Companies with market power, even temporarily, often face increased scrutiny and should expect even closer examination of conduct related to products and services in high demand during the crisis;
  • Increasing prices of essential goods may raise concerns under anti-price-gouging laws; and
  • Emergency pandemic and other crisis statutes that may be invoked in response to COVID-19 may contain antitrust exemptions that are limited and narrow.

Illegal Conduct is Still Illegal

The Antitrust Division of the Department of Justice (“DOJ”) and Federal Trade Commission (“FTC”) have made clear that even in the midst of the ongoing crisis, each will continue to vigorously enforce the antitrust laws. The DOJ will “hold accountable anyone who violates the antitrust laws of the United States in connection with the manufacturing, distribution, or sale of public health products such as face masks, respirators, and diagnostics.” Similarly, the FTC has “stressed that [it] will not hesitate to hold accountable those who try to use the pandemic to engage in antitrust violations.”

In particular, the Joint Antitrust Statement Regarding COVID-19 (“Joint Statement”), released on March 24, 2020, reiterates that efforts to fix prices or wages, rig bids, or allocate markets remain subject to potential criminal prosecution. In this area, there is no broad exception for exigent circumstances. Companies must remain vigilant in their actions and in communicating these prohibitions to their employees. The mere accusation of engaging in this per se illegal conduct during the crisis could result in significant costs and lasting reputational harm.

Collaborating in Times of Crisis

Application of antitrust laws in the United States generally recognizes that collaborative efforts can be pro-competitive.  As a result, even in normal times, companies—including those that are competitors—can engage in limited joint activities, albeit within carefully constructed boundaries.

In the context of COVID-19, there may be joint research and development efforts, or other types of collaborations, that competitor companies would like to pursue collectively to address the pandemic.  Such conduct is not inherently at odds with the antitrust laws.  Indeed, the Joint Statement describes, for example, the potential need for health care facilities to work together in providing resources and services to communities that do not have access to personal protective equipment, medical supplies, or health care.  In another example, the agencies recognized the potential necessity of temporarily combining production, distribution, or service networks to facilitate production and distribution of COVID-19-related supplies.

The impact of COVID-19 stretches well beyond the health care system. As a result, there may be many more pro-competitive collaborations that companies are evaluating.  The DOJ and FTC have several publications that provide guidelines for collaborative conduct, including the Antitrust Guidelines for Collaborations Among Competitors (2000), the Statement of Antitrust Enforcement Policy in Health Care (1996), and a blog posted by the FTC, “Information Exchange, Be Reasonable” (2014). In their Joint Statement on March 24, 2020, the agencies reiterated that this guidance continues to apply.

Further, in certain instances, companies may wish to request guidance from the DOJ or FTC prior to engaging in collaborative activities.  Each of the agencies has a process in place to receive these requests: the Antitrust Division offers a Business Review process and the FTC issues Advisory Opinions. While these processes generally take several months, the agencies have announced that they aim to respond expeditiously to all COVID-19-related requests and to resolve those addressing public health and safety within seven calendar days of receiving all necessary information.

As companies navigate their business interactions with others, it is important to remember that, as the crisis passes, internal discussions regarding collaborations and other activities could be discoverable in either a government investigation or enforcement action, or private litigation. Therefore, companies should be mindful not just of their conduct, but also avoiding the appearances of any unlawful conduct.  For example, it is still important to structure arrangements appropriately, including implementation of measures such as firewalls for exchanging competitively sensitive information or agreements defining the scope and purpose of the collaboration, among others.  The crisis is ever-present today, but months from now, actions may be viewed under a different light, whether by the federal or state government agencies, private parties, or judges and juries.

Limited Statutory Exemptions to Antitrust Rules May Apply

In the United States, certain wartime and other crisis statutes contain limited exemptions to the antitrust rules. While some of these provisions may be available during the COVID-19 response, companies should be mindful that these exemptions are often narrow and do not create blanket exemptions for all conduct related to COVID-19. Potential limited exemptions can be found in the following:

  • Pandemic and All Hazards Preparedness and Advancing Innovation Act 2019, amending, among other provisions, 42 U.S.C. § 247d-7f (“PAHPAIA”): Passed last year, PAHPAIA enhances existing authorities vested in the Secretary for Health and Human Services (“HHS”) to respond to national public health emergencies, including through advanced funding for buying needed medical countermeasures. Such countermeasures include drugs, biological products, or devices that the Secretary of HHS determines to be a priority to diagnose, mitigate, prevent, or treat conditions that may result in adverse health consequences or death. PAHPAIA includes a limited exemption from certain antitrust laws for meetings and conduct directly supervised by the HHS Secretary in consultation with the DOJ and FTC.
  • Defense Production Act of 1950, 50 U.S.C. §§ 4501, et seq. (“DPA”): The DPA provides the President (and department and agency heads, as his designees) with various authorities to regulate private industry in order to facilitate national defense, including emergency preparedness activities. While the statute does not provide general immunity from the antitrust laws, it does create a limited defense in situations where “the President or the President’s designee has authorized and actively supervised the voluntary agreement or plan of action.”
  • National Cooperative Research and Production Act of 1993, 15 U.S.C. §§ 4301-4306 (“NCRPA”): Among other provisions, the NCRPA limits antitrust remedies to single (rather than treble) damages for certain joint ventures and standard setting organizations that file with the DOJ and FTC. The application of the statute is not limited to COVID-19-response activities, but the Agencies have announced that they will work to expeditiously process these filings. The DOJ offers an explanation of the statute and instructions for making filings.

Even in normal times, collaborations between companies, including competitors, can create efficient, pro-competitive effects that are consistent with the application of antitrust laws.  In times of crisis, collaborative efforts can become critical components of effective responses.  The antitrust laws are not intended to thwart these well-intentioned efforts.  However, companies must be aware that the rules still apply to their interactions and conduct. As a result, it is important to structure collaborations carefully and seek pragmatic and practical antitrust advice.

The Covington competition team will continue to monitor the situation and will provide regular updates on new developments. For more information on the application of European competition law to collaborations in response to COVID-19, please refer to this blogpost.

Agencies Encourage Banks to Make Small-Dollar Loans to Customers Affected by Coronavirus

By Covington Team on Posted in Financial, Uncategorized

Yesterday, March 26, the Board of Governors of the Federal Reserve System, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency released an interagency statement encouraging financial institutions to offer responsible small-dollar loans to both consumers and small businesses facing unexpected expenses or sudden income shortfalls due to the COVID-19 pandemic.  The statement is the latest in a series of interagency statements  released in recent weeks encouraging banks to work with customers affected by the coronavirus, including a statement providing that banks will receive credit under the Community Reinvestment Act for certain efforts to assist such customers.

Yesterday’s statement notes that the current regulatory framework authorizes banks to offer small-dollar loans through a variety of structures – including open-end lines of credit, closed-end installment loans, or appropriately structured single-payment loans – subject to safety and soundness standards and consumer protection laws.  The statement does not clarify what features make a small dollar loan “responsible” in the view of the agencies, but the OCC issued guidance in 2018 addressing that issue for national banks and federal savings banks.

Financial institutions may, but are not required to, consult with their primary federal regulator about small-dollar loan products offered to affected customers.  The statement indicates that the agencies are working on future guidance and lending principles for responsible small-dollar lending “in more normalized times.”

CARES Act Will Support Internet Connectivity for Remote Education, Healthcare, and Work

By Holly Fechner, Matthew Shapanka and Eric Chung on Posted in Congressional Action, Health Issues

As millions of American workers, students, and patients stay home to help combat the novel coronavirus (COVID-19), the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act includes funding for the transition to remote life among its many relief provisions. With specific funding for broadband connections, distance learning, telehealth, and telework, the CARES Act recognizes the pressing need for people to remain connected during this public health crisis.

The CARES Act allocates funds specifically to help rural communities connect to broadband internet, including $100 million to the U.S. Department of Agriculture’s Rural Utility Service (RUS) for its Reconnect Pilot Program, which provides grants for the costs of construction, improvement, or acquisition of facilities and equipment needed to provide broadband service in eligible rural areas.

In addition to providing additional funding to connect underserved populations to the Internet, the legislation appropriates specific funding for remote education, healthcare, and work:

  • Provides the Federal Communications Commission (FCC) with $200 million to support efforts of health care providers to address COVID-19 by providing telecommunications services, information services, and devices necessary to enable the provision of telehealth services.
  • Increases RUS’s Distance Learning, Telemedicine, and Broadband Program funding by $25 million, allowing the agency to provide additional grants to support rural communities’ access to telecommunications-enabled information, audio, and video equipment.
  • Sets aside $180 million from the $127 billion increase in funding for the Department of Health and Human Services’ Public Health and Social Services Emergency Fund to expand services and capacity for rural hospitals, including telehealth.
  • Provides that its $13.5 billion in Education Stabilization Funding, allocated to the states by formula, may be used to improve the use of technology to support distance education.
  • Provides $2.15 billion to the Department of Veterans Affairs for information technology uses to support increased telework and telehealth, including the purchasing of devices and enhanced system bandwidth and support.
  • Increases funding to virtually all federal departments to provide operational support, including for transitioning to telework.

The CARES Act is expected to pass the House and be signed by the President this week, but some members of Congress are eying more government support for broadband in future legislation.

The House Democrats released their own version of a coronavirus stimulus bill earlier this week, which included $2 billion for an “Emergency Connectivity Fund” through the FCC’s E-Rate program to support the Commission’s provision of “Wi-fi hotspots and connected devices to schools and libraries” to enable distance learning—a provision Senate Democrats fought unsuccessfully to add to the CARES Act. The House bill also included $1 billion for an Emergency Broadband Connectivity Fund, which would allow the FCC to reimburse network carriers for the cost of providing broadband service to low-income households.

The House bill previews policies lawmakers may attempt to include in future recovery legislation. Indeed, several Senate Democrats expressed frustration that more funding for connectivity to close the “homework gap” and ensure low-income students have access to high-speed Internet was not included in the CARES Act, and they committed to supporting broadband funding in future COVID-19 relief packages.

For additional information on business considerations in response to the coronavirus outbreak, please see Covington’s COVID-19 Legal and Business Toolkit.

Covington’s Ability to Help Respond to the COVID-19 Pandemic in Africa

By Witney Schneidman, Benjamin Haley and Mike McLaren on Posted in Africa, Health Issues

 With African governments increasingly taking strong actions to impede the spread of the COVID-19 virus – including in a number of jurisdictions, imposing full lockdowns – we are able to provide assistance to our clients, financial institutions, developmental finance organizations, companies and organizations on the continent. We are available to get on a call at short notice, at no cost, or respond to questions sent via email. Our interest is to share our perspective on various measures being implemented by governments in Africa and elsewhere, the impact these actions might have, and how our experience can be of assistance at this critical time.

Force Majeure: COVID-19 will have a significant impact on project development markets, construction and infrastructure transactions, supply contracts, and a host of other commercial transactions. As a result, companies will be compelled to assess the costs and benefits of claiming force majeure relief. Force majeure is generally found when an event is (i) beyond the breaching party’s control; and (ii) is not reasonably foreseeable. For example, travel bans imposed by governments will impact the ability of skilled labor and professionals from other countries to complete work under the project development contracts. This will cause delays and create grounds for force majeure claims. Other issues, such as scheduled maintenance, especially if governments limit gatherings to no more than 10 people, could be grounds to claim force majeure. And what happens when a contract stipulates that a project suspension notice must be delivered by hand—and people are not permitted to leave their home or offices are closed?

Financing Transactions, Mergers and Acquisitions (M&A) and Material Adverse Effect: Navigating commercial, M&A and finance agreements during these times can and will be an extremely difficult and daunting task. Whether there are potential issues of force majeure (as discussed above), questions as to the occurrence of a Material Adverse Effect, issues relating to the impossibility of performance, issues relating to disclosures and announcements, or other issues, our multi-faceted and multi-jurisdictional team can mitigate the negative consequences of these complex matters.

Insurance: Covington’s insurance practice group has helped policyholders with losses arising from hurricanes (Katrina), terrorist attacks (September 11), industrial accidents and environmental damages (Deepwater Horizon and Exxon Valdez) and numerous other large losses, and we can be helpful in issues arising from the COVID-19 pandemic. As we have described in a recent alert on insurance best practices, for entities that are considering pursuing insurance claims related to COVID-19, it will be important to document timeframes for shutdowns, supply disruptions, as well as all lost income attributable to the pandemic.

Sourcing Supplies from China and Europe: Companies in Africa are naturally looking to other markets to source ventilators, surgical gowns, masks and other Personal Protective Equipment to respond to the pandemic. Our Food and Drug Regulatory practice and our offices in Shanghai and Beijing can be helpful in evaluating suppliers, their relevant certifications and putting in place commercial contracts to ensure the timely export of materials out of Asia. We can also be helpful in this area from our offices in Brussels, Frankfurt and London in respect of exports being made from the United Kingdom and continental Europe.

Interactions with Government: As governments attempt to blunt the pandemic’s public health and economic effects, many companies are frantically working to seek the help they believe they need to survive these trying times and to preserve their employees’ jobs. In addition, companies with products or services that could assist the ability of governments to respond to the crisis are considering ways to contract with government agencies. As a consequence, many companies are more deeply engaged with government officials than ever before, including by seeking financial loans, grants, contracts, product approvals, regulatory relief, or guidance on how to operate in these times. But the basic rules covering interactions with government—including ethics, bribery, and procurement fraud laws—all remain in place. Companies that cut compliance corners now may pay a price down the road. We also have a number of former diplomats in our ranks who have experience working with decision-makers at all levels of governments in our Global Problem Solving practice.

Lessons from Other Regions: As a global law firm head-quartered in Washington, D.C., we are closely tracking federal, state and regional developments in the United States that might impact our clients. We have put together our analysis of these developments in a Legal and Business Toolkit that can be accessed here. To the degree that there might be relevance for what companies are experiencing in Africa, we would be happy to share our experience working with clients in the U.S. and other jurisdictions.

The Next Pandemic: While organizations and governments may be currently overwhelmed responding to the COVID-19 crisis, they can seize opportunities to consider how they might best prepare themselves for the next pandemic, incorporating lessons from the current and previous pandemics. Lessons already evident from this pandemic are that social and economic disruption may be prolonged, medical interventions may not exist or not be available, and that decision makers may be held to account. A review of existing or new plans should also inform broader catastrophe planning and business continuity.

For further information on any of these topics or other questions, please reach out to Covington’s COVID-19 Task Force, COVID19@cov.com, Witney Schneidman, wschneidman@cov.com, Ben Haley, bhaley@cov.com, Mike McLaren, mmclaren@cov.com, or Mosa Mkhize, mmkhize@cov.com.

This post can also be found on CovAfrica, the firm’s blog on legal, regulatory, political and economic developments in Africa.

 

HHS Relaxes Enforcement of Certain HIPAA Provisions Amidst COVID-19 Nationwide Public Health Emergency

By Anna D. Kraus and Tara Carrier on Posted in Health Issues, Privacy

This month, the U.S. Department of Health and Human Services (“HHS”) issued guidance waiving enforcement of certain provisions of the Health Insurance Portability and Accountability Act (“HIPAA”) in response to the COVID-19 nationwide public health emergency.

Covered Health Care Providers

On March 17, 2020, the Department of Health and Human Services Office for Civil Rights (“OCR”) announced that it will exercise enforcement discretion for health care providers communicating with patients and providing telehealth services through remote communications technologies during the COVID-19 nationwide public health emergency. OCR’s Notification of Enforcement Discretion states that it will waive sanctions and penalties for HIPAA violations connected to the “good faith” provision of telehealth through the use of audio or video communication technologies. Covered health care providers may use certain technologies for telehealth services, even if the technologies or the manner in which they are used by health care providers do not comply with the HIPAA Rules.

Under the Notification, OCR permits health care providers to use non-public facing audio or video applications – i.e., those applications not accessible from the Internet but only from within the internal network – for the purpose of assessing and treating a patient exhibiting COVID-19 symptoms or other medical conditions not related to COVID-19. OCR encourages providers to enable all available encryption and privacy modes for the applications and to notify their patients that there may be privacy risks. OCR emphasizes that health care providers are not allowed to use public facing applications for the provision of telehealth.

Covered health care providers who want additional privacy protections are encouraged to use technology vendors that are HIPAA compliant and will enter into a business associate agreement (“BAA”) for their video communication products. OCR’s Notification contains a list of vendors that represent they are HIPAA-compliant, but notes that OCR has not reviewed the BAAs offered by these vendors. During the COVID-19 nationwide public health emergency, OCR will not impose penalties related to the good faith provision of telehealth services for covered health care providers that do not have a BAA with video communication vendors.

Covered Hospitals

Effective March 15, 2020, HHS will also waive sanctions and penalties for covered hospitals that do not comply with certain provisions of the HIPAA Privacy Rule. The limited waiver states that covered hospitals will not risk HIPAA violations for failing to comply with:

  • the requirement to obtain patient authorization to speak with family members or friends involved with the patient’s care;
  • the requirement to honor a patient’s request to opt out of the facility directory;
  • the requirement to distribute a notice of privacy practices;
  • the patient’s right to request additional privacy restrictions; and
  • the patient’s right to request confidential communications.

This limited waiver applies only (1) in the emergency area identified in the public health emergency declaration; (2) to covered hospitals that have instituted a disaster protocol; and (3) for up to 72 hours after the hospital implements its disaster protocol. Once the declaration of a public health emergency is terminated, covered hospitals must resume compliance with all HIPAA requirements for any patient under their care.

COVID 19 – US and EU Competition Law Implications (25 March 2020)

By Covington Team on Posted in Competition, Uncategorized

The Covington US and EU Competition/Antitrust teams will be updating you regularly, through the Covington Competition blog, on the competition/antitrust law implications – both procedural and substantive – of the COVID-19 crisis in the US and the EU.  This is our update for Wednesday 25 March. New updates as compared to the previous update are highlighted.
United States 1. Mergers / Filings

  • Electronic HSR Filings and No Early Terminations: The Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ) are continuing to accept Hart-Scott-Rodino (HSR) merger filings through a temporary electronic filing system that was launched on March 17th.  Hard-copy filings will not be accepted during this period.  While the temporary electronic filing system is in place, no Early Terminations will be granted.
  • Extended Timing Agreements:  For mergers currently pending or that may be proposed, the DOJ is requesting, as part of any timing agreement, that merging parties afford it an additional 30 days to complete its review of transactions after the parties have complied with document requests.  (Although the DOJ has not stated it expressly, this likely means 30 days in addition to whatever period of time the parties have agreed to delay their closing beyond the 30-day post-compliance period already provided for by the HSR Act itself.  Thus, for example, if the parties have committed not to close for 60 days after compliance, the DOJ will request that they extend that commitment to 90 days.) The DOJ has cautioned that it may revisit its timing agreements with merging parties in light of further developments.
  • No In-Person Meetings & Depositions:  Meetings at both agencies will be conducted by phone or video conference (where possible).  The FTC has announced that Bureau of Competition meetings, including Front Office meetings, will be held remotely until further notice.  And, the DOJ has postponed all scheduled depositions, and they will be rescheduled using secure videoconferencing capabilities.
  • DOJ Proposal to Extend Merger Timelines and Pause the Statute of Limitations for Price-Fixing Cases: According to a press report, the DOJ hopes to have included in the next round of pandemic legislation, a proposal that would let it and the FTC add 15 days onto merger timelines during emergencies, such as disease outbreaks, natural disasters, or government shutdowns.  The proposal also seeks to toll the statute of limitations for price-fixing and bid-rigging cases for at least six months because of the pandemic.

2. Government Investigations / Compliance Considerations

  • Antitrust Laws During Public Health Emergencies:  The tremendous uncertainty created by the current public health crisis may increase the opportunity and temptation to coordinate with others in the industry or substantially increase prices – but the antitrust laws still apply in full.  There is no collusion exemption for public health emergencies.  For example, DOJ recently announced its intention to “hold accountable anyone who violates the antitrust laws of the United States in connection with the manufacturing, distribution, or sale of public health products.”
  • Antitrust Counseling:  The antitrust laws allow for beneficial, pro-competitive collaborations and exchanges of information between competitors, and the needs of responding to a health crisis or other public emergencies are relevant to that determination.  Nevertheless, the antitrust laws apply, and it remains prudent to obtain antitrust counsel regarding communications with competitors and other competitively sensitive activities.
  • Justice Department and Federal Trade Commission Announce Expedited Antitrust Procedure and Guidance for  Coronavirus Public Health Efforts: In a joint statement issued on March 24th, the DOJ and FTC announced that they will aim to respond expeditiously to all COVID-19-related DOJ Business Review Process and Federal Trade Commission Advisory Opinion Process requests, and resolve those addressing public health and safety within seven (7) calendar days of receiving all necessary information.  The expedited procedure requires, among other things, that an applicant provide the agency an explanation of how the arrangement is related to COVID-19 and a description of the nature and rationale of the proposal.  This expedited procedure is for use solely for coronavirus-related public health efforts and may be invoked at the option of the requestor, in lieu of the agencies’ standard procedures for handling requests for advice.  The agencies will also work quickly to process joint venture filings under the National Cooperative Research and Production Act (as amended by the Standards Development Organization Advancement Act).
  • Ongoing Investigations:  Both DOJ and FTC are conducting a matter-by-matter review of investigations to consider appropriate modifications of statutory or agreed-to timing.  Parties and their counsel should expect the agencies to be in touch to discuss proposed modifications.
  • Price Gouging: Several states have moved to limit price gouging during the COVID-19 pandemic.  For example, the Massachusetts Attorney General issued an emergency regulation banning price-gouging in certain products necessary to public health and safety in light of the corona virus pandemic.

 3. Antitrust Litigation

  • Courts Slowing Cases:  Courts around the country are reacting to the public health crisis by closing facilities and postponing court activities. The Northern District of California, for example, stopped the high-profile Capacitors antitrust case in the middle of trial out of concerns for the health of the jurors and other participants. That court, like many others, is also postponing new trials until May 1st at the earliest, and it also announced that all pending civil motions—including those in antitrust cases—will be decided without in-person hearings. The Chief Judge of the New York State Courts entered an order on March 22 that puts a stop to all non-essential filings effectively immediately.  Additionally, the deadline for commencement, filing, service of any legal action, notice, motion or other process or proceeding prescribed by any procedural law of NY State, is tolled until April 19, 2020.

European Union

 1. State Aid  

  • Process: As Member States are putting financial support measures in place to support their economies, a wave of state aid notifications has started.    DG COMP opened a 24/7 hotline for public authorities to raise questions or request advice.
  • Substantive appraisal:
    • On 19 March 2020, the Commission has adopted its Temporary State aid Framework to support the economy in the current COVID-19 framework.  It will provisionally be in place until the end of December 2020.   It provides for five types of aid:
      • Direct grants, selective tax advantages and advance payments: Member States will be able to set up schemes to grant up to EUR 0.8 million (which is higher than the initially proposed EUR 0.5 million) to a company to address its urgent liquidity needs.
      • State guarantees for loans taken by companies from banks: Member States will be able to provide state guarantees to ensure banks keep providing loans to the customers who need them.
      • Subsidised public loans to companies: Member States will be able to grant loans with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.
      • Safeguards for banks that channel state aid to the real economy: Some Member States plan to build on banks’ existing lending capacities, and use them as a channel for support to businesses – in particular to small and medium-sized companies. The framework makes clear that such aid is considered as direct aid to the banks’ customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.
      • Short-term export credit insurance (which was not provided for in the draft proposals): The framework introduces additional flexibility on how to demonstrate that certain countries are not-marketable risks, thereby enabling short-term export credit insurance to be provided by the state where needed.
    • The Commission will be using a number of provisions of the Treaty to assess State aid measures:
      • The decisions will mainly be based on Article 107 (3) (b) TFEU which allows the Commission to clear state aid measures that intend to remedy a serious disturbance in a Member State’s economy.   The State aid decisions adopted in the last 24 hours have been based on this provision;
      • The Commission also refers to Article 107 (3) (b) TFEU which allows rescue and restructuring aid.  There is already a framework in place for this aid.  However, very importantly, the principle of ‘one time last time’ of these guidelines does not need to apply;
      • In the new Framework, the Commission also refers to the less used Article 107 (2) (b) TFEU which allows the Commission to clear state aid on the basis of an “exceptional occurrence”.  This provision has been used in the past in the context of the mad cow disease crisis and the financial crisis.
  • State aid clearances : Since early last week, the Commission has cleared a variety of schemes, including:
    • A Danish aid scheme to compensate organisers for the damage suffered due to the cancellation of large events with more than 1,000 participants;
    • Four Portuguese guarantee schemes for small and medium-sized enterprises and mid-caps with a total budget of EUR 3 billion;
    • A EUR 50 million Italian aid scheme to support the production and supply of medical devices and personal protection equipment;
    • Two German State aid schemes to support the German economy;
    • A EUR 130 million Danish guarantee scheme for small and medium-sized enterprises;
    • Three French State aid schemes for a total amount of EUR 30 billion to support the French economy;
    • A EUR 200 million Latvian loan guarantee scheme and subsidised loan scheme;
    • A EUR 300 million Luxembourg support scheme;
    • A German direct grant scheme not exceeding EUR 800.000 per company;
    • A Spanish EUR 20 billion guarantee scheme for companies and self-employed;
    • Two UK schemes providing direct grants and guarantees for SME’s.

2. Mergers 

  • We understand DG COMP is no longer allocating case teams for new matters and has urged companies to postpone notifications.  This is, in part, driven by the fact that all non-essential DG COMP officials are now working from home, and, on the other hand, the fact that there is a high likelihood that third parties will not respond to RFIs. Case teams are continuing to engage with parties already in pre-notification, albeit at a slower pace. On 23 March, a number of merger notifications have been formally filed (three simplified and one non-simplified) which indicates DG COMP is again ready to accept notifications.
  • There is currently no clear position on on-going merger cases so the timelines on those are running.  We understand the Commission is assessing whether there are ways of pausing timelines on on-going cases (beyond stopping the clock on a case-by-case basis).
  • We understand a number of national authorities are taking a similar approach (no new cases, on-going cases as per normal, including pressing ahead with hearings (using multi-party video calls)).  More specifically,
    • the French Competition Authority has announced that it will continue to progress its merger cases.  However, the FCA anticipates that the deadlines and review procedures of deals could be adapted in the near future.  Companies are advised to delay any non-urgent plans to notify;
    • the Danish Competition Authority has suspended deadlines for merger control for an initial – possibly extendable – period of 14 days as of today (18 March);
    • the Belgian and Irish Competition Authority are encouraging companies to delay non-urgent notifications;
    • the CMA has announced it will continue to progress its cases, subject to the potential extension of statutory deadlines where necessary.  Meetings and hearings will be conducted remotely;
    • the Italian Competition Authority has suspended all deadlines (including for mergers) from 23 February until 15 April; the clock will restart on Monday, 16 April;
    • the Austrian Competition Authority has decided that all time limits for merger review will start on 1 May 2020;

3. Abuse and Cartel Investigations

  • The tremendous uncertainty created by the current emergency may increase the temptation for employees to align with others in the industry, or substantially increase prices — but the antitrust laws still apply in full.  A number of national competition authorities have already issued statements to remind companies of the full application of antitrust laws.
  • Some industries might be able to benefit from enhanced cooperation and coordination to raise efficiencies when addressing specific COVID-19 scenarios (such as the logistics and health care/life science sectors). This needs to be analysed on a case-by-case basis. In addition, antitrust agencies might be willing to grant comfort for such projects on a temporary basis. For example, the CMA announced it is relaxing some elements of competition law to help supermarkets work together to the extent that this is necessary to protect consumers – for example, by ensuring security of supplies.
  • The European Competition Network (composed of the European Commission and NCA’s) issued a statement recognising that additional industry cooperation might be needed given the crisis, for example to ensure continued supplies, but warns against price gouging.  Competition authorities will be quick to act against perceived cartels or abuses of dominance. The statement also notes that producers can set maximum prices to reduce the risks of price increases by distributors or retailers.
  • The cases that are close to finalisation are still being progressed.
  • Some on-going cases are on hold.  Others are being progressed but at a substantially lower pace.

4. Private Enforcement

  • A number of courts around Europe are postponing hearings and halting the progress of damages cases.  In the UK, The Courts remain open but are encouraging the use of remote hearings where possible.
  • The staff at most major arbitral institutions are working remotely but remain operational.

5. General Court and CJEU

  • The General Court and CJEU have suspended all hearings.

COVID 19 – US and EU Competition Law Implications (24 March 2020)

By Covington Team on Posted in Competition, Uncategorized

The Covington US and EU Competition/Antitrust teams will be updating you regularly, through the Covington Competition blog, on the competition/antitrust law implications – both procedural and substantive – of the COVID-19 crisis in the US and the EU.  This is our update for Tuesday 24 March.

United States 1. Mergers / Filings

  • Electronic HSR Filings and No Early Terminations: The Federal Trade Commission (FTC) and Antitrust Division of the Department of Justice (DOJ) are continuing to accept Hart-Scott-Rodino (HSR) merger filings through a temporary electronic filing system that was launched on March 17th.  Hard-copy filings will not be accepted during this period.  While the temporary electronic filing system is in place, no Early Terminations will be granted.
  • Extended Timing Agreements:  For mergers currently pending or that may be proposed, the DOJ is requesting, as part of any timing agreement, that merging parties afford it an additional 30 days to complete its review of transactions after the parties have complied with document requests.  (Although the DOJ has not stated it expressly, this likely means 30 days in addition to whatever period of time the parties have agreed to delay their closing beyond the 30-day post-compliance period already provided for by the HSR Act itself.  Thus, for example, if the parties have committed not to close for 60 days after compliance, the DOJ will request that they extend that commitment to 90 days.) The DOJ has cautioned that it may revisit its timing agreements with merging parties in light of further developments.
  • No In-Person Meetings & Depositions:  Meetings at both agencies will be conducted by phone or video conference (where possible).  The FTC has announced that Bureau of Competition meetings, including Front Office meetings, will be held remotely until further notice.  And, the DOJ has postponed all scheduled depositions, and they will be rescheduled using secure videoconferencing capabilities.
  • DOJ Proposal to Extend Merger Timelines and Pause the Statute of Limitations for Price-Fixing Cases: According to a press report, the DOJ hopes to have included in the next round of pandemic legislation, a proposal that would let it and the FTC add 15 days onto merger timelines during emergencies, such as disease outbreaks, natural disasters, or government shutdowns.  The proposal also seeks to toll the statute of limitations for price-fixing and bid-rigging cases for at least six months because of the pandemic.

2. Government Investigations / Compliance Considerations

  • Antitrust Laws During Public Health Emergencies:  The tremendous uncertainty created by the current public health crisis may increase the opportunity and temptation to coordinate with others in the industry or substantially increase prices – but the antitrust laws still apply in full.  There is no collusion exemption for public health emergencies.  For example, DOJ recently announced its intention to “hold accountable anyone who violates the antitrust laws of the United States in connection with the manufacturing, distribution, or sale of public health products.”
  • Antitrust Counseling:  The antitrust laws allow for beneficial, pro-competitive collaborations and exchanges of information between competitors, and the needs of responding to a health crisis or other public emergencies are relevant to that determination.  Nevertheless, the antitrust laws apply, and it remains prudent to obtain antitrust counsel regarding communications with competitors and other competitively sensitive activities.
  • Justice Department and Federal Trade Commission Announce Expedited Antitrust Procedure and Guidance for  Coronavirus Public Health Efforts: In a joint statement issued on March 24th, the DOJ and FTC announced that they will aim to respond expeditiously to all COVID-19-related DOJ Business Review Process and Federal Trade Commission Advisory Opinion Process requests, and resolve those addressing public health and safety within seven (7) calendar days of receiving all necessary information.  The expedited procedure requires, among other things, that an applicant provide the agency an explanation of how the arrangement is related to COVID-19 and a description of the nature and rationale of the proposal.  This expedited procedure is for use solely for coronavirus-related public health efforts and may be invoked at the option of the requestor, in lieu of the agencies’ standard procedures for handling requests for advice.  The agencies will also work quickly to process joint venture filings under the National Cooperative Research and Production Act (as amended by the Standards Development Organization Advancement Act).
  • Ongoing Investigations:  Both DOJ and FTC are conducting a matter-by-matter review of investigations to consider appropriate modifications of statutory or agreed-to timing.  Parties and their counsel should expect the agencies to be in touch to discuss proposed modifications.
  • Price Gouging: Several states have moved to limit price gouging during the COVID-19 pandemic.  For example, the Massachusetts Attorney General issued an emergency regulation banning price-gouging in certain products necessary to public health and safety in light of the corona virus pandemic.

 3. Antitrust Litigation

  • Courts Slowing Cases:  Courts around the country are reacting to the public health crisis by closing facilities and postponing court activities. The Northern District of California, for example, stopped the high-profile Capacitors antitrust case in the middle of trial out of concerns for the health of the jurors and other participants. That court, like many others, is also postponing new trials until May 1st at the earliest, and it also announced that all pending civil motions—including those in antitrust cases—will be decided without in-person hearings. The Chief Judge of the New York State Courts entered an order on March 22 that puts a stop to all non-essential filings effectively immediately.  Additionally, the deadline for commencement, filing, service of any legal action, notice, motion or other process or proceeding prescribed by any procedural law of NY State, is tolled until April 19, 2020.

European Union

 1. State Aid  

  • Process: As Member States are putting financial support measures in place to support their economies, a wave of state aid notifications has started.    DG COMP opened a 24/7 hotline for public authorities to raise questions or request advice.
  • Substantive appraisal:
    • On 19 March 2020, the Commission has adopted its Temporary State aid Framework to support the economy in the current COVID-19 framework.  It will provisionally be in place until the end of December 2020.   It provides for five types of aid:
      • Direct grants, selective tax advantages and advance payments: Member States will be able to set up schemes to grant up to EUR 0.8 million (which is higher than the initially proposed EUR 0.5 million) to a company to address its urgent liquidity needs.
      • State guarantees for loans taken by companies from banks: Member States will be able to provide state guarantees to ensure banks keep providing loans to the customers who need them.
      • Subsidised public loans to companies: Member States will be able to grant loans with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.
      • Safeguards for banks that channel state aid to the real economy: Some Member States plan to build on banks’ existing lending capacities, and use them as a channel for support to businesses – in particular to small and medium-sized companies. The framework makes clear that such aid is considered as direct aid to the banks’ customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.
      • Short-term export credit insurance (which was not provided for in the draft proposals): The framework introduces additional flexibility on how to demonstrate that certain countries are not-marketable risks, thereby enabling short-term export credit insurance to be provided by the state where needed.
    • The Commission will be using a number of provisions of the Treaty to assess State aid measures:
      • The decisions will mainly be based on Article 107 (3) (b) TFEU which allows the Commission to clear state aid measures that intend to remedy a serious disturbance in a Member State’s economy.   The State aid decisions adopted in the last 24 hours have been based on this provision;
      • The Commission also refers to Article 107 (3) (b) TFEU which allows rescue and restructuring aid.  There is already a framework in place for this aid.  However, very importantly, the principle of ‘one time last time’ of these guidelines does not need to apply;
      • In the new Framework, the Commission also refers to the less used Article 107 (2) (b) TFEU which allows the Commission to clear state aid on the basis of an “exceptional occurrence”.  This provision has been used in the past in the context of the mad cow disease crisis and the financial crisis.
  • State aid clearances : Since early last week, the Commission has cleared :
    • A Danish aid scheme to compensate organisers for the damage suffered due to the cancellation of large events with more than 1,000 participants;
    • Four Portuguese guarantee schemes for small and medium-sized enterprises and mid-caps with a total budget of EUR 3 billion;
    • A EUR 50 million Italian aid scheme to support the production and supply of medical devices and personal protection equipment;
    • Two German State aid schemes to support the German economy;
    • A EUR 130 million Danish guarantee scheme for small and medium-sized enterprises;
    • Three French State aid schemes for a total amount of EUR 30 billion to support the French economy;
    • A EUR 200 million Latvian loan guarantee scheme and subsidised loan scheme;
    • A EUR 300 million Luxembourg support scheme.

2. Mergers 

  • We understand DG COMP is no longer allocating case teams for new matters and has urged companies to postpone notifications.  This is, in part, driven by the fact that all non-essential DG COMP officials are now working from home, and, on the other hand, the fact that there is a high likelihood that third parties will not respond to RFIs. Case teams are continuing to engage with parties already in pre-notification, albeit at a slower pace.
  • There is currently no clear position on on-going merger cases so the timelines on those are running.  We understand the Commission is assessing whether there are ways of pausing timelines on on-going cases (beyond stopping the clock on a case-by-case basis).
  • We understand a number of national authorities are taking a similar approach (no new cases, on-going cases as per normal, including pressing ahead with hearings (using multi-party video calls)).  More specifically,
    • the French Competition Authority has announced that it will continue to progress its merger cases.  However, the FCA anticipates that the deadlines and review procedures of deals could be adapted in the near future.  Companies are advised to delay any non-urgent plans to notify;
    • the Danish Competition Authority has suspended deadlines for merger control for an initial – possibly extendable – period of 14 days as of today (18 March);
    • the Belgian and Irish Competition Authority are encouraging companies to delay non-urgent notifications;
    • the CMA has announced it will continue to progress its cases, subject to the potential extension of statutory deadlines where necessary.  Meetings and hearings will be conducted remotely;
    • the Italian Competition Authority has suspended all deadlines (including for mergers) from 23 February until 15 April; the clock will restart on Monday, 16 April;
    • the Austrian Competition Authority has decided that all time limits for merger review will start on 1 May 2020;

3. Abuse and Cartel Investigations

  • The tremendous uncertainty created by the current emergency may increase the temptation for employees to align with others in the industry, or substantially increase prices — but the antitrust laws still apply in full.  A number of national competition authorities have already issued statements to remind companies of the full application of antitrust laws.
  • Some industries might be able to benefit from enhanced cooperation and coordination to raise efficiencies when addressing specific COVID-19 scenarios (such as the logistics and health care/life science sectors). This needs to be analysed on a case-by-case basis. In addition, antitrust agencies might be willing to grant comfort for such projects on a temporary basis. For example, the CMA announced it is relaxing some elements of competition law to help supermarkets work together to the extent that this is necessary to protect consumers – for example, by ensuring security of supplies.
  • The European Competition Network (composed of the European Commission and NCA’s) issued a statement recognising that additional industry cooperation might be needed given the crisis, for example to ensure continued supplies, but warns against price gouging.  Competition authorities will be quick to act against perceived cartels or abuses of dominance. The statement also notes that producers can set maximum prices to reduce the risks of price increases by distributors or retailers.
  • The cases that are close to finalisation are still being progressed.
  • Some on-going cases are on hold.  Others are being progressed but at a substantially lower pace.

4. Private Enforcement

  • A number of courts around Europe are postponing hearings and halting the progress of damages cases.  In the UK, The Courts remain open but are encouraging the use of remote hearings where possible.
  • The staff at most major arbitral institutions are working remotely but remain operational.

5. General Court and CJEU

  • The General Court and CJEU have suspended all hearings.

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Coronavirus: Potential Implications for Africa

By Kimberly Stietz, Witney Schneidman and Yolanda Dladla on Posted in Africa, Health Issues, International Strategy

The Coronavirus (hereinafter “COVID-19”) is upending lives around the world—equally in developed and developing countries. Some are already affected by the deadly impact of COVID-19 (e.g. China, Italy, and France), while others’ lives have been altered due to efforts taken to “flatten the curve,” to ensure hospital systems are not overrun with patients in need all at once (e.g. the United States). Knowing that the worst is yet to come, experts are bracing for potentially devastating impacts throughout the African continent.As of March 18, 2020, the World Health Organization (“WHO”) reported that there were just over 475 cases in 30 countries on the continent. For a continent of 1.2 billion, this is a low number. However, we know that just as testing in the United States is not widely available, nor is it in Africa. Therefore, the number of actual cases is likely much higher than is currently being reported. In February, Bill Gates warned that COVID-19 may kill upwards of 10 million people in Africa.

High Risk FactorsThere are several high risk factors facing the continent. First, as discussed by the Lancet’s Preparedness and Vulnerability study, not all countries on the continent are equipped to implement the technical and operational interventions necessary for rapid testing and isolation of infected individuals who are traveling to the continent. China is Africa’s largest commercial partner, which means there is a high travel volume of Chinese nationals—where the pandemic started—to the continent and therefore, potential risk for the rapid spread of COVID-19. While this link has not yet been documented, it is too early to rule it out. Thus far, many of the confirmed cases have documented links to travelers coming from the United States and Europe.

Second, not all travel to the continent has been halted. As of March 14, 2020, the Lancet reported that Ethiopian Airlines, the largest carrier in Africa, continued flights from Africa to China, while all Chinese airline companies and others continued to operate as well. Lancet assesses that the overall risk of importation to Africa is lower than that to Europe (1% vs 11%, respectively, according to current estimates), but “response and reaction capacity are also lower.”

Third, the healthcare infrastructure throughout the continent is fragile, and the public health impacts are likely to be further complicated by populations disproportionately affected by HIV, tuberculosis (TB), and other infectious diseases. Tedros Adhanom Ghebreyesus, Director-General of the WHO, recently said his “biggest concern” was COVID-19 spreading in countries with weak health systems. Coordinated action across all government sectors, utilizing trusted networks of professional civil servants, will be key to responding to COVID-19 in Africa.

Potential Mitigating Factors

One thing Africa has going for it in the face of COVID-19 is its youthful population, with the median age under 20. Only three percent of sub-Saharan Africa’s population is older than 65, and thus far, all indications are that children and younger people with no underlying conditions fare quite well with COVID-19.

Some have also suggested that higher average temperatures on the continent will make it harder for COVID-19 to survive and spread, but this is disputed and still an open question.

African Governments Respond

On March 15, 2020 South Africa’s President, Cyril Ramaphosa, declared a “national state of disaster,” and closed schools and banned mass gatherings. He also imposed travel restrictions on nationals from high risk countries including Italy, Iran, the US, the UK, China and elsewhere. The number of known confirmed cases in South Africa sits at 62 as of March 17, 2020.  As described by Mail & Guardian, “With the disease currently growing at a rate of 61% a day in South Africa, by the end of this month we could run out of ICU beds.”

Kenya’s President Uhuru Kenyatta followed suit by closing schools, discouraged large gatherings, and banned travel to Kenya except for Kenyan citizens and foreigners with valid residence permits. In an effort to discourage the physical handling of money, Kenya’s largest telecom provider, Safaricom, will implement a fee-waiver on all mobile-money transactions under $10 that are carried out on its platform, M-Pesa. Kenya has three confirmed COVID-19 cases.

Many other countries are taking similar actions to prevent a wave of infections, but large gatherings continue to occur in some countries. Regardless of how many Africans are infected and have adverse health impacts, the negative economic impact cannot be avoided. The UN Economic Commission on Africa projects that economic growth across the continent will drop from 3.2 percent to about 2 percent in 2020. Tourism, supply chains, commodity exports, and remittances are just a few of the sectors likely to be negatively impacted. Governments will have to pay more for food products, pharmaceuticals, and energy.

Implications for Project Finance Projects

COVID-19 will have a significant impact on project development markets across Africa with companies contemplating claiming force majeure relief during these unprecedented times. Force majeure is generally found when an event is (i) beyond the breaching party’s control and (ii) is reasonably unforeseeable. For example, travel bans placed on many Chinese companies will have a direct impact on the ability of persons from affected countries to travel to the continent to complete work under project development contracts. This will cause delays and create grounds for force majeure claims. When negotiating transaction documents, parties should be mindful of the potential impact of COVID-19 may have on their contracts.

Chinese manufacturers have issued shutdown notices which will have a direct impact on projects in the construction phase. Various African countries have entered into short and long-term collaborative arrangements with Chinese partners that not only supply the material for the development of various projects, but also supply the technical support and expertise for various projects—from the feasibility study to the commercial operation phases, and the subsequent continued management of the project. As the number of new confirmed COVID-19 cases decreases in China, it appears that the shutdown notices may soon be lifted.  However, as the number of cases continues to rise in Africa, the continuity of projects may not improve until the spread of COVID-19 is controlled.

We will continue to monitor the rapidly evolving situation on the continent as a consequence of COVID-19. If you are doing business on the continent and require further guidance and legal advice, please contact Witney Schneidman at wschneidman@cov.com or Bob Kayihura at RKayihura@cov.com.

This post can also be found on CovAfrica, the firm’s blog on legal, regulatory, political and economic developments in Africa.

New Jersey “Dark Money” Disclosure Law Permanently Enjoined

By Andrew Garrahan on Posted in Compliance Issues, Financial

Last year, we blogged about a new and highly restrictive disclosure law in New Jersey that took aim at so-called “dark money” spending by nonprofit and political organizations.  In response to a series of lawsuits, a federal court has issued an order permanently prohibiting the state from enforcing the law against “independent expenditure committees” as defined in that law.  An independent expenditure committee is defined as an entity:

  • organized under federal tax law as a 527 political organization or § 501(c)(4) social welfare organization;
  • that is not otherwise a political committee in the state; and
  • that raises or spends $3,000 or more in an attempt to influence an election or the passage or defeat of a public question, legislation, or regulation, without coordinating those activities with a candidate or party. “Coordinating” is defined in great detail.

The order notes that it does not prevent the state from passing new legislation on the same topic, which state leaders have previously indicated they plan to do.

FinCEN Issues COVID-19-Related Guidance on SAR Filings, Heightened Risk of Disaster Fraud

By Covington Team on Posted in FinCEN, Health Issues

The Financial Crimes Enforcement Network (FinCEN) issued guidance today, which:

  • requested financial institutions affected by the COVID-19 pandemic to contact FinCEN’s Regulatory Support Section and their functional regulator as soon as practicable if they have concerns about potential COVID-19-related delays to their ability to timely file Bank Secrecy Act (BSA) reports, including Suspicious Activity Reports (SARs);
  • advised financial institutions to remain alert to malicious or fraudulent transactions involving bad actors seeking to exploit the pandemic.

FinCEN is not the only agency concerned about COVID-19-related fraud.  On Friday, Interpol issued a warning concerning financial scams related to COVID-19; yesterday, the FBI tweeted a warning on COVID-19 cyber-scams; and over the past week, New York’s Attorney General and its Department of Financial Services have issued warnings and, in the case of the Attorney General, multiple orders targeting price gouging and fake medical treatments.  (Update:  late in the day today, U.S. Attorney General William Barr released a memorandum directing U.S. Attorneys to clamp down on COVID-19-related crimes, including sales of fake cures and phishing email schemes.)

FinCEN’s alert builds on standing guidance issued in October 2017 concerning the identification of financial transactions related to disaster fraud.  Disaster fraud can include:

  • benefits fraud, where individuals apply for emergency assistance benefits to which they are not entitled;
  • charities fraud, where bad actors impersonate legitimate charities and ask for disaster relief donations; and
  • cyber-related fraud, including where bad actors set up crowdfunding sites to solicit donations.

Many forms of disaster fraud constitute federal crimes and, particularly since the establishment of the National Center for Disaster Fraud in 2005, federal and state prosecutors have actively prosecuted disaster fraud cases in the wake of natural disasters and other significant incidents.

In addition to the typical forms of disaster fraud, FinCEN’s guidance notes the following specific emerging trends connected to COVID-19:

  • imposter scams, involving charities fraud as well as schemes where bad actors impersonate governmental, inter-governmental or healthcare organizations to steal personal information or distribute malware;
  • investment scams, such as promotions that falsely claim that the products or services of publicly traded companies can prevent, detect, or cure coronavirus;
  • product scams, such as those involving companies selling unapproved or misbranded products that make false health or safety claims pertaining to COVID-19; and
  • insider trading related to COVID-19.  FinCEN did not further explain what might constitute COVID-19-related insider trading but, as a commonsense matter, this may include trading ahead of announcements by public companies on COVID-19 response plans and on how COVID-19 is affecting their businesses.

Where a financial institution files a SAR in connection with suspicious activity related to COVID-19, the financial institution should enter “COVID19” in Field 2 of the SAR-template.

If your institution requires further information on FinCEN’s guidance, or on responding to suspected COVID-19-related financial crime, please do not hesitate to reach out to D. Jean Veta, Nikhil V. Gore, or other lawyers in Covington’s bank regulatory enforcement and investigations practice.

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