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Focus on Regulation

EU to suspend tariffs on medical equipment

Following requests from numerous Member States, on 3 April the European Commission (“Commission“) adopted Commission Decision (EU) 2020/491 (“the Decision“), which provides for relief from import duties and VAT for goods imported in the EU to combat the COVID-19 outbreak.  Although the Decision does not include a specific list of covered products, it would likely cover items such as personal protective equipment (e.g., protective spectacles and visors, face shields, mouth-nose-protection equipment, protective garments and gloves), and other items to treat the pandemic, including testing kits, ventilators and other medical equipment. Several Member States had already waived customs duties and VAT for such items.

The Decision allows Member States to grant an exemption from import duties and VAT to imported goods that fulfil the following conditions:

  1. They are intended for (i) distribution free of charge by State organisations, including State bodies, public bodies and other bodies governed by public law or by or on behalf of organisations approved by the competent authorities in the Member States (“State bodies“) to persons affected by or at risk from COVID-19 or involved in combating COVID-19 (“affected persons“); or (ii) are made available free of charge to affected persons while remaining the property of State bodies.
  2. They satisfy certain requirements set out in prior EU legislation allowing import duties and VAT relief in cases of disasters (Council Regulation (EC) No 1186/2009 setting up a Community system of reliefs from customs duty; and Council Directive 2009/132/EC determining the scope of Article 143(b) and (c) of Directive 2006/112/EC as regards exemption from VAT on the final importation of certain goods).
  3. They are imported for release for free circulation by or on behalf of (i) State bodies or (ii) disaster relief agencies to meet their needs during the period they provide disaster relief to affected persons.

The duty relief applies to imports from 30 January 2020 and will be valid until 31 July 2020, unless further extended.

Please contact our team for any questions you may have.

President Trump Signs Bipartisan Broadband Mapping Legislation

On March 23, 2020, President Trump signed the Broadband Deployment Accuracy and Technological Availability (DATA) Act. The law requires the Federal Communications Commission (FCC) to collect and disseminate more granular data about the availability of broadband service and to establish processes to ensure data accuracy.

The legislation comes in response to commentary about the FCC’s broadband coverage maps and suggestions regarding the Form 477 data collection process used to create those maps. The FCC has taken several steps to address these concerns about the data collection process. The FCC adopted a Further Notice of Proposed Rulemaking in 2017 to gather information about how to increase the quality and accuracy of broadband data and streamline reporting requirements. In August 2019, the FCC initiated a new process, the Digital Opportunity Data Collection, which requires all fixed broadband providers to submit granular maps of the areas where they have broadband-capable networks and offer service. Most recently, on December 4, 2019, the FCC announced that it would terminate its Mobility Fund Phase II (MF-II) proceeding after an investigation into major mobile providers’ compliance with data collection requirements revealed that some of the maps used for MF-II may have reported differences with the  performance experienced by consumers. Controversy surrounding the report increased calls for Congress to act. Continue Reading

Customs Rescinds Proposal to Extend Payment of Duties in Response to COVID-19 Pandemic; Requires Payment of Deferred Duties Not Granted Extension

US Customs and Border Protection (“Customs”) rescinded its proposal to grant extensions on all customs duty payments for 90 days in response to the COVID-19 Pandemic.  While Customs has conducted a limited case-by-case review of some requests for extensions of duty payments, Customs notified the trade community it was no longer accepting case-by-case requests for deferrals, and any extensions not granted would no longer be considered.  Any importer that deferred payments that should have been tendered between March 20 and 26, 2020 based on CSMS message 42097586 must initiate payment by March 27, 2020.  The US trade community continues to engage with Customs to address challenges faced by the importing community as a result of the COVID-19 Pandemic and to ask for a 90-day reprieve in duty payments. We will keep you posted regarding any new developments from CBP.


FCC Confirms that Certain COVID-19 Communications Fall Within the TCPA’s “Emergency Purposes” Exception

Health care providers and government officials have more clarity regarding the ability to place certain calls and texts about the novel coronavirus, thanks to recent action by the Federal Communications Commission (FCC).

On March 20, 2020, the FCC released a Declaratory Ruling confirming that the pandemic caused by the novel coronavirus qualifies as an emergency under the Telephone Consumer Protection Act (TCPA), after President Trump pronounced the COVID-19 outbreak a national emergency. As a result, hospitals, health care providers, health officials, and other government officials may use automated calls and text messages to communicate information about COVID-19 when “necessary to protect the health and safety of citizens,” without violating the TCPA.  The FCC released the Declaratory Ruling on its own motion, without being prompted to do so by a regulated party. Continue Reading

COVID-19: Actions taken by EU competition authorities – will the HCC’s approach go viral?

Within the first week of the confinement measures in Europe, the Hellenic Competition Commission (HCC) was one of the first EU competition authorities to announce a more lenient approach towards certain vertical agreements, as a way to address severe shortages caused in the market by the COVID-19 outbreak. This action taken by the HCC seems to have triggered equivalent initiatives by its co-enforcers in the European Competition Network (ECN). Last week, in a joint statement, ECN members announced a more lenient and flexible application of competition rules to help the markets remain competitive and overcome this crisis. The joint statement expressly provides that they “will not actively intervene against necessary and temporary measures put in place in order to avoid a shortage of supply”.

The COVID-19 outbreak led to an unprecedented demand for key medical supplies and other healthcare essentials. Companies found themselves in great distress trying to meet consumers’ high demand. The Greek Authority announced that during this time of crisis and in order to avoid supply shortages, it “will not take action against practices which relate to the imposition of maximum resale prices or recommended prices on supply contracts and distribution agreements”, provided that certain conditions are fulfilled.

The ECN joint statement is along the same lines. In particular, it introduced the possibility for manufacturers to set maximum prices for their products as a way to prevent unjustified price increases at the distribution level, by reference to the exceptional circumstances which require that undisrupted supply and distribution of essential goods is maintained.

However, market players should keep in mind that there is no “carte blanche” for hard-core vertical restraints, such as resale price maintenance agreements, or indeed any other anti-competitive agreement. The HCC stressed that given the circumstances, it will monitor market conduct even closer to ensure that companies are not taking advantage of the current situation. Again, the ECN joint statement follows the direction of the HCC announcement, noting that scrutiny of the behaviour of market players will remain unchanged and focus on identifying anti-competitive behaviour in sectors critical during these times.

In fact, at the end of last week, the HCC initiated an investigation in the markets for healthcare products, in particular surgical masks and disposable gloves, as well as other products such as antiseptic wipes and antiseptic solutions. The HCC sent requests for information to players at all levels of the supply chain, i.e. manufacturers, wholesalers and distributors. The investigation was the result of numerous consumer complaints and media reports regarding significant price increases and shortcomings of the products in question. The questions focus on prices (of purchase and further sale), profit margin and the rationale of any significant price increases. The scope of the investigation covers November 2019 to March 2020.

In light of the above, companies should be cautious when deciding to rely on the more lenient approach announced by the various EU competition authorities, as this is just an exceptional measure designed to address a crisis and not an open invitation to forget about competition rules. Following the ECN joint statement, and the concrete action taken by HCC, we expect to see more competition authorities launching investigations in sectors relating to the broader medical and healthcare industries as well as other industries that show signs of possibly unjustified price hikes and output restrictions as a result of the COVID-19 outbreak.

For a version of this blog post in Greek, please click here.

Reforms for China’s public procurement regime expected in 2020

On 27 February 2020, China’s Ministry of Finance (“MOF”) published its legislative agenda for 2020 and released a plan to amend a series of laws and regulations regarding public procurement (see here).  As China is speeding up the negotiation process for its accession to the Agreement on Government Procurement (“GPA”) within the WTO framework, significant changes to modernize the public procurement system are expected.

China’s current public procurement regime is governed by two main laws. On the one hand, the Government Procurement Law (“GPL”), administered by the MOF, governs purchasing activities conducted with fiscal funds by state organs and other organizations at all levels of government in China. On the other hand, the Tendering and Bidding Law (“TBL”) falls under the jurisdiction of the National Development and Reform Commission (“NDRC”) and imposes uniform tendering and bidding procedures for certain classes of procurement projects in China, notably construction and works projects, without distinguishing based on the type of entity that conducts the procurement.

The MOF plans to amend the GPL and a number of implementing rules in 2020, in particular the Government Procurement Law Implementation Regulation, as well as other important administrative measures, such as the Framework Agreements in Government Procurement Administrative Measures, Non-Public Bidding Procurement Methods in Government Procurement Administrative Measures and the Tendering of Goods and Services in Government Procurement Administrative Measures.

Some reforms have already been implemented. For instance, in July 2019, the MOF issued the Circular on Promoting Public Procurement and Optimizing the Business Environment (see here), which prohibits unfair restrictive practices in government procurement, such as discriminatory treatment relating to private, foreign or domestic companies, requirements on the size/business track record period for potential bidders, untimely or insufficient public disclosure of the tendering information, and so forth. In December 2019, the MOF amended the Publication of Government Procurement Information Administrative Measures (see here), setting out detailed requirements to enhance the effectiveness, sufficiency and transparency of tendering information publication.

As for NDRC, similar legislative efforts are underway. In August 2019, NDRC, along with seven other relevant ministries, launched the Special Rectification Work Plan for the Business Environment in Tendering and Bidding for Construction Projects (see here), aiming to remove unreasonable restrictions and barriers in the bidding processes for construction projects. On 3 December 2019, NDRC published draft amendments to the TBL for third party comments (see here). The draft amendments focus on both substantive and procedural changes to address legislative loopholes based on past practices and to enhance the efficiency, transparency and fairness of bidding processes.

As mentioned, one of the drivers for the reform of the public procurement regime is China’s ongoing negotiations to join the GPA, which is a multilateral trade agreement within the WTO framework, requiring open, fair and transparent conditions relating to competition to be ensured in government procurement involving GPA member countries. China’s accession to the GPA would open up significant business opportunities not only for Chinese companies abroad, but also for foreign players in China. In particular, foreign companies would gain better access to the giant government procurement market.

China’s GPA accession plan has received a major boost very recently. In its formal application back in 2007, China delivered its initial offer of conditions for acceding to the GPA and has revised that offer several times since then. On 10 April 2018, President Xi Jinping announced that China would accelerate the process of its accession to the GPA. On 20 October 2019, China circulated its sixth revised market access offer which offered additional commitments going beyond its last offer made in 2014. The new offer is now under discussion in the WTO’s GPA Committee. However, since China is required to have bilateral negotiations with each GPA member (including the United States), the timing for China’s accession remains unknown at this time. The fact that the United States government is considering withdrawing from the GPA adds a further layer of uncertainty to the entire process.

Despite the potential slowdown of the GPA negotiations due to the coronavirus and the possibility of complex bilateral negotiations ahead, with the State Council’s push to improve the business environment and implement a fair competition policy in China, ongoing reform of China’s public procurement regime is still expected to deliver important business opportunities for market players in the foreseeable future.

COVID-19: State aid available now!

European Commission approves first State aid measure in relation to the COVID-19 outbreak and announces a flexible application of State aid rules to stabilize the economy

Probably everyone would agree that the COVID-19 outbreak qualifies as an exceptional occurrence, or as an extraordinary, unforeseeable event. From a European law perspective, this qualification has a direct impact on many businesses. Due to the severe economic impact of the pandemic, EU State aid law will play an important role in the European response to the crisis. Already now we can predict that the situation will be comparable with the financial crisis in 2007/2008 where the flexible application of State aid rules was a political instrument of high importance.

It is in this context that the European Commission on 12 March approved the first national aid scheme notified by Denmark to compensate organisers for the damage suffered due to the cancellation of large events with more than 1,000 participants. Denmark set aside DKK 91 million (€12 million) intended to help operators with the losses suffered as a consequence of the cancellations or postponement of events, e.g. for tickets that were already sold.

The Commission had to approve this aid since, in principle, all State aid measures are illegal unless they have been notified to and authorised by the Commission. The notable exceptions are support measures that are de minimis or fall under a block exemption regulation or under an approved State aid scheme. Additional national schemes will be notified to the Commission in the next days as governments in the Member States are working with full speed on responding to the crisis. For instance, Germany announced a “protective shield” for the economy on 13 March that falls partially under existing and approved State aid schemes, and of new schemes that will be notified to the EC.  Similarly, the French government announced on 12 March a number of measures aimed at supporting French companies during the crisis, including the possibility to delay tax obligations for all companies unconditionally and State reimbursement of all short-time working costs. While the review of State aid notifications normally can take several weeks or months, in this first “coronavirus State aid” case the Commission approved the aid within 24 hours. The Commission has put a hotline in operation that is accessible 24/7 for the Member States to discuss State aid questions, including aid for individual companies that are particularly affected such as airlines.

As State aid is a fairly broad concept there will be many more cases in the coming months. State aid law does not only apply to direct subsidies but also to indirect financial measures, e.g. waivers of public debts or the non-enforcement of obligations (e.g., to pay taxes and other charges). In fact, such measures account for a large portion of State aid measures and the Commission will have to review a variety of political responses to the pandemic.

There are different legal benchmarks that will apply. Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU) will be important for COVID-19 schemes, such as the Danish example, that apply to specific companies or specific sectors for the damages directly caused by exceptional occurrences. Since the Commission decision concluded that the COVID-19 outbreak qualifies as an exceptional occurrence, it can be expected that many Member States will rely on this definition. This means that State interventions to compensate for the damages that are directly linked to the outbreak and proportionate are deemed justified.

However, the establishment of a direct link is not always as easy as for cancelled events. What about businesses that are affected by the downturn of the economy as a whole? For major parts of the business, rescue and restructuring aid according to article 107(3)(c) TFEU will be the instrument of choice as it was during the financial crisis 2008/2009. This provision enables Member States to help companies cope with liquidity shortages and needing urgent rescue aid. In addition, the Commission has already indicated that it views the economic situation currently faced by Italy as “a serious disturbance to the economy” of a Member State which allows aid under article 107(3)(b) TFEU. Commission Vice-President Vestager indicated that other Member States could fall into this category, as well. Therefore, the Commission is now preparing under this provision a temporary framework that will be similar to what has been used during the financial crisis.

In recent years, State aid law has been discussed in the public often in the context of its application to tax schemes and profit allocation questions. Now, it will be used again to flexibly respond to a serious economic crisis. The Commission and the Member States will benefit from the experiences during the financial crisis and President Ursula von der Leyen has announced today that the Commission will handle State aid law with “maximum flexibility”. In order to help the European economy, the Commission will also support particularly affected sectors such as tourism, transport, or hotels and restaurants. Other Commission measures are targeting urgent liquidity needs of SMEs and liquidity in the banking sector.

Companies affected directly or indirectly by the COVID-19 outbreak should take the following steps:

  • Monitor whether your business falls into the scope of any aid schemes implemented by the EU Member State. If it does, assess your eligibility, including those of your subsidiaries and affiliates in other jurisdictions.
  • Make sure to think of State aid law not only for direct financial grants but also any other support measures directly or indirectly attributable to an EU Member State and feel free to contact us, should you have any questions relating to notification requirements since missing notification requirements may trigger an obligation to return the aid.
  • Work with your trade associations to discuss your industry’s positioning vis-à-vis governments, considering aid schemes for the same industry in the other Member States, and aid schemes for other industries in your Member States to avoid unfair advantages for competitors.
  • Stay on the right side of competition law when teaming up with other industry players or working in trade associations. Do not disclose confidential information that could raise competition law issues.

Offshore wind farms (OWF) – an update from Poland

With costs coming down, a pre-existing supply chain, and other sites being developed nearby, Poland is well placed to develop and build a large-scale offshore market. Investors with know-how and experience in this field are attracted to the business opportunities available by joining the most advanced projects as joint venture partners, acquiring on-going projects, or securing the area and developing new projects. The Polish market is also interesting for companies involved in OWF supply chains and financing processes.

Click here to read the full article.

Industrial policy strikes again: Germany announces further tightening of Foreign Investment Control rules

For M&A transactions in Germany and beyond, Foreign Investment Control screenings have become an indispensable standard element to assess when structuring deals and planning for regulatory review. Similarly to merger control, acquirers and sellers need to consider the impact of the increasing number of jurisdictions that might want to review their proposed transaction. In the last few years, Germany has been at the forefront of the EU Member States concerning, in particular, the screening of Chinese investments, although the number of notified acquisitions by US acquirers has also increased. And there is more to come:

On 30 January 2020, the German Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie – BMWi) issued a draft bill further tightening regulations on Foreign Direct Investment (FDI) into Germany (the draft is publicly available in German here). Specifically, the current draft bill concerns a reform of the German Foreign Trade and Payments Act (Außenwirtschaftsgesetz – AWG) in three main areas:

  • The reform tightens the standard of review as the threshold for the BMWi to take action is lowered to encompass all transactions “likely to affect public order or security in Germany“. So far, actual endangerment of public order or security is required for the BMWi to take action. In line with the EU FDI Framework Regulation (EU) 2019/452 of 19 March 2019  (publicly available here), the draft bill expands the scope of FDI review to include considerations of “public order or security of other Member States or projects or programmes of Union interest” and not only considerations of public order or security of Germany.
  • The scope of the stand-still obligation for closing shall in the future extend to all transactions subject to mandatory review in Germany. So far, only so-called sector-specific transactions, mainly in the sector of defence, are subject to the stand-still obligation.
  • Also, the reform establishes a contact unit for the cooperation mechanism at the BMWi to exchange with the European Commission as well as other Member States on foreign investments undergoing screening in Germany. This is foreseen in the EU FDI Framework Regulation.

Further to the amendments foreseen to the AWG, the Federal Government also intends to amend the German Foreign Trade and Payments Ordinance (Außenwirtschaftsverordnung – AWV). The AWV specifies the provisions of the AWG in practice. For instance, the operation of satellite-based earth remote sensing systems will be included in the catalogue of security-relevant activities of targets subject to mandatory review. Furthermore, the Federal Government intends to add “critical technologies” to the catalogue.

Both the amendment of the AWG, as well as the amendment of the AWV, are planned to become effective in October 2020 when the EU FDI Framework Regulation will fully enter into force. All transactions signed after this date will be subject to the new rules. The changes apply to all direct or indirect acquisitions of German targets by non-EU acquirers. Currently, trade associations are invited to comment on the draft and companies should make use of this channel to let the government know about their views.

Below we discuss some aspects of the tightened rules in more detail.

Stricter standard of review – transactions “likely to affect” security interests

The draft tightens the legal standard for the substantive review to all transactions involving a German target which are “likely to affect public order or security” in Germany. According to the draft’s reasoning, “[t]his emphasises in particular the necessary forward-looking approach which is inherent in investment screening anyway: an impairment which has not yet occurred but which may occur in the future as a result of a critical acquisition is to be prevented.” Hence, this significantly lowers the degree of risk enabling the Federal Government to intervene. In the future, the Federal Government will already have the power to prohibit a transaction or impose commitments if the transaction is “likely to affect” security interests. So far, this power is limited to transactions actually endangering public order or security in Germany.

The new standard corresponds to the wording used by the EU FDI Framework Regulation. However, Member States are not obliged to apply this strict standard. The expansion of the standard of the review can therefore rather be seen as a deliberate tightening of FDI regulation by the Federal Government.

Expanded scope of review – EU interests and “critical technologies

FDI review in Germany will, in the future, not only encompass German security interests, but also take into account whether a transaction “affects public order or security of other Member States or projects or programmes of Union interest“. The cited projects and programmes are set out in the EU FDI Framework Regulation’s Annex and include Galileo, Copernicus and Horizon 2020.

Additionally, the BMWi is very clear about its changed, wider general approach to FDI screenings. This is supposed to be reflected in an upcoming amendment of the AWV taking place parallel to the changes to the AWG. While FDI screenings in Germany were initially only intended to protect national security, critical infrastructures and public supplies, the reasoning of the draft states that the relevance of FDI review now goes beyond that. Expressly, the “technological sovereignty of the Federal Republic of Germany” shall be secured.

The draft specifically refers to “critical technologies” as defined in the EU FDI Framework Regulation, including artificial intelligence, robotics, semiconductors, cybersecurity, aerospace, defence, energy storage, quantum and nuclear technologies as well as nanotechnologies and biotechnologies. Additionally, the operation of satellite-based earth remote sensing systems will be included in the catalogue of especially security relevant activities. This means that transactions in all of the aforementioned areas will become subject to mandatory notification and review.

Expansion of stand-still obligation to all listed industry areas

The former is particularly relevant as the reform also foresees a significant procedural change to the mandatory FDI review in Germany. So far, the catalogue of industry areas listed as especially security relevant only requires mandatory FDI notifications to the BMWi without a direct impact on the deal time-line. In the future, the parties to such transactions will additionally face stand-still obligations to have their transaction cleared by the Federal Government before closing a deal. The relevant industry areas will be critical infrastructure, telecommunications/surveillance, provision of cloud-computing services, telematics, media as well as the newly added critical technologies and earth remote sensing systems.

So far, only so-called sector-specific transactions (mainly in the defence area) have been subject to this stand-still obligation. Now, transactions in all areas expressly listed in the AWV subject to non-sector specific review will also be provisionally invalid prior to clearance by the Federal Government. All other transactions, which are solely subject to the blanket clause and not expressly listed, remain subject to ex officio reviews by the BMWi or voluntary notifications by the parties to a transaction and the parties may close without having to await clearance.

Context of the reform: German and EU Industrial Policies

Regarding the practice of FDI review in Germany, the stricter standard of review and the wider general approach to FDI screenings regarding the scope of review largely reflect the practice the BMWi has already increasingly been following in screening procedures. FDI screenings have recently mostly concerned targets in the areas of mechanical engineering, IT and communication as well as automotive suppliers and companies holding export control licenses, which could be deemed active in critical technologies. Furthermore, the BMWi has put a particular focus on Chinese investors and showed a tendency to interpret the provisions of AWG and AWV very broadly, thereby anticipating the planned reform. In essence, the reform does not come as a surprise.

In a broader context, the reform is not a Germany-specific development, but follows an ongoing trend in major Western economies like the US, Japan as well as the UK, France, Spain and others in Europe to tighten Foreign Investment Control. In Germany, it is the third significant reform of FDI regulations within less than three years – while the last one has only taken place in December 2018 (see here for our coverage of the 2018 reform and here for our coverage of the 2017 reform). Additionally, the BMWi has made it very clear in its Industrial Strategy 2030 released in November 2019 (publicly available here, see our coverage of the largely similar draft here) that it deems tightening of FDI regulations as crucial for future economic development in Germany – an entire chapter is dedicated to “Maintaining technological autonomy“. Other envisaged measures include tightening conditions on technology transfer to third countries, the German state serving as a moderator for private-sector players to step in as “white knights” in sensitive transactions involving German targets and even the German state setting up structures to acquire shareholdings in sensitive companies itself as a last resort.

The reform also reflects a European trend. The EU Screening Regulation enacted in March 2019 (see here for our latest coverage) established a common structure for the screening of FDI into the EU. The Regulation was based on a joint initiative by France, Italy and Germany, while the further convergence between the French and German approach to interventionism and FDI screenings became clear with the publication of the “Franco-German Manifesto for a European industrial policy fit for the 21st Century” in February 2019 (publicly available here, see here for our coverage). In line with this development, the upcoming EU Industrial Policy also foresees tighter trade measures. Inter alia, the EU is purportedly planning a “new instrument” to tackle the impact of foreign companies supported by government subsidies on European markets. In January 2020, the U.S., the EU and Japan released a joint statement outlining plans to widen actions against state-owned intervention (publicly available here). This reflects the widespread and increasing concerns about Chinese investors in Western economies. With Germany taking over Presidency of the Council of the EU in the second half of 2020 and the departure of the UK from the EU, further developments – and likely further tightening – in the area of FDI regulation on EU level are possible.

Key Takeaways

The draft bill and envisaged further changes to German FDI regulation will have a significant impact on future M&A deals directly or indirectly involving German entities or assets. Parties to such transactions will increasingly have to take German and EU FDI regulations into account – as has long been the case for CFIUS in the US, and merger control globally. This is further emphasised by the stricter standard of review and widened general approach by the BMWi to initiate FDI screening procedures. The development is underlined by the steadily increasing number of screening procedures over the last decade and will require parties, specifically acquirers, to start carrying out FDI assessments and even to consider voluntary notifications to the BMWi for transactions which appeared to raise no FDI concerns in the past.

Planning and structuring future deals will have to reflect these substantive considerations, but also the changing procedural elements of German FDI review. Mandatory notifications and stand-still obligations are now foreseen for a number of industry segments – with the number of concerned areas likely growing in the future. This along with the broader substantive assessment will impact the timing for concerned deals. Implementation of the EU Screening Regulation with its cooperation mechanism between the European Commission and Member States for FDI screening procedures will likely further impact both the timing of the procedures and the substance of the assessment. The latter can already be seen in the expanded scope of FDI review in Germany regarding other Member States and EU projects.

Generally speaking, government intervention under foreign investment rules is already much harder to predict than under the tried and tested merger control regimes – not only in Germany. The German Federal Minister for Economic Affairs, Peter Altmaier, tried to downplay the reform, simply stating: “We want to protect our security interests in a more forward-looking and comprehensive manner.” However, criticism from industry representatives followed promptly. The head of the leading German industry association BDI, Dieter Kempf, concluded: “Great uncertainties arise for investors and companies.

Read our previous blogs on related topics here:

Digital health solutions in Germany: Detailed requirements for eligibility to reimbursement being fleshed out in draft legislation


In November 2019, the parliament passed a new law which will provide reimbursement for digital healthcare provision for the around 70 million publicly insured patients in Germany (Digital Health Service Act/Digitale-Versorgung-Gesetz – DVG). As reported in our Newsflash on 15 November 2019, reimbursement coverage will be granted for digital health solutions that are medical devices of a low risk class (Class I or IIa) with a main functionality based on digital technologies (apps or mainly software-based solutions). The solutions’ purpose of usage has to be the diagnosis, monitoring or treatment of diseases or improvement of related healthcare provision.

Reimbursement of a digital health solution is triggered by a registration of the solution in a newly established register. Once a product is listed, it can be prescribed for reimbursement by doctors. The new law so far outlined the requirements for the registration in a quite general manner. Recently, the German Federal Ministry of Health submitted its first draft for an ordinance which will regulate in more detail the registration requirements as well as the registration procedure.

This publication provides an overview over these registration requirements under the draft ordinance (Ordinance concerning the procedure and the requirements for the assessment of reimbursability of digital health applications in the statutory health insurance (Verordnung über das Verfahren und die Anforderungen der Prüfung der Erstattungsfähigkeit digitaler Gesundheitsanwendungen in der gesetzlichen Krankenversicherung – Digitale-Gesundheitsanwendungen-Verordnung – DiGAV)). It is expected that some details of the ordinance may change in the course of the legislative process; however, the key aspects will likely remain the same. Thus, the following provides a fair outline of the future requirements for eligibility for reimbursement of digital health solutions in Germany.


A digital health solution can be prescribed upon reimbursement once the digital solution is registered by the competent authority (Bundesinstitut für Arzneimittel und Medizinprodukte – BfArM). The manufacturer of the digital health solution has to apply for the registration and has to demonstrate that the solution meets the requirements of the law and the new ordinance. Generally speaking, the two key requirements are: (1) technical requirements for the device as such; and (2) its positive impact on health care provision. If evidence for the latter is not yet available, manufacturers may apply for a preliminary registration for a 12 months’ testing period.

The reimbursement amount in the first 12 months after registration will be at the manufacturer’s price. During that time period, manufacturers and the National Association of Statutory Health Insurance Funds (“GKV-Spitzenverband“) will negotiate the reimbursement amount which will apply for the future – from the end of the first 12 months onwards.

The first, technical requirements for registration cover a broad range of features which the medical device has to fulfil in order to be registered for reimbursement. Compliance with these requirements has to be proven by submitting the CE marking and the conformity certificates obtained in the medical device conformity assessment procedure, and, with regard to the other technical requirements, by certain confirmations to be given by the manufacturer or certain other certificates.

(For further details on these requirements see also Dr. Matthias M. Schweiger, Stefan Mayr in: Hogan Lovells Newsflash of 14 February 2020, Germany is going to specify safety expectations for reimbursable digital health applications)

The second requirement for registration, the positive impact on health care provision, can be demonstrated either by establishing that the digital solution has a medical (i.e. clinical) benefit or by establishing that the digital solution improves the structure or procedure of healthcare provision in Germany. Fulfilment needs to be demonstrated by clinical evidence, as shown below.


Our first impression is that the level of requirements and respective evidence is quite high, in particular the required quality and sourcing of clinical data. As already indicated in our earlier Newsflash, manufacturers will often need to apply for a preliminary registration until they were able to generate such clinical data in the testing phase based on a robust evaluation concept.

Further, the limitation that the manufacturers will not be allowed to use the personal data generated – upon required user consent – by the digital health solution for any other purpose than basically for operating the solution and certain reimbursement purposes is a substantial limitation; however, it seems that usage of data other than personal data (namely anonymized data) is not restricted.

Still, the reimbursement coverage for digital health solutions is crucial to foster patient treatment by digital solutions in Germany and therefore a good development.