What is the cause of the competition

Competition in times of pandemic

The coronavirus pandemic is severely affecting public and economic life around the world. In Germany, too, the pandemic has led to a drastic economic downturn, which poses great difficulties for many companies and means that far-reaching changes in market structures and effects on competition can be expected.1 These changes result from company closures and insolvencies, company mergers and limited start-up activity, as well as from economic policy measures with which the economic slump as a result of the coronavirus pandemic is being countered. The latter include the facilitation of business cooperation and the extensive granting of state aid.

Market structures change in the crisis. Across all sectors, it can generally be assumed that less competitive providers will leave markets in a recession, as it is more difficult for them to compensate for the decline in demand and the deterioration in financing options (cf., inter alia, Foster, Grim and Haltiwanger, 2016). This can increase the concentration in individual sectors. Increased market concentration is initially viewed critically from a competitive perspective, as the increased scope for behavior and easier coordination options for companies potentially reduce the intensity of competition. At the same time, however, the elimination of less efficient competitors can also lead to an increase in average productivity. In general, however, decreasing intensity of competition tends to go hand in hand with lower productivity growth, as current studies indicate (see SVR, 2019, Chapter 2; Monopolies Commission, 2020, Chapter II) .2 In this context, structural changes in digital platform markets in particular can be observed more closely. The worldwide contact restrictions have led to an increasing use of digital services, for example through increased video conferences and online shopping. This pandemic-induced digitization push is expected to lead to a further increase in the market power of the large digital companies. In view of the trend towards concentration in digital markets, the importance of abuse control is likely to become even more important in this area

Against this background, the economic and competition policy reactions to the economic crisis caused by the pandemic are of great importance for functioning competition and thus an economic system that increases prosperity. They should be examined for their appropriateness and the expected effects on competition. For example, state aid and company investments could distort competition in the affected markets.

In order to assess the medium to long-term consequences of the coronavirus pandemic for competition, it is necessary to take a look at the three market structure determinants of market entries, market exits and company mergers. Overall, the three mechanisms outlined below will increase corporate concentration in many economic sectors affected by the crisis. According to an assessment by the Ifo Institute, the travel industry, vehicle construction, hospitality and the cultural sector in particular are already affected in Germany (Ifo Institute, 2020).

High number of market exits to be expected

Falling demand, deteriorating financing options and impairing supply chains make it more likely that companies will exit the market during a recession, either by going out of business or bankruptcy. As the crisis lasts, more and more large companies are facing considerable problems, but small and medium-sized enterprises (SMEs) were particularly at risk from the start (ZEW, 2020). When it comes to financing, creditworthiness plays an important role, and smaller companies tend to have poorer credit ratings than larger ones. If predominantly smaller companies have to close, this would lead to an increase in company concentration. Examples of sectors with a high proportion of small companies with poor credit ratings in Germany are gastronomy, automotive suppliers, the chemical industry and the construction industry (ZEW, 2020).

So far, the number of registered insolvency proceedings is well below the previous year's figure, but this is due to the suspension of the obligation to file for insolvency for companies until December 31, 2020.4 No robust figures are available for the number of companies that have given up their business. According to the Halle Institute for Economic Research (2020), it can be observed that the number of employees affected by bankruptcies has increased, which points to an increase in payment difficulties for larger companies as well. Current simulations by the Bundesbank suggest an increase in insolvencies of 35% by the first quarter of 2021 (Bundesbank, 2020, 43/44). In the manufacturing sector in particular, a significant increase in corporate insolvencies can be expected, so that with a quarterly figure of around 750 there could be a similar number of insolvencies as after the global financial crisis in 2007/2008. Compared to Q1 2020, this would double the number of insolvencies in this sector.

More business combinations possible

The economic downturn can also lead to an increase in the number of business combinations, especially when financially troubled companies have to choose between selling and going out of business. Due to the immediately reduced number of competitors, mergers have direct effects on company concentration and market structures. Most recently, the number of merger control notifications to the Federal Cartel Office in April and May 2020 decreased compared to the same months of the previous year. Similar to insolvency filings, however, this decline is likely due to the postponement of filings - which the Bundeskartellamt had expressly asked companies to do. A significant increase in merger control proceedings is expected in the coming months.5 In the 2007 financial crisis, merger notifications to the Federal Cartel Office rose by around 25% in the same year (Monopolies Commission 2020, 154). Restructuring mergers could play an important role in times of crisis. However, during the last financial and economic crisis, approvals with reference to restructuring mergers were not granted more often (Monopolkommission, 2010, Item 329; Monopolkommission, 2012, Item 404).

Decreasing incentives to start up

Ultimately, it can be assumed that the pandemic-induced downturn will also have a negative impact on the number of business start-ups. More than half of the chambers of industry and commerce in Germany expect fewer or significantly fewer start-ups in 2020 (DIHK, 2020). New companies in the market can help to compensate for the concentration-increasing effect of mergers and market exits. Start-ups and market entries are an important factor for new competitive impulses.

However, even before the current crisis, relevant indicators showed a negative trend in start-ups. The number of company liquidations recently exceeded that of start-ups (IfM, 2020), and the start-up rate in Germany also follows a long-term negative trend (Eurostat, 2020). According to the scientific advisory board of the Federal Ministry for Economic Affairs and Energy (2020), it is to be feared that start-ups will be hit particularly hard in the short term due to a lack of financing options in the corona crisis and that the start-up culture in Germany will be permanently damaged. In this respect, the federal government's € 2 billion aid package for start-ups is an important measure to counteract the possible negative effects on start-ups.

Pandemic-induced increase in concentration

How much corporate concentration will increase can be estimated with the help of an econometric analysis, which examines the effect of cyclical and cyclical influences on concentration indicators. To do this, the economic impact on individual economic sectors must first be measured. An obvious indicator would be the decline in sales or value added. However, although this would reflect the direct impact on economic activity, such a measure would not fully take into account market intervention by the state through financial aid, participations or regulatory relief. An ex-post measure based on the market result, which includes potentially existing market interventions, is therefore more suitable. In this sense, insolvency rates are a suitable indicator, as they reflect decisions made by companies taking into account all economic and institutional framework conditions and thus reflect the effects of the economic development of a sector on its market structure.

In the recent past, the effects of the global economic and financial crisis have represented an economic shock for the German economy that is comparable to the coronavirus pandemic. As Figure 1 shows, there was a sharp increase in corporate insolvencies in 2009, both for the economy as a whole and in individual areas of the economy . Compared to the current crisis, the extent and impact of individual economic sectors differ, but there are also similarities. Both crises unfold global effects. B. Affect supply chains, international trade and the real economy. Nevertheless, it must be taken into account that the economy collapsed much faster as a result of the pandemic than at the end of 2008.

illustration 1
Corporate insolvencies in Germany

Notes: The crisis period from the end of 2008 to mid-2010 is colored gray. The absolute number of insolvencies applied for in 2019 and at the height of the crisis in 2009 is given for each time series.

Source: Destatis (2020b); own calculations.

A causal effect of the economic downturn on the development of company concentration can be estimated using a difference-in-differences approach. In a quasi-experimental form, two groups of economic sectors are compared which, according to the assumption, differ on average only in terms of whether they were exposed to the said economic shock or not. For this analysis, two comparison groups ("high insolvency rate" and "low insolvency rate") were therefore formed on the basis of the respective insolvency rates during the financial crisis in four-digit branches of the economy.6 Herfindahl-Hirschman indices (HHI) are used to measure company concentration ( Heidorn and Weche, 2020).

According to the basic assumption of the difference-in-differences approach, both groups follow the same basic trend; H. the average company concentration develops in parallel over time without other influences.7 The only influence - the effect size of which this analysis is intended to determine - is the economic shock in the context of the economic crisis (in the gray area of ​​Figure 2). If the two groups had been equally affected, the trend line of the industries with a high insolvency rate would have followed the dotted counterfactual trend. Instead, the company concentration in these branches of the economy increased due to structural changes caused by the crisis and in 2011 was on average 10% higher than would have been expected under otherwise identical circumstances.

Figure 2
Average company concentration
4-digit industries with high and low insolvency rates,
Herfindahl-Hirschman index

Note: The crisis period from the end of 2008 to mid-2010 is colored gray. The values ​​shown correspond to the sales-weighted average value of the 4-digit economic sectors in the respective group. The dotted line shows the counterfactual development of the average company concentration in industries with high insolvency rates if there had been no economic crisis.

Source: Destatis (2020b); Heidorn and Weche (2020); own calculations.

If these results can be transferred, it is to be expected that the coronavirus pandemic with its economic effects will increase the concentration of companies in heavily affected sectors of the economy. In the medium term, the concentration in these sectors will be 10% higher on average than would be the case without the pandemic. The effects of such a rapidly increasing corporate concentration on the actual competitive situation in markets are, however, unclear. On the one hand, concentrated industries increase the risk of oligopoly tendencies. On the other hand, increases in concentration can also go hand in hand with an intensification of competition among the remaining market participants, for example if these are the particularly productive companies.

European aid control adequate during the coronavirus pandemic

The federal government reacted very quickly to the pandemic-related challenges by launching a package of measures worth several hundred billion euros to mitigate the socio-economic consequences of the current crisis (BMWi, 2020). In addition to non-company-specific measures to avert pandemic-related market exits, unwanted company takeovers and to improve incentives to start up, individual companies are also specifically supported, which can lead to distortions of competition. EU state aid controls are also effective in times of crisis. The majority of government measures to support companies must be notified to the European Commission and cannot be implemented without its approval.

In order to facilitate the measures of the EU member states, the European Commission set out early on, on March 19, 2020, in its communication on a “Temporary State Aid Framework” the conditions that must be met in order for state measures to support companies in the Coronavirus pandemic can be viewed as compliant with EU state aid law (EU Commission, 2020a, 5 ff., Item 22 ff). The temporary aid framework is intended to provide a certain amount of leeway so that every EU member state can support its national economy in the corona pandemic (EU Commission, 2020d). The European Commission was able to use the experience from the financial crisis in 2008/2009 when drawing up the temporary aid framework. At that time, too, it had issued notices that were repeatedly adapted to the situation at the time in order to make it easier for banks and companies to access funding (EU Commission, 2020e).

On the basis of the temporary aid framework, the crisis-related aid measures of the EU member states were mostly able to be approved quickly by the European Commission. The approval of the German Economic Stabilization Fund (WSF), on the other hand, required more time - the law establishing the WSF was notified to the European Commission on March 24, 2020 as an aid scheme and was only approved by the European Commission on July 8, 2020.8 The temporary aid framework was expanded four times and supplemented with additional support measures. Most recently, the European Commission decided to extend and expand the Temporary Aid Framework until June 30, 2020 and the provisions on recapitalization measures until September 30, 2021 in order to provide greater support to companies with significant sales losses (EU Commission, 2020h). Before this enlargement, the EU member states had the opportunity to comment on the draft proposal submitted by the European Commission (Beck-aktuell, 2020). In particular, the Temporary Aid Framework of March 19, 2020 concerned the approval of direct grants, repayable advances or tax advantages for companies, on the condition that they were due to the pandemic, i. H. after December 31, 2019, have run into difficulties and that the amount of support does not exceed EUR 800,000 per company. In addition, as part of the first expansion on April 3, 2020, measures were adopted, such as direct grants, repayable advances and tax advantages for research and development, the establishment and expansion of test facilities for the coronavirus-related products and the creation of additional production capacities for the manufacture of products necessary for crisis management (EU Commission, 2020b).

Overall, it can be said that the European Commission has largely responded quickly and flexibly to the challenges of the coronavirus pandemic. However, the delayed approval of the German Economic Stabilization Fund is unfortunate. The argument put forward in this context that the amount of support available in Germany basically leads to a distortion of competition is not convincing. On the one hand, it can be assumed that some programs launched for Germany will not be exhausted, while programs in other countries can be increased if necessary. In addition, only companies that have not got into financial difficulties by the end of 2019 and that are likely to continue to be successful after the crisis will be funded.A smaller economic stabilization fund that would not be available for all companies that need liquidity support and that meet these criteria would likely result in more market exits. This fact would not mean any competitive advantage.

Requirements and requirements for state investments necessary

In the second extension of the Temporary Aid Framework adopted by the European Commission on May 8, 2020, the conditions under which the EU member states can grant companies equity or so-called hybrid capital in order to avoid bankruptcies are set out (EU Commission, 2020c) . The focus of these conditions is on ensuring effective competition. EU member states must take additional precautions if the recipient has significant market power in at least one relevant market and the measure amounts to more than EUR 250 million. In addition, recipients of crisis-related recapitalization measures are not allowed to participate in more than 10% in competing companies or other companies in the same business field, including upstream and downstream business activities, until at least 75% of the measure has not been bought back and sold (EU Commission , 2020c). In addition, state holdings in companies may not exceed the minimum necessary to ensure recipient profitability and should aim to rebuild the capital structure that existed before the coronavirus pandemic.

The Lufthansa case

One of the first cases of equity increases approved by the European Commission on June 25, 2020 was the federal government's entry into Deutsche Lufthansa AG. The European Commission has approved the participation of the German state in Lufthansa subject to certain conditions. For example, 24 take-off and landing rights at the Lufthansa hubs at Frankfurt and Munich airports and up to four aircraft must be transferred to competing companies. Since a state participation in a company can lead to more serious distortions of competition than loans or state guarantees, the European Commission believes that it can only be approved under strict conditions.

The German Monopolies Commission (2017, No. 213 ff.) Considers this argument of the European Commission to be valid, because the state, as co-owner, gives the company in question advantages in borrowing due to its creditworthiness, which results in unequal competitive conditions at the expense of competitors without state participation can create. A restriction of competition on certain flight routes in Germany can be observed at the latest after the insolvency of Air Berlin in 2017. For example, Deutsche Lufthansa and its subsidiaries Eurowings, Swiss, Austrian Airlines and Brussels Airlines are the sole providers on some routes within Germany and Europe. Surrendering take-off and landing rights to competitors, either directly by the airline or after being returned to the state through an auction to other airlines, can thus contribute to more competition on such routes (Haucap and Wambach, 2020; Monopolkommission, 2017, Item 213 ff.).

The Curevac case

Another case of state participation is the entry of the federal government with 300 million euros in the biopharmaceutical company Curevac. This means that the federal government currently holds a share of around 17% in the Tübingen vaccine developer via the KfW loan institute (Lambrecht and Baars, 2020). The federal government describes this stake as a "strategic investment"; a short-term sale is not planned (Dostert, 2020). Even if the public often positively emphasizes that this participation is (currently) economically profitable, profit and loss are not the measure of the success of a state participation (Dostert, 2020). The purpose of a state participation should be clearly recognizable. Securing vaccine deliveries is an important goal for the federal government, especially in times of pandemics. For example, the federal government has launched a special research program worth 750 million euros. The biotechnology company Biontech will receive up to 375 million euros and Curevac up to 252 million euros to support ongoing clinical studies and expand production capacities (Lambrecht and Baars, 2020). It is not clear why an additional stake in a company was necessary. Other and less competition-distorting instruments, such as a purchase commitment for vaccines, would have been available to achieve the supply target.

According to the second extension of the Temporary Aid Framework, government entry with equity capital in a company should only be considered if “no other suitable solution can be found” (EU Commission, 2020c, margin no. 7). If one takes a closer look at the Curevac case, the company's successful IPO after entering the state indicates that there would have been other options for raising capital (Dostert, 2020). And if it is an industrial policy goal to improve the financing options for the biotech industry as a whole, this will probably not be achieved with the selective financing of an individual company (Dostert, 2020).

According to the temporary aid framework, clear conditions are also to be created for state participation in the companies concerned: appropriate remuneration for the state for its investment, governance provisions, for example with regard to business expansion and the taking of entrepreneurial risks, as well as suitable measures to restrict distortions of competition (EU Commission, 2020c, margin no. 45). Given that state participation in companies is a crisis instrument, it should be ended once the current crisis is over and the economy has stabilized. Above all, this means that the federal government should create incentives to buy back and sell its shares in this specific case and should have a coherent exit plan in order to limit the risk of any distortion of competition to a minimum.

The Deutsche Bahn case

Deutsche Bahn is already fully owned by the federal government. However, an equity increase of 5 billion euros is planned, which the Bundestag has already approved. Even if the company's financial needs are considerable, this aid measure is mainly criticized because it could put Deutsche Bahn's competitors at a competitive disadvantage. Approval from the EU Commission is pending.

In its current main report, the Monopolies Commission notes that competition in rail transport in Germany is already weak and would be further weakened if Deutsche Bahn were to use federal aid to strengthen its own competitive position as a transport company. This could be avoided if the support for Deutsche Bahn were primarily earmarked as an investment in the rail network as infrastructure. Both Deutsche Bahn and the competition would benefit from investments in the infrastructure used by all competitors. As far as the transport sectors are supported, they should meet the requirements of state aid control and, if necessary, anti-competitive precautions should be taken.

Aid for start-ups expedient

In the third extension of the temporary aid framework by the European Commission on June 29, 2020, it was stipulated that the EU member states can support small and micro-enterprises, even if they already ran into financial difficulties on December 31, 2019. This is justified by the fact that such companies9 are particularly affected by pandemic-related liquidity bottlenecks. This could lead to a disproportionate increase in insolvencies, which would have a serious negative impact on the EU economy (EU Commission, 2020g). Start-ups should also be given more support. Excluded from the scope of the third extension are companies that are the subject of insolvency proceedings, have received rescue aid that has yet to be repaid or are subject to a restructuring plan in compliance with state aid rules. In addition, incentives for private investors to participate in corona-related recapitalization measures are to be increased. If the state decides to offer recapitalization aid, in which the participation of private investors in the capital increase amounts to at least 30% of the newly injected capital and takes place on the same terms as the state participation, then according to the third extension, the takeover ban and the remuneration restrictions of the management are for three years limited. If the capital shares of the holders of the existing shares combined are less than 10%, the dividend ban for the holders of the new shares and for those of the existing shares will be lifted (EU Commission, 2020g).

As the European Commission emphasizes, innovative companies should be supported as they are essential for the economic recovery of the European Union (EU Commission, 2020g). In addition, a wave of bankruptcies among young companies would also reduce interest in start-ups in the medium term, with the result that the competitive impetus from start-ups would be lost. Due to their low level of participation in cross-border businesses and their low market power, temporary aid for small companies may have less of an adverse effect on competition in the internal market (EU Commission, 2020g).

Merger control

In view of the impending wave of insolvencies and takeovers, the Monopolies Commission believes that a relaxed implementation of corporate takeovers, for example through a more generous handling of the merger control intervention criterion, is not recommended (Monopolies Commission, 2020a).

In view of the current crisis, the instrument of the failing company defense could again attract increasing attention. In order for a restructuring merger to be cleared by the Federal Cartel Office, the companies involved in the merger must prove that certain cumulative conditions are met: First, without the merger, the target company must face an immediate market exit. This is usually the case when the target company is about to go out of business or bankruptcy proceedings have already been initiated. Second, there must be no alternative acquirer whose merger with the target company would be less harmful to competition. Thirdly, the market position of the target company must essentially grow to the purchaser even without the merger.

Due to the very high requirements for the presentation and proof of the requirements outlined above, a restructuring merger is more of an exception in merger control practice. Against this background, in the current crisis situation, considerations are being made to lower the requirements. On the one hand, the deteriorating economic environment caused by the crisis and the corresponding awareness of urgency make it likely that some companies will exit the market (Fountoukakos, Barraud and Barrio, 2020). On the other hand, there could be more cases in which powerful competitors buy weakened companies under the umbrella of the financial difficulties triggered by the crisis, which can lead to less competition. Easier criteria for the restructuring merger were also considered during the financial crisis in 2008/2009. However, they were rejected by competition authorities on the grounds that insolvency and state aid law also provide suitable instruments to support companies that have been particularly hard hit by the crisis (OECD, 2009, 12-13).

In summary, it is not advisable to weaken the criteria for restructuring mergers or the intervention criteria under merger control law in general with the aim of being able to permit additional company mergers, insofar as this also allows mergers between companies that would otherwise not leave the market. The changes in the market structure and the associated decrease in the intensity of competition would persist in the long term and could not be reversed after the end of the current crisis.

Conclusion: keep an eye on functioning competition after the crisis

Against the background of the coronavirus crisis, it can be assumed that the economic slump will lead to an increase in corporate concentration in the medium-term in some of the heavily affected sectors of the economy. Comparable economic developments in the course of the financial and economic crisis between 2008 and 2010 have increased the concentration of the sectors particularly affected by an average of 10%. However, it remains unclear how such an increase in concentration will affect the actual competitive situation in individual markets, since the above-average productive and competitive companies could also assert themselves on the market.

In view of the challenges posed by the crisis, a number of economic and competition policy measures were adopted at both national and European level in order to support companies in financial difficulties. With the adoption of the Temporary Framework and its extensions, the European Commission points out the need for pro-competitive measures in order to prevent possible distortions of competition by supporting individual companies. Even during the crisis, state aid and merger controls help to ensure that competition works, which is of crucial importance for economic stabilization and consumer welfare. In particular, the criteria of the Temporary Framework provide that state holdings in companies are only considered in order to cope with the crisis and provided with a clear exit plan.

The massive economic slump caused by the corona pandemic will lead to changes in market structures and competitive conditions in many areas of the economy. To ensure that competition can function properly in the long term, care must be taken to ensure that the instruments used to protect it are also used in the crisis and that any necessary aid measures are terminated promptly after the crisis.

  • 1 In its current annual report, the Advisory Council for the Assessment of Overall Economic Development forecasts a 5.1% decline in economic output in 2020 (SVR, 2020).
  • 2 The connection between competition and productivity growth is also the subject of current studies (cf., inter alia, Ganglmair et al., 2020). For an overview of the possible consequences of falling competition, see Wambach and Weche (2020).
  • 3 Most recently, the Commission on Competition Law 4.0, set up by the Federal Ministry for Economic Affairs and Energy, proposed the introduction of a special platform regulation for dominant online platforms (Commission Competition Law 4.0, 2019). For further information on the problem of abuse control in the platform economy, see Monopolies Commission (2020, Item 90 ff.).
  • 4 According to the Federal Statistical Office, reported corporate insolvencies in August 2020 were most recently almost 40% below the value for August 2019 (Destatis, 2020a).
  • 5 Cf. also the assessment of the President of the Bundeskartellamt: “Kartellamt expects a wave of takeovers”, Süddeutsche Zeitung of May 11, 2020. For example, a wave of consolidation is also expected in the construction industry and the entire SME sector (see, among other things, “The construction industry is afraid of a crash”, Handelsblatt dated June 15, 2020 and “Even solid medium-sized companies get into financial difficulties”, Handelsblatt dated April 20, 2020).
  • 6 It is questionable whether individual branches of the economy in the control group were not affected at all by the economic development during the financial and economic crisis. For a proper analysis, however, it is sufficient to make the distinction on the basis of the strength of the respective economic shock suffered. Therefore, the two comparison groups can be formed on the basis of the respective insolvency rates in 4-digit branches of industry. To determine the insolvency rates, the absolute insolvencies of the crisis years 2009 and 2010 were summed up for each 4-digit branch of industry and compared to the number of active companies before the start of the crisis in 2007. The group assignment is based on the distribution of these insolvency rates: The middle 10% between the The 45th and 55th percentiles were excluded from the analysis; the upper part of the distribution forms the group “high insolvency rate”, the lower part the group “low insolvency rate”.
  • 7 The parallelism of the two trends in Figure 2 is broken by the outlier of the group “low insolvency rate” in 2013; in the longer term, both lines follow the same trend.The concentration data are not available for a sufficiently long period of time as would be required for more extensive econometric tests.
  • 8 The European Commission offers an overview of the status of the national support measures already approved on its website (EU Commission, 2020f).
  • 9 This includes companies with fewer than 50 employees and an annual turnover and / or an annual balance sheet total of less than 10 million euros.

literature

Beck-aktuell (2020), Corona crisis: EU Commission wants to extend and adjust temporary aid framework, October 6, https://rsw.beck.de/aktuell/daily/meldung/detail/wegen-corona-befristeter-eu -the-aid-framework-should-be-extended (October 6, 2020).

Bundesbank (2020), risk of sharply rising insolvencies, in Financial Stability Report 2020, Deutsche Bundesbank, Frankfurt a. M.

BMWi (2020), package of measures for companies against the consequences of the coronavirus (as of October 1, 2020), https://www.bmwi.de/Redaktion/DE/Downloads/MO/masshabenpaket-fuer-unternehmen-gegen-die-haben -des-coronavirus.html (October 12, 2020).

BMF (2020), press release of June 25, https://www.bundesfinanzministerium.de/Content/DE/Pressemitteilungen/Finanzpolitik/2020/06/2020-06-24-Lufthansa.html, (July 10, 2020).

Destatis (2020a), press release, No. 348 from September 10, https://www.destatis.de/DE/Presse/Pressemitteilungen/2020/09/PD20_348_52411.html;jsessionid=8C0A65FECEC7CD2A9F19E02A7FEA5E80.internet8731 (October 14, 2020) .

Destatis (2020b), insolvency proceedings (companies): Germany, years, procedures applied for, economic sectors (5-digit (subclasses)).

DIHK (2020), DIHK Founders Report 2020: Corona hits start-up events in the market, Berlin, Brussels, October.

Dostert, E. (2020), Curevac shares bring German government 1.6 billion euros in New York, Southgerman newspaper, https://www.sueddeutsche.de/wirtschaft/curevac-aktien-bundesregierung-1.5002387, (October 14, 2020).

EU Commission (2020a), Temporary framework for state aid to support the economy in view of the current outbreak of COVID-19, OJ C 91 I of March 20, 5 ff., Item 22 ff.

EU Commission (2020b), Amendment of the Temporary Framework for State Aid to Support the Economy in the Face of the Current Outbreak of COVID-19, C (2020) 2215 final, April 3, https://ec.europa.eu/competition/ state_aid / what_is_new / sa_covid19_1st_amendment_temporary_framework_de.PDF (October 26, 2020).

EU Commission (2020c), Communication from the Commission, Amendment of the Temporary Framework for State Aid to Support the Economy in view of the current COVID-19 outbreak, May 8, https://ec.europa.eu/competition/state_aid/what_is_new /sa_covid19_2nd_amendment_temporary_framework_de.pdf (May 25, 2020).

EU Commission (2020d), press release of March 19, https://ec.europa.eu/commission/presscorner/detail/de/IP_20_459 (October 12, 2020).

EU Commission (2020e), Communication from the Commission, Temporary Community Framework for State Aid to Facilitate Access to Finance in the Current Financial and Economic Crisis, OJ C83 of 7 April.

EU Commission (2020f), Coronavirus Outbreak - List of Member State Measures approved under Articles 107 (2) b, 107 (3) b and 107 (3) c TFEUand under the State Aid Temporary Framework, https: //ec.europa .eu / competition / state_aid / what_is_new / State_aid_decisions_TF_and_107_2b_107_3b_107_3c.pdf (November 6, 2020).

EU Commission (2020g), State Aid: Commission expands temporary framework to provide more support to small and micro-enterprises as well as start-ups and to create incentives for private investments, press release of June 29, https://ec.europa.eu / commission / presscorner / detail / de / IP_20_1221 (October 13, 2020).

EU Commission (2020h), press release of October 13, https://ec.europa.eu/commission/presscorner/detail/de/ip_20_1872 (November 6, 2020).

Eurostat (2020), Tables, Graphs and Maps, https://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=de&pcode=tin00142&plugin=1, (July 1, 2020).

Foster, L., Grim, C. and J. Haltiwanger (2016), Reallocation in the Great Recession: Cleansing or Not ?, Journal of Labor Economics, 34(1), 293-331.

Fountoukakos, K., C. Barraud and D. Barrio (2020), The Failing Firm Defense in Times of the (COVID-19) Crisis: Is it Worth Revisiting ?, Competition Policy International Antitrust Chronicle September 2020 - I.

Ganglmair, B., N. Hahn, M. Hellwig, A. Kann, B. Peters and I. Tsanko (2020), Price Markups, Competition, and Productivity: Evidence from Germany, Project report on behalf of the Bertelsmann Foundation.

Haucap, J. and A. Wambach (2020), How do you get rid of the state ?, Frankfurter Allgemeine Zeitung, https://www.faz.net/aktuell/wirtschaft/unternehmen/lufthansa-staat-am-steuer-16810774.html (October 19, 2020).

Heidorn, H. and J. P. Weche (2020), Business Concentration Data for Germany, Yearbooks for national economics and statistics, forthcoming, published online May 15, https://doi.org/10.1515/jbnst-2020-0010 (October 26, 2020).

Institute for SME Research (IfM) Bonn (2020), foundations and company closings, https://www.ifm-bonn.org/statistiken/gruendung-und-unternehmensverbindungen/gewerbliche-existenzgruenden-und-liquidationen (October 29, 2020).

ifo Institute (2020), press release of April 28.

IWH (2020), IWH insolvency trend: number of insolvencies stabilizes at a low level, number of affected jobs high, press release, 19/2020, October 6, https://www.iwh-halle.de/nc/presse/ press-releases / detail / iwh-insolvency-trend-number-of-insolvencies-stabilized-at-a-low-level-number-of-those-affected / (October 26, 2020).

Commission Competition Law 4.0 (2019), final report, A new competitive framework for the digital economy, https://www.bmwi.de/Redaktion/DE/Pressemitteilungen/2019/20190909-expertenkommission-wettbewerbsrecht-40-uebergibt-schlussbericht-an-minister- altmaier.html (May 29, 2020).

Lambrecht, O. and C. Baars (2020), The Vaccine Business, daily News, https://www.tagesschau.de/wirtschaft/corona-impfstoff-133.html (October 26, 2020).

Monopolies Commission (2010), VIII. Main report: More competition, few exceptions.

Monopolies Commission (2012), XIX. Main opinion: Strengthening competition in trade and services.

Monopolies Commission (2017), XXI. Main opinion: Competition 2016.

Monopolies Commission (2020), XXIII. Main report: Competition 2020, https://monopolkommission.de/de/gutachten/hauptgutachten/330-xxiii-haben.html (November 6, 2020).

OECD (2009), Failing Firm Defense, https://www.oecd.org/competition/mergers/45810821.pdf (October 26, 2020).

Expert council for assessing macroeconomic development SVR (2020), coping with the corona crisis together, strengthening resilience and growth, annual report 2020/21, https://www.sachverstaendigenrat-wirtschaft.de/jahresgutachten-2020.html (November 11, 2020) .

Seitz, C. and A. S. Berne (2020), The Panacea against COVID-19: The EU State Aid Law, State Support Measures and the Temporary Aid Framework of the EU Commission, European Journal of Business LawEuZW, 14/2020, 591, 593.

Expert Council for the Assessment of Macroeconomic Development SVR (2019), National Productivity Report 2019, Productivity: Improving growth conditions, Annual report, 2019/20.

Wambach, A. and J. P. Weche (2020), Cross-sectoral increase in concentration and margins: inventory, causes and consequences, Economic Policy Perspectives, 21(2), 1-16.

Scientific Advisory Board at the Federal Ministry for Economic Affairs and Energy (2020), Open letter on the Corona crisis to the Federal Minister for Economic Affairs and Energy, April 24.

ZEW News (2020), The corona pandemic endangers the existence of many companies in Germany, April.

Title: Competition in Times of a Pandemic

Abstract: Numerous markets are affected during the coronavirus pandemic by corporate closures and insolvencies, mergers and reduced incentives for start-ups. In addition, the surge in digitization due to policies intended to reduce personal contacts is expected to lead to an increasing significance of digital markets. Sustained structural changes with adverse effects on competition are therefore to be expected against the backdrop of existing trends toward increasing market power and concentration in certain sectors of the economy. With this in mind, the economic policy responses to the challenges posed by the crisis should consider the requirements of long-term competition. Mergers and state aid control without any substantive legal concessions as well as the flanking of state shareholdings in companies with measures to promote competition would contribute to this.

JEL Classification: L1, L4, L5, D4