A recent ruling by the Trade and Industry Appeals Tribunal (CBb) highlighted the importance of the notion of an “undertaking” within state aid law. This particularly with regard to the situation where several entities are considered to be one undertaking. In such cases, all aid received by these entities should be added up, as they qualify as one undertaking and thus one aid beneficiary. This may have implications for, for example, application of aid ceilings. The ruling therefore offers important insights for companies that are part of a group and may receive state aid. CBb’s ruling In the judgment of February 20, 2025 (ECLI:NL:CBB:2025:76), the CBb dealt with a case in which a company (hereafter: Company X) appealed against a decision of the Minister of Economic Affairs in which a TVL subsidy (Reimbursement Fixed Costs) of Company X was revised and lowered. Based on this decision, an amount of €333,831.48 of the TVL subsidy received as an advance was recovered from Company X for exceeding the aid ceiling. The Minister reached this decision as Company X was part of a group which until December 1, 2021 consisted of Company X, Company Y and Company Z. Company Z was dissolved on December 1, 2021. All three companies received subsidies under the TVL scheme over different periods. This TVL scheme gave financial support to enterprises with loss of turnover due to COVID measures from June 2020. According to the Minister, in the present case, the TVL subsidy to Company X had exceeded the aid ceiling of €2.3 million applicable until Q1 of 2022. Company X believed that the recovery of part of its subsidy was unlawful, as the subsidies received by Company Z should not be added to the total subsidies received by the group. This is because Company Z had been dissolved as of December 1, 2021, which meant that it was not part of the group at the time of both the award and review of the subsidy given to Company X. The CBb did not follow Company X’s position and upheld the Minister’s judgment. The court ruled that the three companies qualify as one undertaking under state aid law, and that the total aid granted to them may not exceed the aid ceiling. Exceeding the aid ceiling would result in unlawful state aid. The fact that Company Z was no longer part of the group due to dissolution at the time of award and review of the subsidy does not change this. Because Company Z ceased to exist, the TVL subsidies granted to it (earlier) were not withdrawn from the group. They benefit the group (in)directly. This is also the case if the balance of dissolution has been used to pay a tax debt of Company Z. Even then, the subsidy received by Company Z prior to dissolution can provide (in)direct benefit to the rest of the group. In view of the above, the CBb held that the revision and lowering of the subsidy to Company X was justified. Determination of a higher amount would constitute unlawful state aid, according to the CBb. Definition of an enterprise within state aid law Under state aid law, an undertaking is defined as any entity engaged in an economic activity, regardless of its legal form and method of financing. Based on Union law jurisprudence, carrying out economic activities is defined as offering goods and/or services on a market. The concept of undertaking within state aid law is thus very broad, and can include virtually any legal form, regardless of whether the entity in question is profit-making or not. Any provider of a good or service on a market is, in theory, an undertaking within state aid law. Multiple entities as one company Within state aid law, several separate legal entities may be deemed to constitute a single economic entity for the purposes of state aid rules. They then qualify as a single undertaking, for the purposes of State aid reviews. This was also the case for the companies that were part of the group in the CBb ruling. In assessing whether multiple entities qualify as a single undertaking, a number of factors are considered which have been developed in Union law jurisprudence. In particular, the following factors are considered: Economic, organizational and functional links between entities; Degree of say and control; Joint performance on the market. Impact on state aid The classification of multiple legal entities as a single undertaking under state aid law may have negative consequences for the amount of aid granted. In such cases, the aid received by these separate legal entities must be added together to determine whether the aid remains below applicable aid ceilings. In the CBb ruling, this worked out negatively for Company X, which received a lower subsidy due to a past group composition. Indirect aid should also be taken into account in such cases. Conclusion For companies that may receive state aid, it is crucial to carefully analyse the interrelationships between different entities. Failure to pay sufficient attention to this may lead to unlawful state aid and recovery risks. This is the case, for example, when aid ceilings are exceeded because aid granted to different entities must be added together within the frameworks of state aid law. Do you have questions on this topic? Would you like to learn more about the qualification of multiple entities as a single enterprise for state aid purposes? Please feel free to contact Monika Beck or one of our other state aid specialists.

On 11 February 2025, the Court of Appeal of The Hague (“CoA”) rendered its decision in the PI proceedings between Janssen Biotech Inc (“Janssen”) and Samsung Bioepis NL B.V. (“Samsung”). The CoA upholds the decision of the Provisions Judge in first instance and denies the PI claimed by Janssen. Samsung can benefit from the SPC Manufacturing Waiver for production and stockpiling for export of its biosimilar product containing ustekinumab. This case is of particular interest as it is one of the few decisions on the application of the SPC Manufacturing Waiver and, more generally, provides clear answers to various questions raised on when a manufacturer can benefit from said waiver. What preceded In our Pharma Update of 31 January 2024 we have reported on the decision of the Provisions Judge of the District Court of 23 January 2024. In said decision the PI claimed by Janssen was denied as the Provisions Judge was of the preliminary opinion that Samsung could benefit from the production-for-export and stockpiling- for-export exemptions of the SPC Manufacturing Waiver. Facts Janssen holds EP 1 309 692 B1 (“EP 692”) for “ANTI-IL-12 Antibodies, compositions, methods and uses”. The medicinal product of Janssen is marketed under the brand name ‘Stelara’ and contains the active ingredient ustekinumab. EP 692 was granted on 13 May 2009 in, among others, Italy and Denmark. The patent expired on 7 August 2021. After expiration, Janssen was granted an SPC in Italy, Denmark and the United Kingdom (UK – ending on 19 January 2024). Similar Stelara patents in Canada and South Korea have also expired. However, Jansen has filed patent(s) (applications) in these countries that protect the treatment regimen approved for Stelara for ulcerative colitis disease. Samsung has developed a biosimilar of ustekinumab with Stelara as reference called SB17. The Dutch Samsung entity (the defendant) issued a notice to the Danish and Italian authorities respectively that it intended to manufacture and stock its biosimilar in Denmark and Italy for the purpose of exporting it to the UK, Canada and South Korea based on Regulation 2019/933 regarding the SPC Manufacturing Waiver “MW Regulation”) and to market the product in the European Union after expiration of the SPC (stockpile exemption). Samsung mentioned that it would submit the reference numbers of its market authorisations in said countries as soon as publicly available. Samsung additionally undertook towards Janssen that it would not manufacture its biosimilar products for the EU-market until 24 January 2024 in order to avoid discussion on the stockpile exemption in the PI proceedings. Assessment of the CoA In its decision, the CoA considers the full range of arguments put forward by the parties. In general, the CoA considers that the purpose of the SPC Manufacturing Waiver is to create a level playing field for generic and biosimilar manufacturers in the EU vis-à-vis competitors in third countries in order to promote EU competitiveness in global markets where protection expired, while at the same time ensuring protection for SPC holders in the EU. In particular, the CoA answers three legal questions: 1. Does a valid reliance on the production-for-export exemption require that the manufacturer has a MA for the intended country of export at the time of notification, or at least before production commences? The CoA answers this question by first analysing the wording of the MW Regulation and finds that article 5(5)(e) of the MW Regulation only requires that the reference number of an MA is provided in relation to the notice of the SPC Manufacturing Waiver once this is available. There is no obligation for the manufacturer to wait with giving notice or with starting production until the MA for the intended country of export is granted and a reference number is provided. 2. Does a valid reliance on the production-for-export exemption require that at the time of the notification, or at least before the start of production, there are no IP rights in force in the intended exporting countries that could oppose entry into that country’s market? The CoA is of the opinion that the MW Regulation does not contain a requirement that the manufacturer must wait with the production under the waiver until the IP rights have expired in the intended export country. Starting production before those rights have expired is not considered unlawful because manufacturing in the EU under the waiver does not automatically infringe an IP right in the country intended for export. This would only be the case if IP rights still exist when the product is imported into that country’s market. 3. Does a manufacturer have the right to stockpile for the intended export? The CoA considers that under article 5(2)(a)(ii) MW Regulation the EU manufacturer is also entitled to stockpile its products as this is strictly necessary for export to third countries in order to achieve Day 1 entry and for the manufacturer to benefit from the “first mover” effect. The CoA considers that this is in line with the intention of the Union legislator and that Day 1 entry is not only intended for the EU but also for Day 1 entry in third countries, giving the EU manufacturer a first mover effect. The CoA rejects Janssen’s concerns that stockpiling could create a risk that products destined for third countries would eventually enter the EU market. According to the CoA there are sufficient safeguards in the MW Regulation to prevent such products from entering the EU market.

The Authority for Consumers & Markets (“ACM“) recently announced its 2025 agenda (link). This agenda outlines the regulator’s priorities and focus areas for the coming years. Among other things, the ACM wishes to get ready for the challenges of our time and has defined three focus areas in that context. There are also plans to conduct market surveys in certain sectors. In the blog below, you can read what the ACM plans to do in the coming year, and what this could mean for you. Focus points voor 2025 This year, the ACM will focus on three key societal themes. In this way, the ACM wishes to ensure the healthy functioning of the markets concerned, and protect consumers’ interests in these rapidly developing themes. This year’s focus is on: Promoting an open and fair digital economy; Accelerating the energy transition; and Developing a more sustainable economy. The focus points for 2025 are a continuation of the focus work for 2024 (link). The focus from 2024 will be further pursued by more specific and targeted actions in 2025, with a stronger emphasis on digital innovation, energy flexibility and supply chain sustainability. Digital economy The Dutch economy is becoming increasingly digitised. This brings opportunities for economic growth and innovation on the one hand, but also risks on the other. The ACM will therefore pay attention to protecting consumers, especially vulnerable groups such as minors, while promoting economic growth and innovation. Areas of focus include: More oversight of big tech companies to prevent abuse of power; Taking action against abuse, deception and manipulation in online sales and gaming; and Strengthening data protection and consumer privacy rights. Energy transition The ACM is also committed to a rapid energy transition. The ACM aims for a reliable and sustainable energy supply for all people and businesses, now and in the future. In that context, the ACM plans, among other things, to reduce grid congestion and improve flexible grid use in the coming year. In addition, the ACM will promote renewable energy sources and design new regulatory methods for grid operators for future-proof infrastructure. Sustainable economy The ACM supports the development of a sustainable economy. The focus is on ensuring a level playing field between companies and providing clarity for companies when cooperating for sustainability purposes within competition rules. The ACM also wants to ensure that consumers can trust information on sustainability provided by companies. Market research In 2025, the ACM will launch five new general market reviews. Specifically, it will look at (i) veterinary practices, (ii) (digital) learning resources, (iii) computerised consumer prices, (iv) the fixed internet budget segment and (v) the development of the hydrogen market. In this way, the ACM can look at the (dis)functioning of these markets without concrete suspicions of violations. For instance, in the veterinary practice market, the issue is that many practices have become owned by investment funds in recent years, which may have led to sharp price increases. In its market studies, the ACM will use its new “Methodology for market research” published in February 2025 (link). In this document, the ACM describes the reasons for (the selection of) market investigations and the process of market investigations. What does this mean for you? The ACM’s 2025 agenda could be significant for several parties. For companies, it is likely that increased compliance requirements will be introduced, especially in the digital sector. More enforcement can also be expected with regard to dissemination of (online) disinformation on sustainability issues or misconduct related to online sales or gaming. Furthermore, the ACM wishes to encourage a healthy market and create more opportunities for companies to realise sustainability initiatives. Consumers can also expect some change. For instance, protecting consumer rights (especially within the focus areas) is one of the ACM’s priorities, and it intends to achieve healthy markets and price formation for consumers through its market investigations. Companies active in the sectors under investigation by the ACM, can expect to receive questions from the ACM. Do you have any questions on this topic? Or do you, as a company, need support in contacting the ACM? Feel free to contact Monika Beck or one of our other specialists.

In the dynamic world of startups and innovative companies, venture capital (VC) plays a crucial role in funding growth potential. But what exactly is venture capital, how do Venture Capitalists work and what is their role in the investment ecosystem? In this article, I take a closer look at the definitions, processes and strategies behind venture capital, as well as the role VC plays in the Dutch startup economy. This article is the first in our series about venture capital. Definition of Venture Capital Venture capital is a form of financing that focuses on (innovative) start-ups and small companies with high growth potential. These target companies are in their development phase, are generally not yet profitable and depend on external money for their further growth and development ambitions. VC investors invest in these companies to further support their initial development or rapid growth. It is important to note that venture capital usually focuses on companies that have already achieved some degree of validation. This means they would have a working product, an initial customer base, or have demonstrated clear market potential. Venture capitalists rarely invest in completely untested ideas, which sets them apart from earlier funding sources such as angel investors or the 3Fs (family, friends and fools). How Does Venture Capital Work? Investors and Sources of Capital Venture capitalists are professional investors who put their capital into companies with high growth potential but also inherent risk. These investors obtain their capital from various sources, including external investors called Limited Partners (LPs) and sometimes from their own funds. LPs can be pension funds, university endowments, family offices or high net worth individuals. VC parties also often act jointly and, in the Netherlands, regularly with government-funded parties such as Regional Development Companies (Regionale Ontwikkel Maatschappijen). The consortium of collaborating investors then takes a joint position within a start-up. Phases of Investment The process of venture capital investment involves several stages: Investors use their personal networks, recommendations and online platforms to identify interesting young companies (deal sourcing). In the deal screening phase, startups are assessed based on criteria such as market potential, team expertise and innovation. A thorough due diligence is conducted to assess the feasibility and risks of the investment. This process includes a comprehensive audit of the startup to evaluate finances, operations, legal aspects, market position and more. At the investment committee stage, the final investment decision is made (FID) by a group of experts and partners. After due diligence, the venture capital firm generally prepares a term sheet and other relevant documents and structures the deal. Once the necessary documents are signed, funding is provided through capital contributions to the company (capital deployment). In practice, the actual capital investments often take in several rounds/phases, each with specific goals and conditions. The first formal investment round, also known as the seed round, focuses on product development and market validation. The subsequent series A round focuses on refining the business model and accelerating growth. All rounds (series B and beyond) after that focus on scale-up and expansion. Each round typically entails more capital and higher valuations, but often also contains more stringent requirements on the company’s performance. Conditions and Risks In return for their financial investment, venture capitalists receive partial ownership of the company and, often, a say in its operations. This then usually takes the form of a seat in the board, supervisory board or otherwise. Investors may also make other demands, such as the right to future investments, the right to get their investment back on a priority basis or the possibility to sell the company at a profit after a certain period of time. Venture capital is a risky type of investment because the companies are still in the early stages, have little or no revenue and have not yet proven that they will actually be successful. The exit strategy, or how the investor can sell its shares, may therefore be uncertain or unclear. It is crucial to understand that most venture capital investments are not successful. VC firms expect to earn their returns from a small percentage of their investments – often only 10-20% of their portfolio. These ‘winners’ must generate sufficient returns to offset losses on the other investments to still generate an attractive total return. This showcases the high risk-return ratio in the venture capital sector. Exit Strategies The main goal of investors is to earn a return on the money invested. This is usually done by selling the shares after a certain period, on average between 3-7 years, through an initial public offering, merger or acquisition by another company or investor. Although initial public offerings and acquisitions are the most common exit strategies, they depend heavily on market conditions and the performance of the startup. Not every company will achieve such a successful exit though. Venture capitalists consider different scenarios and then adjust their strategies as the company evolves. In some cases, a secondary sale of shares or a recapitalisation can provide an alternative to the usual exit routes. Role in the Startup Economy Venture capital is an essential source of funding for start-ups and innovative companies, especially when traditional bank loans are too difficult to obtain. It helps in the rapid growth and development of these companies and can lead to exponential growth across the startup ecosystem. Networking and relationships play a crucial role in deal flow. VCs often invest in startups with founders they know or through recommendations from trusted sources. A strong network can significantly improve access to high-quality investment opportunities. Networks not only play a crucial role in deal flow, but also influence the quality of due diligence and strategic decisions. Strong networks enable VCs to gather in-depth, reliable information on potential investments. They also facilitate access to industry experts, potential customers and partners, which significantly increases the value a VC can add to a startup. Moreover, good networks can help find suitable executives or board members for portfolio companies. VC firms based in thriving entrepreneurial regions, such as Silicon Valley, New York, Berlin, Stockholm or Tel Aviv and closer to home ‘Brainport Eindhoven’, BioScience Park in Leiden, the Amsterdam region or metropolitan region of The Hague-Rotterdam, generally have better access to deal flow than firms in less active areas. Said regions offer a rich ecosystem of startups, talent and resources. VC firms that specialise in specific sectors or industries are more likely to get a better deal flow as they have deeper understanding of the market and are better able to identify promising startups. Specialisation can also help make due diligence more efficient and make better investment decisions . The main sectors currently attracting VC investment are information technology, healthcare/biotechnology, fintech and consumer products and services. Conclusion To summarise, venture capital is a complex but essential part of the startup economy. By understanding the phases of deal flow, the key players in the VC ecosystem, and the factors that influence deal flow, both entrepreneurs and investors can develop strategies to be more successful. Mitigating challenges such as a limited deal flow, investor competition, time constraints and risk management is crucial to achieving success in the world of venture capital. By using technology, building strong networks, and implementing efficient processes, VC firms and entrepreneurs can effectively navigate the dynamics of deal flow and increase their chances of success. With the right strategies and mitigation measures, both entrepreneurs and investors can benefit from the potentially high returns that venture capital has to offer. Contact Do you have questions about bad leaver or good leaver clauses or want to exchange views? If so, please contact Mathijs Arts, Reinoud van Ginkel or one of our other Mergers and Acquisition (M&A) specialists.