COVID-19 Temporary Framework for State Aid Measures
News    ·   23-03-2020
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AUTHOR: Ron Galea Cavallazzi; Lisa Abela; Kristina Azzopardi

On 19 March 2020, the European Commission adopted a communication setting out a temporary framework for state aid measures which are intended to support the economy and maintain the integrity of the internal market of the European Union, which has been severely hit by the COVID-19 outbreak.

While again referring to the measures which Member States may take under the regular State aid regime, including measures of general application and direct assistance to consumers, the Communication sets out additional temporary State aid measures which the Commission considers compatible under Article 107 (3)(b) TFEU, relating to aid to remedy a serious disturbance in the economy of a Member State.

The Communication expressly states that the measures indicated can be approved very rapidly upon notification.

The measures, stated to be applicable as from 19 March 2020 and, unless reviewed, not applicable after the 31 December 2020 are:

  1. Direct grants, repayable advances and tax advantages up to €800,000 (other than for agricultural, fisheries and aquacultural sectors, which are subject to specific conditions);
  2. Guarantees on loans;
  3. Subsidised interest rates for public loans;
  4. Short-term export credit insurance.

Clearly a number of conditions as set out in the Communication must be satisfied in order to ensure compatibility. These are intended as safeguards for the state aid measures to be appropriate, necessary and adequately targeted towards remedying the effects of the COVID-19 outbreak.

The Communication further expressly states that the ‘one time last time’ principle in the Rescue and Restructuring Guidelines does not cover aid that the Commission declares compatible under Article 107(2)(b) TFEU and that therefore, Member States may compensate undertakings for damage directly caused by the COVID-19 outbreak, under Article 107(2)(b), despite their having received rescue and restructuring aid.

The sectors majorly impacted by the circumstances of COVID-19, namely the tourism, transport, retail and hospitality sectors, may find useful support in the Framework’s temporary state aid measures.

For more information on state aid support measures surrounding the COVID-19 outbreak or other related matters, kindly contact us on competition@camilleripreziosi.com.

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