The EU Commission implements a temporary State aid framework to tackle the COVID-19 pandemic

As part of its policy reaction to the Covid-19 pandemic, the European Commission has mobilised two instruments to assist Member States in dealing with the crisis: Article 107(2)(b) TFEU allowing for State aid to compensate damages caused by exceptional occurrences, and Article 107(3)(b) TFEU allowing for State aid to remedy a serious disturbance in the economy of a Member State. In the context of the second exemption, a new State aid Temporary Framework was adopted by the European Commission on 19 March 2020 and was amended on 3 April 2020 and 8 May 2020. The Temporary Framework, as amended, provides detailed guidance on the compatibility conditions for the following types of measures adopted in the context of the Covid-19 crisis: (i) direct grants, repayable advances or tax advantages; (ii) guarantees on loans; (iii) subsidised interest rates; (iv) short-term export credit insurance; (v) aid for Covid-19-related R&D; (vi) aid for the construction and upscaling of testing facilities; (vii) aid for the production of Covid-19-relevant products; (viii) aid in the form of (selective) tax deferrals and/or suspensions of social security contributions; (ix) aid in the form of (selective) wage subsidies for employees, (x) recapitalisation aid to non-financial companies in need; and (xi) subordinated debt measures to companies on favourable terms. The Commission has published templates for the notification of the respective measures. Aid may not be granted to undertakings that were already in difficulty (within the meaning of the Rescue and Restructuring Guidelines) on 31 December 2019, while aid granted by Member States under the Temporary Framework to undertakings via banks (as intermediaries) must benefit the undertakings directly and cannot have the objective of preserving or restoring the viability, liquidity or solvency of banks. Notably, the Temporary Framework has already generated some controversy regarding its alleged abuse by certain Member States to favour national champions. In the case of air carriers, Ryanair has already filed six appeals against Commission decisions approving aid to air-carriers.

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Stamatis Drakakakis, Argyris Papaefthymiou, Ellie Gavriilidou, The EU Commission implements a temporary State aid framework to tackle the COVID-19 pandemic, 19 March 2020, e-Competitions March 2020, Art. N° 99983

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