The EU Commission prolongs its State aid temporary framework in the context of the COVID-19 pandemic

On 13 October 2020, the European Commission decided to prolong and extend the scope of the State Aid Temporary Framework as follows:

  • Extension of Temporary Framework: All sections of the Temporary Framework are prolonged for six months until 30 June 2021, except the section that enables recapitalization support, which is prolonged for three months until 30 September 2021 (originally due to expire on 30 June 2021). Before 30 June 2021, the European Commission will review the Temporary Framework and assess the need for further extensions or adjustments.
  • Support for uncovered fixed costs: Member States may now contribute to the uncovered fixed costs (i.e. fixed costs not covered by profit contribution) of companies whose turnover declines by at least 30% during the eligible period, as compared to the same period in 2019, with a maximum amount of €3 million per company. This additional form of support to companies seeks to avert the erosion of their capital, maintain their business activity, and afford them with reinforced footing to recover.
  • Recapitalization measures and exit of the State from previously State-owned companies: Member States may now exit from the equity of companies where they were an existing shareholder prior to the recapitalization. Such exit is permitted through an independent valuation, while restoring the Member State’s previous shareholding and maintaining safeguards to uphold effective competition in the Internal Market.
  • Extension of temporary removal of all countries from the list of “marketable risk" countries: A general lack of sufficient private capacity persists in relation to covering all economically justifiable risks for exports to countries listed as “marketable risk” countries under the Short-term export-credit insurance Communication. Given such shortfall, the temporary removal of all countries from the list of “marketable risk" countries is extended until 30 June 2021.

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Renato Antonini, Kaarli Harry Eichhorn, Jörg Hladjk, Cristiana Spontoni, The EU Commission prolongs its State aid temporary framework in the context of the COVID-19 pandemic, 13 October 2020, e-Competitions October 2020, Art. N° 97398

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