The EU Commission approves German aid scheme to support airports affected by the COVID-19 outbreak

State aid: Commission approves German aid scheme to support airports affected by the coronavirus outbreak*

The European Commission has approved a German aid scheme to support airports in the context of the coronavirus outbreak. The scheme was approved partially based on Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU) and partially under the State aid Temporary Framework.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Airport operations must be secured to ensure connectivity, mobility and air transport. This scheme will enable German authorities at different levels to compensate German airports for the damage suffered as a result of the coronavirus outbreak. At the same time, it will help them address their liquidity shortages and weather the crisis. During these difficult times, we continue to work with Member States to ensure that national support measures can be put in place as quickly and effectively as possible to tackle the negative effects of the coronavirus outbreak.”

The German support measures

Germany notified to the Commission, based on Article 107(2)(b) TFEU and under the Temporary Framework, a scheme to support airports affected by the coronavirus outbreak.

Under the scheme, which will be open to all operators of German airports, the German authorities at different levels (federal, state and municipal) will be able to:

  • Compensate airports for revenue losses directly caused by the coronavirus outbreak during the period 4 March - 30 June 2020, in the form of direct grants. The scheme ensures that any compensation paid out in excess of the actual damage suffered will have to be returned to Germany including interest. The risk of the State aid exceeding the damage is therefore excluded;
  • Provide liquidity support in the form of grants, guarantees on loans, subsidised interest rates and deferrals of certain taxes and charges to airports facing liquidity shortages as a result of the restrictions that Germany and other Member States had to impose to limit the spread of the coronavirus. Most liquidity support measures covered by the scheme, with the exception of deferrals of tax and charges, fall under existing schemes previously approved by the Commission under the Temporary Framework (“Bundesregelung Kleinbeihilfen 2020”, “Bundesregelung für niedrigverzinsliche Darlehen 2020” and “Bundesregelung Bürgschaften 2020”). The Commission’s assessment in the present case is therefore limited to tax and charges, which are not covered by previously approved schemes.

With respect to the damage compensation, the Commission assessed the measure under Article 107(2)(b) TFEU, which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors (in the form of schemes) for the damages directly caused by exceptional occurrences. The Commission considers that the coronavirus outbreak qualifies as an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by the Member States to compensate for the damages linked to the outbreak are justified.

The Commission found that, with respect to the compensation measure, the German aid scheme will compensate damage that is directly linked to the coronavirus outbreak and will provide liquidity to airports in need. It also found that the measure is proportionate as the compensation does not exceed what is necessary to make good the damage.

With respect to the deferrals of tax and charges, the Commission found that the measure is in line with the conditions of the Temporary Framework. In particular, (i) the measure supports undertakings that are active in a sector which is particularly affected by the coronavirus outbreak; and (ii) the aid will be granted before 31 December 2020 and the end date of the deferrals will be not later than 31 December 2022.

The Commission therefore concluded that the measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the scheme under EU State aid rules.

Background

Financial support from EU or national funds granted to health services or other public services to tackle the coronavirus situation falls outside the scope of State aid control. The same applies to any public financial support given directly to citizens. Similarly, public support measures that are available to all companies such as for example wage subsidies and suspension of payments of corporate and value added taxes or social contributions do not fall under State aid control and do not require the Commission’s approval under EU State aid rules. In all these cases, Member States can act immediately.

When State aid rules are applicable, Member States can design ample aid measures to support specific companies or sectors suffering from the consequences of the coronavirus outbreak in line with the existing EU State aid framework. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the coronavirus outbreak setting out these possibilities. In this respect, for example:

  • Member States can compensate specific companies or specific sectors (in the form of schemes) for the damage suffered due and directly caused by exceptional occurrences, such as those caused by the coronavirus outbreak. This is foreseen by Article 107(2)(b)TFEU.
  • State aid rules based on Article 107(3)(c) TFEU enable Member States to help companies cope with liquidity shortages and needing urgent rescue aid.
  • This can be complemented by a variety of additional measures, such as under the de minimis Regulation and the General Block Exemption Regulation, which can also be put in place by Member States immediately, without involvement of the Commission.

In case of particularly severe economic situations, such as the one currently faced by all Member States and the UK due the coronavirus outbreak, EU State aid rules allow Member States to grant support to remedy a serious disturbance to their economy. This is foreseen by Article 107(3)(b) TFEU of the Treaty on the Functioning of the European Union.

On 19 March 2020, the Commission adopted a State aid Temporary Framework based on Article 107(3)(b) TFEU to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework, as amended on 3 April and 8 May 2020, provides for the following types of aid, which can be granted by Member States: (i) Direct grants, equity injections, selective tax advantages and advance payments; (ii) State guarantees for loans taken by companies; (iii) Subsidised public loans to companies, including subordinated loans; (iv) Safeguards for banks that channel State aid to the real economy; (v) Public short-term export credit insurance;(vi) Support for coronavirus related research and development (R&D); (vii) Support for the construction and upscaling of testing facilities; (viii) Support for the production of products relevant to tackle the coronavirus outbreak; (ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions; (x) Targeted support in the form of wage subsidies for employees; (xi) Targeted support in the form of equity and/or hybrid capital instruments.

The Temporary Framework will be in place until the end of December 2020. As solvency issues may materialise only at a later stage as this crisis evolves, for recapitalisation measures only the Commission has extended this period until the end of June 2021. With a view to ensuring legal certainty, the Commission will assess before that date if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.57644 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

More information on the Temporary Framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.

*This is the original title of the press release. The title above has been amended in order to match the e-Competitions format. Individual authors are welcome to provide original independent commentaries on the case law. Articles are subject to approval by the Board of e-Competitions Bulletin before publication based on the Editorial Policy (click here).

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European Commission, The EU Commission approves German aid scheme to support airports affected by the COVID-19 outbreak, 11 August 2020, e-Competitions September 2020, Art. N° 96375

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