The EU Commission approves €300 million Austrian scheme for package travel organisers and facilitators of linked travel services in the context of the COVID-19 pandemic

State aid: Commission approves €300 million Austrian scheme for package travel organisers and facilitators of linked travel services in the context of the coronavirus outbreak*

The European Commission has approved, under EU State aid rules, a €300 million Austrian scheme for package travel organisers and facilitators of linked travel services in the context of the coronavirus outbreak.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The package travel industry has been hit hard by the coronavirus outbreak, due to restrictions on international travel that Austria and other countries had to impose to limit the spread of the virus. This €300 million aid scheme will enable Austria to ensure that, should package travel organisers become insolvent, sufficient resources are available to refund consumers for travel services cancelled due to the coronavirus. We continue working closely with Member States to ensure that national support measures can be put in place in a coordinated and effective manner, in line with EU rules.”

The Austrian support measure

Austria notified to the Commission a €300 million State guarantee scheme to ensure that sufficient resources are available to refund consumers for cancelled travel services should package travel organisers or facilitators of linked travel services become insolvent.

Under Austrian law, implementing the Package Travel Directive, package travel organisers and facilitators of linked travel services are required, by means of appropriate insurance, to ensure that travellers will be reimbursed for sums they have already paid (such as advance payments and residual payments) for services which were not ultimately provided, either fully or in part, including in the case of insolvency of the organiser.

Under the scheme notified by Austria, the aid will take form of State guarantees, which will cover 100% of the beneficiaries’ liability for travel services which could not be provided in full or in part due to the coronavirus outbreak, in the specific instance in which the beneficiaries become insolvent.

The Commission assessed the measure under EU State aid rules, and in particular Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures implemented by Member States to remedy a serious disturbance in the economy of a Member State.

The Commission found that the scheme notified by Austria is compatible with the principles set out in the EU Treaty and is well targeted to remedy a serious disturbance to the Austrian economy. In particular, (i) the guarantee fee premiums are in line with those set in the Temporary Framework; (ii) the guarantees are limited in time: they will be granted by 30 June 2021 at the latest and will cover the risk of insolvency of the beneficiaries until 31 December 2021; and (iii) the duration of the guarantees is one year.

The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the Austrian economy, in line with Article 107(3)(b) TFEU and the general principles set out in the Temporary Framework.

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

Background

In case of particularly severe economic situations, such as the one currently faced by all Member States 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, 8 May, 13 October 2020 and 28 January 2021, 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; (xii) Support for uncovered fixed costs for companies facing a decline in turnover in the context of the coronavirus outbreak.

The Temporary Framework will be in place until the end of December 2021. With a view to ensuring legal certainty, the Commission will assess before those dates if it needs to be extended.

This complements the many other possibilities already available to Member States to mitigate the socio-economic impact of the coronavirus outbreak, in line with EU State aid rules. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities. For example, Member States can make generally applicable changes in favour of businesses (e.g. deferring taxes, or subsidising short-time work across all sectors), which fall outside State Aid rules. They can also grant compensation to companies for damage suffered due to and directly caused by the coronavirus outbreak.

The non-confidential version of the decision will be made available under the case number SA.60521 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 €300 million Austrian scheme for package travel organisers and facilitators of linked travel services in the context of the COVID-19 pandemic, 4 February 2021, e-Competitions Competition Law & Covid-19, Art. N° 99184

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