The European Commissions’ Battle with EU Economy Disturbance Goes on

Certainly, you remember the Temporary Framework for State Aid Measures to Support the Economy in the Current COVID-19 Outbreak (“Temporary Framework”), adopted on March 19, 2020 (article available here), amidst the coronavirus which raised hell in all major spheres of state activity of both EU Member States and EU Association countries.  On this wise, the European Commission has decided to prolong and extend the scope of the Temporary Framework on October 13, 2020. 

The bottom line – the Temporary Framework has been prolonged for six months until June 30, 2021, and the section to enable recapitalization support is prolonged for three months until September 30, 2021.  The objective is to enable the Member States to support businesses in the context of the coronavirus crisis, especially where the need or ability to use the Temporary Framework has not fully materialized so far while protecting the level playing field.

So, what’s new?

The amendment introduces a new measure to enable the Member States to support companies facing a decline in turnover during the eligible period of at least 30% compared to the same period of 2019 due to the coronavirus outbreak.  The support will contribute to a part of the beneficiaries’ fixed costs that are not covered by their revenues, up to a maximum amount of EUR 3 million per undertaking.

The Commission has also adapted the conditions for recapitalization measures (article available here) under the Temporary Framework, in particular for the State’s exit from the recapitalization of enterprises where the State was an existing shareholder prior to the recapitalization.  The amendment allows the State to exit from the equity of such enterprises through an independent valuation, whilst restoring its previous shareholding and maintaining the safeguards to preserve effective competition in the Single Market.

The Commission wrapped it up with the remark that the amendment provides for an extension until 30 June 2021 of the temporary removal of all countries from the list of “marketable risk” countries under the Short-term export-credit insurance Communication.

We will continue to track how Europe moves from crisis management to economic recovery and keep you posted.