This regular alert covers key regulatory EU developments related to the COVID-19 situation. It does not purport to provide an exhaustive overview of developments and contains no analysis or opinion.

LATEST KEY DEVELOPMENTS

Competition & State Aid

  • European Commission endorses last national recovery and resilience plan, subject to rule of law milestones
  • European Commission approves further schemes under COVID Temporary Crisis Framework
  • European Commission approves further schemes under Ukraine Temporary Crisis Framework

Trade / Export Controls

  • Launch of new Digital Partnership between EU and Republic of Korea
  • European Commission proposes Regulation establishing a market correction mechanism to protect against excessively high gas prices
  • Council of the European Union expands sanctions against Iran and Russia

Medicines and Medical Devices

  • European Commission adopts EU Global Health Strategy
  • European Commission adopts EU4Health Work Programme for 2023

Cybersecurity, Privacy & Data Protection

  • Council of the European Union adopts NIS2 Directive for high common level of cybersecurity across the Union
  • European Commission establishes European Centre for Algorithmic Transparency

COMPETITION & STATE AID

State Aid

European Commission endorses last national recovery and resilience plan (subject to meeting rule of law milestones) (see here and here)

On 30 November 2022, the Commission endorsed Hungary's recovery plan under the Recovery and Resilience Facility (RRF)*, to be financed by ?5.8 billion in grants. With this approval, the Commission has now endorsed all 27 Member State recovery plans.

However, the Commission's endorsement of Hungary's recovery plan is conditioned on Hungary's full and effective implementation of 27 milestones on the rule of law, judicial independence, anti-corruption, and protecting the EU's budget. These reforms must be fulfilled before any payment to Hungary is possible. Later reversals or watering-down of these milestones would block any subsequent payments under the RRF.

Of the 27 milestones, 17 of these respond to the Commission's launch against Hungary of a "conditionality mechanism of the rule of law procedure" in April 2022. This procedure against Hungary is the first one under the Conditionality Regulation, adopted in December 2020 to protect the EU budget (see here and Jones Day COVID-19 Update No. 87 of 23 September 2022).

The remaining milestones in Hungary's recovery plan concern other rule of law reforms related to judicial independence and audit and control measures.

Despite certain reforms underway by Hungary, the Commission considered that Hungary had failed to timely and adequately implement central aspects of the necessary 17 remedial measures agreed under the conditionality mechanism. The Commission thereby also announced on 30 November 2022 that it maintained its proposal to the Council (see here) for budget protection measures under the Conditionality Regulation against Hungary's breaches of the rule of law, including:

  • a suspension of 65% of the commitments for three operational programs under cohesion policy, amounting to ?7.5 billion; and
  • a prohibition to enter into legal commitments with the public interest trusts for programs implemented in direct and indirect management.

The European Parliament also earlier adopted a Resolution on 24 November 2022 on Hungary's compliance with the rule of law and Hungary's recovery plan (see here). The Resolution asserted the ongoing risk of misuse of EU funds in Hungary and, in this respect, deplored that because of the Hungarian government's actions, EU recovery funds have not yet reached its people. The Resolution also emphasized that final beneficiaries of EU funds should not be deprived of support due to Hungary's lack of cooperation and called on the Commission to find ways to distribute EU funds via local governments and NGOs.

Next steps: Regarding the Commission proposal to protect the EU budget against Hungary's breaches of principles of the rule of law, the Council has until 19 December 2022 to take a decision, by qualified majority.

Concerning the RRF, the Council now has, in principle, four weeks to adopt the proposed Council Implementing Decision to endorse the Commission's positive assessment of Hungary's recovery and resilience plan.

* The RRF is the key component of NextGenerationEU, the EU's historic recovery fund for rebounding from the COVID-19 crisis (and now also the energy crisis). Member State recovery plans have set out the reforms and public investment projects foreseen for implementation with the RRF, which makes available ?723.8 billion (in current prices) (i.e., grants totaling ?338 billion and ?385.8 billion in loans). These national recovery plans must comply with State aid rules.

European Commission approves further schemes under COVID Temporary Crisis Framework (see here and here)

The Commission has adopted a significant number of State aid measures under Article 107(2)b, Article 107(3)b and under the State aid COVID Temporary Crisis Framework adopted in March 2020.

With certain exceptions, the Temporary Framework applied until 30 June 2022.* Among the latest schemes (until 23 September 2022):

  • ?557 million German support to compensate Deutsche Bahn for damages suffered by its subsidiary DB Fernverkehr due to the coronavirus pandemic.
  • ?100 million Cypriot scheme to support companies and self-employed persons affected by the coronavirus pandemic.
  • 12.6 million Dutch scheme to support zoos in the context of the coronavirus pandemic.

* Exceptions notably include the possibility for Member States to (i) create direct incentives for private investments (until 31 December 2022) and (ii) provide solvency support measures (until 31 December 2023) aimed at easing access to equity finance for smaller companies


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