European Union: COVID-19 Key EU Developments, Policy & Regulatory Update No. 79

COMPETITION & STATE AID

Competition

 European Commission publishes 2021 General Report on Activities of the European Union (see  here)

 On 9 March 2022, the Commission published "The EU in 2021 – General Report on the Activities of the European Union."

The Report notes that in 2021, following one of the most challenging years in the EU's history, the EU began to launch its recovery from the COVID-19 pandemic. This included the EU's continued and extended efforts to respond to the crisis, with over 2,326 measures adopted in total to provide support since the beginning of the pandemic.

As concerns State aid, in 2021, the Report noted:

• The Commission's continued use of State aid rules as part of its policy response to the pandemic's severe impact on the economy. By end-2021, the Commission had adopted over 730 decisions, approving nearly 900 national measures notified by the Member States, for a total funding amount of €3.17 trillion.
• The Commission's initial response to the urgent need to keep businesses afloat had shifted to fostering robust and sustained recovery, in particular through the sixth amendment to the State Aid Temporary Framework (adopted in November 2021), which aims to enable an EU-wide coordinated phase-out of support while envisaging measures to accelerate the recovery (see Jones Day COVID-19 Update No. 68 of 22 November 2021).

The Report also noted the continued role of competition law in supporting Europe's recovery, the green and digital transitions, and a resilient Single Market, as framed by the Communication on Competition Policy Fit for New Challenges of 18 November 2021.

To recall, the Communication, in particular, addressed the comprehensive current review of competition policy and enforcement, which spans over 20 sets of competition rules and guidelines, across all competition instruments (merger, antitrust and State aid control) (see Jones Day COVID-19 Update No. 68 of 22 November 2021).

State Aid

 European Commission comments on Intel's investment plans in the European Union (see here)

 On 15 March 2022, Commission President Ursula von der Leyen welcomed Intel's announced investment plans in the EU as a "first major achievement" under the recently proposed EU Chips Act (see Jones Day Commentary, EU Chips Act: The EU's Push for Semiconductor Autonomy, March 2022, here).

To recall, the proposed EU Chips Act sets out a planned strategy for semi conductors to incentivize manufacturing in the EU and achieve strategic autonomy. The proposal follows the Commission's previous assertions that the COVID-19 pandemic has exposed vulnerabilities in certain sectors in Europe due to high dependency on a perceived narrow range of non-EU suppliers, especially for raw materials. The Commission believes that this is particularly the case for the EU industry confronted by semiconductor shortages.

Although specific new powers and funding mechanisms under the proposed EU Chips Act would require enactment through a regulation by the Parliament and the Council, many of the Commission's policy objectives do not require a change in the law and can already be applied. Crucially, the EC can immediately apply the more lenient interpretation of State aid rules for building new fabs that it announced in this proposal.

In total, over €43 billion of public investment (both EU and national investments) would support the EU Chips Act until 2030, in view of attracting tech companies to Europe to invest in cutting-edge chips development and production.

President von der Leyen noted that Intel planned as much as an €80 billion investment in the EU over the next decade across the entire semiconductor value chain. As stated by Intel: "The EU Chips Act will empower private companies and governments to work together to drastically advance Europe's position in the semiconductor sector. This broad initiative will boost Europe's R&D innovation and bring leading-edge manufacturing to the region for the benefit of our customers and partners around the world."

Intel indicated that in an initial phase, it plans to develop two first-of-their-kind semiconductor fabs in Magdeburg, Germany, with construction anticipated in H1 2023 and production planned to come online in 2027, pending European Commission approval.

 European Commission approves new and amended Member State measures to support the economy (see here and here)

 Since the onset of the coronavirus outbreak, the Commission has adopted a significant number of State aid measures under Article 107(2)b, Article 107(3)b and under the Temporary Framework.

The Temporary Framework, adopted in March 2020, is currently applicable until 30 June 2022.

• €44 million Slovenian scheme to support the digital transformation of the economy in the context of the coronavirus pandemic.
• Lithuanian scheme, including €25 million budget increase, to support the agriculture and aquaculture sectors affected by the coronavirus pandemic.
• Latvian scheme, including €4 million budget increase, to support small farmers affected by the coronavirus pandemic.
• €5 million Portuguese scheme to support companies in the Azores in context of coronavirus pandemic.
• €2.7 million Danish scheme to support companies affected by the coronavirus pandemic.