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.
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COMPETITION & STATE AID
European Commission adopts Temporary Crisis Framework to support economy in context of Russia's invasion of Ukraine (see here)
On 23 March 2022, the Commission adopted a Communication on a Temporary Crisis Framework for State Aid measures, which sets out the criteria for Member States to support businesses in the context of Russia's invasion of Ukraine and its serious disruption to the EU economy.
The Communication notes that the conflict has significantly impacted the energy market, and steep rises in energy prices have affected various economic sectors, including some of those particularly affected by the COVID-19 pandemic, such as transport and tourism. The conflict has also disrupted supply chains for both EU imports from Ukraine (notably, cereals and vegetable oils) and EU exports to Ukraine.
Under the Crisis Framework, based on Article 107(3)(b) of the Treaty on the Functioning of the European Union ("TFEU"), Member States, in particular, may:
(i) grant a limited amount of aid to companies affected by the current crisis or by related sanctions and counter-sanctions, with up to €35,000 for companies affected by the crisis active in the agriculture, fisheries and aquaculture sectors and up to €400,000 per company affected by the crisis active in all other sectors;
(ii) guarantee the availability of sufficient liquidity for companies through (i) subsidized State guarantees to ensure that banks continue to provide loans to all companies impacted by the crisis; and (ii) public and private loans with subsidized interest rates; and
(iii) compensate companies for additional costs due to exceptionally high gas and electricity prices, and in particular for energy-intensive businesses, such that:
- Support can be granted in any form, including direct grants, with overall aid per beneficiary not exceeding 30% of eligible costs, up to a maximum of €2 million.
- For companies incurring operating losses, further aid may be necessary to ensure the continuation of an economic activity, such that Member States may grant aid exceeding the above-referred ceilings, with up to €25 million for energy-intensive users, and up to €50 million for companies active in specific sectors (e.g., production of aluminum and other metals, pulp, fertilizer or hydrogen and many basic chemicals).
Towards ensuring a level playing field, the Crisis Framework also foresees certain safeguards in relation to, e.g.:
- Proportionality, such that the amount of aid that can be granted to businesses should be linked to the scale of their economic activity and exposure to the economic effects of the crisis, in light of their turnover and energy costs; and
- Eligibility conditions, and in particular, defining "energy-intensive"
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