European Union: COVID-19 Key EU Developments, Policy & Regulatory Update No. 64

COMPETITION & STATE AID

State Aid

European Commission adopts Communication on Energy Prices to tackle exceptional rise in energy prices (see here)

On 13 October 2021, the Commission adopted a Communication on Tackling Rising Energy Prices: a Toolbox for Action and Support.

The Communication seeks to respond to the sharp rise global energy prices, anticipated to continue throughout the winter. The price surge is principally attributed to increased global demand for energy, as economic recovery accelerates as the COVID-19 pandemic subsides.

The Communication seeks to respond to the sharp rise global energy prices, anticipated to continue throughout the winter. The price surge is principally attributed to increased global demand for energy, as economic recovery accelerates as the COVID-19 pandemic subsides.

Presenting the Toolbox, Energy Commissioner Kadri Simson explained: "Rising global energy prices are a serious concern for the EU. As we emerge from the pandemic and begin our economic recovery, it is important to protect vulnerable consumers and support European companies."

Immediate measures to shield consumers and businesses include, among others:

• Providing aid to companies or industries, in line with EU State aid rules and international subsidy rules.
• Facilitating broader access to renewables power purchase agreements beyond large business, including SMEs, for instance by aggregating end-user demand in line with competition rules.
• Investigating possible anti-competitive behavior in the energy market and requesting the European Securities and Markets Authority (ESMA) to further enhance monitoring of developments in the carbon market.

Medium-term measures for a sustainable and resilient energy system include, among others:

• Boosting investments in renewables and energy efficiency and speeding up renewables auctions and permitting processes;
• Considering revising the security of supply regulation to ensure a better use and functioning of gas storage in Europe.
• Exploring the potential benefits of voluntary joint procurement of gas stocks by Member States.

Commissioner Simson is presenting the Communication and Toolbox to Members of the European Parliament and to Energy Ministers. The European Council on 21-22 October will also discuss energy prices. The Communication is the Commission's contribution to the continued debate among EU policymakers.

Anticipated limited extension of State aid Temporary Framework and new support tools (see here)

Margrethe Vestager, Executive Vice-President and Commissioner for Competition provided remarks to the media on 19 October 2021 on the contemplated extension of the State aid Temporary Framework. She indicated that this was hopefully the last version of the Temporary Framework.

The Temporary Framework, to recall, was initially adopted on 19 March 2020 (and most recently amended on 28 January 2021) in view of supporting the economy following the COVID-19 outbreak through various aid measures which, in particular, could be rapidly approved upon notification to the Commission.

The European Commission is currently consulting with Member States on a draft proposal to prolong the State aid Temporary Framework until 30 June 2022 and to extend its scope with the intended aim of further accelerating economic recovery (see Jones Day Update No. 63 of 11 October 2021).

For some sectors still in difficulty, Commissioner Vestager also remarked that certain tools would be used to support recovery, particularly in view of incentivizing private investment.

As the Commission previously announced on 30 September 2021, for a limited period beyond 30 June 2022, it proposes to allow Member States to grant:

• Investment support measures to help Member States address the investment gap resulting from the crisis; and
• Solvency support measures to leverage private funds and investment in undertakings, in particular small and medium-sized enterprises (SMEs) and small mid-caps, by facilitating access to equity financing.

The Commission, thus far, has taken more than 650 decisions in all Member States, including based on the Temporary Framework, to enable support worth over €3 trillion in total to companies affected by the pandemic.