EU To Extend State Aid Rules As COVID-19 Marches On

By Nadia Dreid
Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.

Sign up for our Public Policy newsletter

You must correct or enter the following before you can sign up:

Select more newsletters to receive for free [+] Show less [-]

Thank You!



Law360 (July 2, 2020, 5:37 PM EDT) -- The European Commission is pushing back the expiration date on a slew of state aid rules and tweaking others to account for the economic fallout caused by the coronavirus pandemic, the watchdog said on Thursday.

These "targeted adjustments" are aimed at "[mitigating] the economic and financial impact of the coronavirus outbreak on companies," the regulator said in its statement unveiling the changes.

One such change will allow companies that have fallen on hard times due to the pandemic to access state aid even if they wouldn't otherwise be eligible, the regulating body said. Another will protect companies that have been forced into layoffs, so they don't run afoul of previous commitments not to cut or relocate jobs.

Guidelines on regional state aid, state aid to promote riskier finance investments and state aid for environmental protection and energy — which were set to expire at the end of the year — are being extended another year.

Policies for keeping certain players out of specific industries to encourage competition and those governing smaller aid projects coming in at under €200,000 — known as the General Block Exemption Regulation and de minimis regulation, respectively — got their expiration date extended for three years.

This is the latest move by the commission to help member states prop up their economies as they work to contain the coronavirus. Earlier this year, the commission revealed a new temporary framework aimed at helping countries "use the full flexibility foreseen under the state aid rules to support the economy in the context of the COVID-19 outbreak."

The framework creates an outline for several types of state aid: state-guaranteed business loans, subsidized loans that see the government take on part of the interest, direct grants, tax advantages and others that they hope will keep member state economies afloat.

In the months since the European Commission greenlit the framework, it has approved dozens of state aid schemes that will see scores of billions of euros sent out to companies in various member states.

The latest round of aid was aimed at the airline industry, which has been particularly hard hit by the vast and immediate reduction in travel. Rescue loans were approved for Finnair, Lufthansa and a Portuguese airline at the end of June, with German Lufthansa set up to be the largest recipient with €6 billion in aid.

--Editing by Nicole Bleier.

For a reprint of this article, please contact reprints@law360.com.

Hello! I'm Law360's automated support bot.

How can I help you today?

For example, you can type:
  • I forgot my password
  • I took a free trial but didn't get a verification email
  • How do I sign up for a newsletter?
Ask a question!