Coronavirus: Commission extends and adapts state aid rules to mitigate the impact of the COVID 19 pandemic

On 2 July 2020, the Commission formally decided to extend for a period of one or three years, the validity of certain EU regulatory frameworks concerning State aid, in order to create predictability and legal certainty.

These extensions fall within the framework of the ongoing "quality review" in progress since January 2019, as well as that of the possible evaluation and review, foreseen until 2021, of certain State aid guidelines, as announced by recent Commission communications on the European Green Deal and the European Industrial Strategy.

Thus, will be extended until 2021:

• the guidelines on regional state aid;
• the guidelines on State aid to promote risk finance investments;
• the guidelines on State aid for environmental protection and energy;
• the Communication from the Commission concerning the execution of important projects of common European interest and
• the Communication on State aid for short-term export credit insurance.

The General Block Exemption Regulation (GBER), the de minimis Regulation, the de minimis Regulation on SGEI’s, as well as the guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty will remain in effect until 2023.

In addition, after consultation of Member States, the Commission has decided to make certain adaptations to the EU state aid rules which are being prolonged, as well as to the framework for State aid for research and development and innovation, in order to respond to the current situation caused by the COVID-19 pandemic and to limit the economic and financial consequences of this crisis on undertakings.

These adaptations relate particularly to undertakings in difficulty, job relocation and de minimis aid granted to SGEI’s.

The Commission has thus modified the existing rules in order to allow undertakings in difficulty, due to the COVID-19 pandemic, and which as an undertaking in difficulty would otherwise have been excluded, to remain eligible to receive certain aids. These companies, which were not in difficulty on 31 December 2019, will be able to apply for such aid, in particular under the GBER or the de minimis regulation relating to SGEI’s.

In addition, the Commission's adaptations are intended to ensure that job losses decided by an undertaking due to the COVID-19 pandemic are not considered as relocations and, therefore, as a violation of the commitments made by certain undertakings when obtaining regional investment aid under the GBER.

The various modifications to the current framework as decided by the Commission will therefore allow more undertakings to benefit from State aid to combat the economic and financial impact of the health crisis due to the COVID-19 pandemic.

CMS has the widest coverage and the broadest team of state aid specialists in Europe. Furthermore, we have extensive experience in setting up aid schemes and in public interventions in favour of undertakings in difficulty.

Please refer to our brochure for the CMS contact in your jurisdiction.