Article 107(2)(b) – aid to make good the damage caused by exceptional circumstances: article 107(2) is an objective concept, meaning that, unlike aid granted under article 107(3), the Commission has no margin of discretion in applying this provision.The Treaty on the Functioning of the European Union (TFEU) gives member states three legal bases to justify the grant of state aid to companies in need of support because of the pandemic: Options for member states to support companies affected by covid-19 In this article, we take a look at the rules for member states seeking to assist struggling companies and what their experience has looked like in practice. In the wake of the financial crisis in 2008, the Commission adopted a similar approach, also introducing a temporary framework allowing member states to assist ailing financial institutions of systemic importance, despite an obvious risk for serious distortion to the market from the adoption of state aid support at this scale. Recognising the need for rapid and decisive action, the Commission tried to assist the member states by expediting approvals, offering dedicated engagement and adopting the Temporary Framework, which set specific thresholds for measures to be deemed compatible with certain state aid rules.Īs the impact of the pandemic evolved, the Commission sought to keep pace by adapting those rules: the Temporary Framework has been subject to five sets of amendments to date. In response to this, governments across the European Union sought to come to their assistance, mobilising unprecedented amounts of public resources through subsidised schemes and targeted support measures. Pros and cons, procedural implications and practical issuesĪs the covid-19 pandemic wrought havoc and governments were forced to impose restrictions on daily life, businesses experienced sharp decreases in liquidity that seriously threatened their ability to meet payment obligations and ensure their long-term viability.Best options to support companies affected by covid-19.
It introduces the different instruments and procedures under which public funding may be available and discusses some of the main practical issues that have occurred over the course of the implementation of these rules. This article provides an overview of the state aid regime adopted by the European Commission to allow member state governments to assist companies affected by the covid-19 pandemic, particularly the Temporary Framework.
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