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How Flexible Should State Aid Control Be in Times of Crisis? journal article

Carole Maczkovics

European State Aid Law Quarterly, Volume 19 (2020), Issue 3, Page 271 - 283

The COVID-19 pandemic requires massive State intervention in the economy. To allow EU Member States to act decisively, the Commission committed to make flexible use of State aid rules. This article examines how, over the first four months of the crisis, these rules have been applied to measures notified by EU Member States in view of addressing the consequences of the crisis on their economy. It further highlights the risks that the more flexible application of State aid rules in the context of the current crisis can present for the level playing field and the internal market, and argues that the EU Recovery Plan would not be able to remove those risks. Finally, it recommends that the Commission reviews whether aid measures comply with the general principle of equal treatment and, where it is given discretion under the Treaty, considers imposing conditions counter-balancing distortions of competition, and as the case may be, enabling the green and digital transition so as to ensure, to the largest extent possible, fair competition and the integrity of the internal market. Keywords: COVID-19, level playing field, internal market, equal treatment, conditionality

Can the EU’s SME Definition be Limited? journal article

Comments on the Background of the Polish Financial Shield

Magdalena Porzeżyńska

European State Aid Law Quarterly, Volume 19 (2020), Issue 3, Page 339 - 345

Poland, following other Member States, has adopted a scheme to support the national economy in the context of the COVID-19 outbreak. The so-called Financial Shield aimed at ensuring liquidity to micro-enterprises and small and medium-sized enterprises was approved by the European Commission (case number SA.56996) and triggered heated discussions not only among entrepreneurs, but also among Polish practitioners dealing with State aid law. The European Commission Decision specified that the beneficiaries of the measure are SMEs in the meaning of the Polish law which does not take the relationships between the enterprises being a fundamental issue for SME status verification under EU law into account. The presented paper aims at making a contribution to this debate, focusing on whether the beneficiaries of the Financial Shield are indeed limited only to SMEs in the meaning of the Polish law and what the legal consequences resulting thereof may be. Keywords: SME, COVID-19, Financial Shield, Polish Development Fund, Poland

State Aid Tools to Tackle the Impact of COVID-19: journal article

What Is the Role of Economic and Financial Analysis?

Nicole Robins, Laura Puglisi, Ling Yang

European State Aid Law Quarterly, Volume 19 (2020), Issue 2, Page 137 - 149

In response to the COVID-19 pandemic, the European Commission quickly provided guidance on how Member States can support companies during the crisis in a manner that is in line with State aid rules. With the Commission having approved €2.6 trillion of aid notified by Member States since the start of the pandemic, State aid rules have come under the spotlight more than ever before. Some argue that the different approaches adopted by Member States to deal with the crisis create significant competitive distortions between Member States, while others argue that State aid rules should be made more lenient. This article discusses the State aid tools that Member States can use to deal with the effects of the pandemic, focusing on the role of economic and financial analysis to support the application of these tools. The article examines how Member States can provide liquidity support to companies in compliance with State aid rules, before looking at how Member States could provide more longer-term funding solutions to companies to deal with the effects of the pandemic without breaching State aid rules. Keywords: COVID-19, liquidity support, compensation for damages, rescue aid, restructuring aid, economic and financial analysis, recapitalisations

Learnings from the Commission’s Initial State Aid Response to the COVID-19 Outbreak journal article

Paula Riedel, Thomas Wilson, Shane Cranley

European State Aid Law Quarterly, Volume 19 (2020), Issue 2, Page 115 - 126

Against the background of the COVID-19 outbreak and the effects of public health measures on Member State economies, the Commission has acted impressively quickly to prevent State aid rules becoming a block to necessary interventions. The Commission has published a Temporary Framework under Article 107(3)(b) TFEU, which has been amended twice including to allow for recapitalisation of firms in return for State participation. Aid under this Temporary Framework along with a wide range of measures approved under Article 107 TFEU has allowed billions in aid to be granted, ensuring that liquidity is available to companies. This liquidity has avoided mass bankruptcies but comes with the risk of distortions of competition across the internal market; a risk augmented by the differences in approach of the Member States. As Member States exit the initial phase of the response to the crisis focused on liquidity, and move to more structural measures such as recapitalisations, we can expect the design of aid to be monitored even more closely to minimise market distortions. The Commission’s initial response has been flexible, swift and pragmatic and is to be lauded but many potential pitfalls remain as the crisis moves to the next phase.  Keywords: COVID-19, Temporary Framework, recapitalisation, distortion of competition

To Aid and How to Aid: journal article

Policy Options to Preserve Markets

Georgiana Pop, Ana Amador

European State Aid Law Quarterly, Volume 19 (2020), Issue 2, Page 127 - 136

All countries across the globe are speeding up economic measures to tackle the impact of the coronavirus pandemic. Many of these measures, which have adopted different forms, fundamentally aim at providing liquidity to companies and reducing the pressure on cash-flows of most affected sectors. Even if subsidies and State aid can provide immediate support to ailing companies in extraordinary circumstances, governments should not forget the disruptive effects that subsidies can bring on competition and international trade in the longer run. Keywords: COVID-19, coronavirus, subsidies, design, general measures, EU Temporary Framework

How to Estimate the COVID-19 Damages? journal article

Economic Considerations for State Aid During a Time of Crisis

Victor Ahlqvist, Adina Claici, Stephanie Tizik

European State Aid Law Quarterly, Volume 19 (2020), Issue 2, Page 150 - 160

The unprecedented volume of State aid applications during the COVID-19 crisis presents new economic challenges and policy considerations related to the need for aid and the extent of the damages suffered by undertakings. In light of the current situation, this article presents the foundation for State aid during the outbreak of COVID-19, discusses the methodology for determining the damages using a counterfactual analysis and addresses some of the important factors that policy makers must balance in order to ensure that firms receive the necessary support while minimising the distortions on competition. Keywords: damage estimation, counterfactual analysis, COVID-19

The SURE Initiative, Short-time Work Compensation, and State Aid journal article

Hans Arno Petzold

European State Aid Law Quarterly, Volume 19 (2020), Issue 2, Page 161 - 164

The European Commission has put forward a proposal for a Council regulation aimed at ‘temporary Support to mitigate Unemployment Risks in an Emergency (SURE) following the COVID-19 outbreak’. This is not the place to discuss political or financial implications of the idea of a Basic European Unemployment Insurance. But it gives the opportunity to have a look at options for short-time work compensation, based on a case study of the German model, and the State aid relevance of such compensation. Keywords: COVID-19, SURE Initiative, short-time work Ccmpensation, State aid, selectivity, Germany

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