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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


A Critical Analysis of Rescue and Restructuring Aid journal article

Giulia Sonderegger

European State Aid Law Quarterly, Volume 18 (2019), Issue 3, Page 264 - 273

Rescuing and restructuring aid (R&R aid) is one of the most controversially debated categories of State aid and perceived very critically by the Commission. In the course of the State aid modernisation programme in 2014, the Commission has tightened the requirements to grant such aid by introducing a non-exhaustive list of balancing criteria. This counterfactual analysis increasingly shifts the focus to the economic effects of R&R aid and the incentives it creates. The modernised R&R aid therefore primarily aims at promoting a more reliable assessment of all the effects of an intervention whilst enhancing the predictability of decisions. Despite the efforts the Commission has put into improving R&R rules, this article asserts that due to R&R aid’s pervasive and distortive nature, it can hardly ever be justified and should consequently be replaced with other, less distortive market instruments, such as harmonised insolvency proceedings. Considering the fact that the EU consists of 28 countries with various national interests, the currently very restrictive practice of R&R aid could, however, be seen as a temporary compromise solution between Member States and the Commission. Keywords: Rescue and Restructuring Aid; State aid Modernisation; Justifiability of Rescue and Restructuring Aid


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