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Proportionality of the Sectoral Application of the Covid-19 Temporary Framework journal article open-access

Sofie Holtan Lakså

European State Aid Law Quarterly, Volume 22 (2023), Issue 4, Page 356 - 370

This article is adapted from the author’s College of Europe Master’s Thesis which was awarded the Lexxion Publisher prize for the Best Thesis on EU State aid. One of the measures put in place to mitigate the effect of the Covid-19 pandemic on the European economy was the Covid-19 Temporary Framework. Adopted on 19 March 2020, it granted Member States flexibility under the State aid regime to support their national economies from their own pockets. While the relaxed rules were deemed necessary, the Framework was introduced with a known caveat: it is well-established that the granting of State aid distorts competition on the internal market. It is for the same reason that certain criteria have to be met for the Commission to approve the granting of aid, amongst them the principle of proportionality. This article argues that a large share of the aid approved under the Temporary Framework was in fact not proportionate to the shock caused by the Covid-19 pandemic, and should therefore not have been approved by the European Commission. The results demonstrate that the aids granted under the Temporary Framework cannot be considered proportionate in nature: of the 19 sectors analysed, the aid was found not to be disproportionate to the shock caused by the pandemic in only one sector. Keywords: Temporary Framework; proportionality; subsidy race; COVID-19

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