Government aid in reaction to the Corona virus needs to be state aid proof: Van Doorne can help you with this

Governments across Europe are announcing new measures to soften the economic blow of the corona virus (COVID-19). Many sectors including entertainment, (air) transport and the horeca branch are urgently seeking financial support from the government. Speed is of the essence.

More about COVID-19

• Covid-19: Frequently asked questions and answers
• Measures and answers in times of corona
• Dutch suspension of bankruptcy requests and limitations on other recovery measures Temporary Payment Deferral Act COVID-19

Where there is government support, it is important to take account of the rules on state aid. They provide various possibilities for financial support but often subject to the condition of notification to, and approval of, the European Commission. Prior to approval it is not permitted to grant the aid. Companies which receive illegal aid are obliged to reimburse the (often already spent) money, potentially also with interest.

The European Commission has stated that it intends to act quickly and proactively in this period. On 13 March vice-president Margrethe Vestager announced that the European Commission is working on a “Temporary Framework” on the basis of which state aid can be granted:

“So we’re keeping a very close watch on the situation in all Member States, and staying in close contact with governments. And we are ready to respond as we did in 2008, at the time of the financial crisis. At that time, the Commission adopted a Temporary Framework, guiding Member States as to how to use state aid to help stabilise the European economy, while protecting the single market. And we’re now working on a new framework, so that we have it ready, if it becomes necessary.

Even before such framework is in place ,there are possibilities for aid, as set out in the scheme below:

(download the scheme via the link below)

As an example of what is possible, on 12 March the European Commission  approved state aid by the Danish Government to companies which organize events for more than 1000 visitors or which are directed at groups at high risk such as the elderly. Such companies have had to cancel such events.

Van Doorne is following these developments closely. If you would like state aid advice please contact the European and competition team:  Sarah Beeston or Pim Jansen.