Last week, the Commission has sent a draft proposal for consultation to Member States to further extend the State Aid Temporary Framework. The Commission proposes to allow recapitalization of companies in need, but also notes that recapitalization is a last-resort-measure and will be subject to strict provisions. The COVID-19 outbreak has confronted many non-financial undertakings with losses and decreases in equities, worsening their ability to borrow from financial institutions. Member States will be allowed to, under certain conditions, acquire equities of undertakings that cannot find market solutions. Member States are currently analyzing the draft proposal to be able to provide feedback. The Commission is expected to publish the extended guidelines for state aid in the next days.
Equity instruments and debt financing instruments will only be accessible to undertakings that face serious difficulties to maintain its operations and have no possibilities to find market solutions. Undertakings benefiting from recapitalization will be bound by rules related to market behavior. Until the recapitalization has been repaid to the state, undertakings are not allowed to acquire competitors unless this is needed to maintain the viability of the undertaking. Recapitalization cannot be used for cross-subsidization of other economic activities, payment of dividends or advertising purposes. Furthermore, the distortion of competition should be limited by refraining from aggressive commercial strategy and more stringent behavioral measures can be imposed upon beneficiaries with significant market power.
Initiatives at EU level
- The Croatian Presidency of the Council of the EU and the Commission issued a joint statement after the videoconference of EU trade ministers. The ministers discussed the continuation of global supply chains as a consequence of the COVID-19 pandemic. They were positive about the Commission’s proposal for a new export authorization measure for specific items of personal protective equipment;
- The European Commission published a toolbox on mobile applications to support contact tracing in the EU’s fight against COVID-19;
- During yesterday’s extraordinary European Parliament plenary session, Commission President Von der Leyen delivered a speech on the EU coordinated action to combat COVID-19 and its consequences.
- The European Commission approved several national support schemes under the Temporary Framework for state aid:
- Belgium extended its lockdown until May 3, cancelling all big events up until September.
Council of the EU
- 22-04: Videoconference of foreign affairs ministers;
- 22-04: Videoconference of ministers for European affairs.
- 20-04: Committee on Foreign Affairs (AFET) will hold a remote meeting;
- 21-04: The Committee on the Environment, Public Health and Food Safety (ENVI) will hold a remote meeting;
- 21-04: European Commissioner for Internal Market, Thierry Breton, will exchange views with the Transport and Tourism (TRAN) Committee to discuss the impact of the COVID-19 outbreak;
- 21-04: Committee on International Trade (INTA) will hold a remote meeting.