Coronavirus: Commission Statement on consulting Member States on proposal to further expand State aid Temporary Framework to recapitalisation measures
The European Commission has sent to Member States for consultation a draft proposal to further extend the scope of the State aid Temporary Framework adopted on 19 March 2020 to support the economy in the context of the coronavirus outbreak. The Temporary Framework was first amended on 3 April 2020, which increased possibilities for public support to research, testing and production of products relevant to fight the coronavirus outbreak, to protect jobs and to further support the economy. In total, the Commission has adopted 43 decisions approving 53 national measures in relation to the coronavirus outbreak. The Commission is now proposing to extend further the scope of the Temporary Framework by enabling Member States to provide recapitalisations to companies in need. The Commission is consulting Member States on the possibility of providing public support in the form of equity or hybrid capital instruments to these severely affected companies, provided that it is the most appropriate means of support and subject to clear conditions. The proposed broadening of the scope of the Temporary Framework to aid in the form of recapitalisations complements the possibility of Member States to purchase existing shares of companies at market price or pari passu with private shareholders, which in principle falls outside the scope of EU State aid control. This can in particular be important for interventions by Member States to prevent hostile takeovers of strategic companies by foreign purchasers. It therefore complements the tools available to Member States as set out in the Commission’s guidelines to ensure a strong EU-wide approach to foreign investment screening in a time of public health crisis and related economic vulnerability. Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Our shared priority faced with the coronavirus crisis is protecting the health of all European citizens. At the same time, the emergency measures are putting a strain on many companies that face a reduction in equity, with negative consequences on their ability to finance their activities. Following the amendment of last week, we will further extend the State aid Temporary Framework to enable Member States to recapitalise companies when necessary and appropriate. We will make sure that taxpayers are sufficiently remunerated for their investment, and companies that receive capital support are subject to controls and governance provisions that limit possible distortions to competition in the Single Market. We continue working with Member States to make sure that the European economy can weather this storm, and bounce back even stronger.” The full Statement is available online.