By Marc Picat, partner, pharumlegal
Like in the 2008 financial crisis, the European Commission (“the EC”) adopted a very similar package of measures through its Temporary Framework in March and amended early April 2020.
In fact, the EC does not reinvented the wheel and mainly proposed to use the existing rules of the TFEU with a flexible approach for approving urgent aid granted by Member States to companies affected by the COVID-19 outbreak.
In this respect, the EC took what already exists, i.e. the state aid provisions of the TFEU (article 107.2 (b), article 107.3 (b) and (c) in order to avoid, as far as possible, the use of the mandatory article 108.3 of the Treaty which obliges companies in difficulty to notify to the European Commission most of the aids granted by Member States before their implementation, the aim of which being that aids should not distort competition. The Temporary Framework complements the existing tools but does not replace them. It describes the type of measures that Member States can implement in compliance with state aids rules.
The European Commission already gave them its green light to almost all of them (including UK!). In doing that, the EC concluded that these measures will contribute to the managing the economic impact on the COVID-19 in Europe.
One sector in particular suffering from COVID-19 crisis is tourism. Bear in mind that this sector contributed to around 4% of the EU GDP (in 2018 together with travel) and concerns more than 12 million of direct employees all over Europe, i.e. around 5 % of the total work force in Europe. When other indirect sectors are taken into account, the tourism sector figures increase significantly (10,3% GDP, 11,7% employment which equates to 27,3 million workers). Europe is the first destination for tourists all over the world.
In its communication of 13 March 2020, the EC dedicated a specific part to tourism and transport impacted by the slow-down of intra-EU and domestic travel and national safety measures. Hence the various type of measures regarding state aids to help companies in this sector. Many forms of regional or sectorial aids to the tourism sector have been approved in the past and the EC should assess the application for financial assistance in the context of this new framework to facilitate a swift approval process.Pharumlegal remains at your disposal to assist you.