04 Oct 2021

EU Proposes the Prolongation of the State Aid Temporary Framework

The European Commission has proposed the prolongation of the State aid Temporary Framework until 30 June 2022, in order to expedite the ongoing Covid-19 economic recovery in Europe.

The Temporary Framework was initially adopted on 19 March 2020 and to this date, it was amended and prolonged five times (more information available here and here).

Margaret Vestager, the Executive Vice-President, who is in charge of the competition policy said that we are finally seeing improvements in the EU economy after the big crisis that hit the EU due to Covid-19.  She also added: ’’[W]e need to be aware of disparities across Member States and the need to avoid cliff-edge effects when withdrawing public support. We are therefore proposing a progressive phase-out of crisis support measures to enable Member States and industry to adjust, accompanied by measures to kick-start and crowd-in private investment in the recovery phase.  We will decide on the way forward taking into account the views of all Member States and the need to preserve effective competition in the Single Market.’’

The new prolongation will ensure that the businesses which are still affected by the crisis, will not suddenly be cut off from the necessary support, ensuring a coordinated phase-out.

Moreover, this proposed prolongation also foresees an extension of the scope of the Temporary Framework.  The two new proposed measures are investment support and solvency support. The goal of those measures is to avoid undue distortions to competition and to the access to equity funding.

Member States now may comment on the proposed prolongation.  Thereafter, the Commission will decide on the next steps while taking into consideration the feedback given by the Member States.


Authors: Jelena Škorić and Milica Novaković