Coronavirus: Practical guide to state aid

How can undertakings access state aid and under what conditions can the state grant this aid? PLMJ’s EU and Competition Law team has prepared a practical guide to help companies navigate this topic.

Concept of state aid

State aid is any economic or financial support granted by the state, or from state resources, that gives an undertaking a selective advantage which may affect trade between Member States. State aid is, in principle, prohibited. Therefore, it must be notified to the European Commission in order for it to decide whether the aid is compatible with the internal market.

The COVID-19 pandemic

To combat the economic effect of the COVID-19 pandemic, the European Commission decided to relax the rules for granting state aid by creating a Temporary Framework (“TF19”). This will apply until the end of 2020, with some measures provided for in the framework possibly extending until July 2021. TF19 excludes from its scope of eligibility undertakings that were in difficulty as of 31 December 2019, subject to some limited exceptions.

If it is not possible to use the measures provided for in TF19, especially when the undertaking was in difficulty as at 31 December 2019, undertakings may benefit from public support under other aid schemes. In the context of the COVID-19 pandemic, the “compensation aid” scheme – which is aimed at remedying the damage caused by the pandemic and often takes the form of guarantees or loans – is particularly significant.

The PLMJ guide analyses the conditions for the aid that can be granted under TF19 and in the form of compensation aid.