October 20
2020
Dolores Utrilla
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3rd April 2020
Competition & State Aid Covid-19

Commission approves Maltese, Swedish, Spanish, and German State aid schemes to support the economy in the context of COVID-19 outbreak

The European Commission approved yesterday several State aid schemes notified by Member States under the State aid Temporary Framework adopted on 19 March 2020 to support the economy in the context of the COVID-19 outbreak. The measures greenlighted yesterday concern four different Member States: Malta, Sweden, Spain, and Germany. In all the cases, the Commission found the notified measures to be necessary, appropriate and proportionate to remedy a serious disturbance in the economy of the incumbent Member States, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

Malta

Malta is setting up a guarantee scheme for working capital loans granted by commercial banks to support companies affected by the coronavirus outbreak, with an estimated budget of 350 million euros.

The Commission found that the Maltese measure is in line with the conditions set out in the Temporary Framework. In particular: (i) the underlying loan amount per company is linked to cover its liquidity needs for the foreseeable future, (ii) the guarantees will only be provided until the end of this year, (iii) the guarantees are limited to a maximum of six years, and (iv) guarantee fee premiums do not exceed the levels foreseen by the Temporary Framework.

The non-confidential version of the decision has yet to be published in the State aid register of the Commission’s competition website under the case number SA.56843. In the meantime, more information is available here.

Sweden

The State aid notified by Sweden consists of a guarantee scheme on new loans granted by commercial banks to support companies, mainly small and medium-sized enterprises (SMEs), affected by the coronavirus outbreak. The scheme, with a budget of 100 billion SEK (approximately 9.1 billion euros), purports to limit the risk associated with issuing loans to those companies that are most severely affected by the economic impact of the current crisis, thus ensuring the continuation of their activity.

The Commission found that the Swedish measure is in line with the conditions set out in the Temporary Framework. In particular: (i) the underlying loan amount per company is limited to what is needed to cover its liquidity needs for the foreseeable future, (ii) the guarantees may be provided until 30 September 2020 at the latest, (iii) the guarantees are limited to three years and only exceptionally prolonged for another three years, and (iv) the risk taken by the State is limited to a maximum of 70%.

The non-confidential version of the decision has yet to be published in the State aid register of the Commission’s competition website under the case number SA.56860. In the meantime, find out more here.

Spain

Spain notified the Commission of its new ‘umbrella’ scheme to support companies affected by the coronavirus outbreak under the Temporary Framework. This consists of a National Temporary Framework for State aid based on which the Spanish authorities (at national, regional and local level) will be able to grant aid to support companies affected by the coronavirus outbreak. Under this scheme, the Spanish authorities will provide liquidity support to self-employed, small and medium-sized entreprises (SMEs) and large companies in the form of direct grants, repayable advances, tax and payment advantages, guarantees on loans and subsidised interest rates for loans.

The Commission, which had already approved two Spanish guarantee schemes on 24 March, found that the new ‘umbrella’ scheme is in line with the conditions set out in the Temporary Framework. It took into account, in particular, that the support per company will not exceed 800,000 euros per company in the case of direct grants, repayable advances, and tax and payment advantages. With respect to State guarantees and subsidised interest rates, the Commission noted that: (i) the loan amount per company and its duration are limited as set out in the Temporary Framework, and (ii) the guarantee fee premiums and interest rates do not exceed the levels foreseen by the Temporary Framework.

The non-confidential version of the decision has yet to be published in the State aid register of the Commission’s competition website under the case number SA.56851. In the meantime, find out more here.

Germany

In respect of Germany, the European Commission approved a State aid scheme extending the one approved on 22 March 2020 to support the economy in the context of the coronavirus outbreak. In particular, the extension enables support through subsidised loans to be granted by other regional authorities and promotional banks not covered by the existing measures. Specifically, while the initial scheme was designed in a way that subsidised loans could only be granted by the German Kreditanstalt für Wiederaufbau, this new scheme now also allows other regional authorities and promotional banks to provide support along the same lines. It enables the granting of loans on favourable terms to help businesses cover immediate working capital and investment needs.

When considering that this measure is in line with the Temporary Framework, the Commission noted in particular that: (i) the underlying loan amount per company is linked to cover its liquidity needs for the foreseeable future, (ii) the loans can only be granted until the end of this year, (iii) the loans are limited to a maximum six-year maturity, and (iv) the scheme foresees a mechanism to ensure that commercial banks pass the advantage of the subsidised rates on to the companies that need support.

The non-confidential version of the decision has yet to be published in the State aid register of the Commission’s competition website under the case number SA.56863. In the meantime, more information is available here.

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