Tag ‘Margrethe Vestager’
The original press release is available in the Commission Press Corner.
On Friday 12 June, the European Commission sent Member States for consultation and comment 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 to increase 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. On 8 May 2020, the Commission adopted a second amendment extending the scope of the Temporary Framework to recapitalisation and subordinated debt measures.
The Commission is now proposing to further extend the scope of the Temporary Framework by enabling Member States to:
- Support certain micro and small enterprises, including start-ups that were already in difficulty before 31 December 2019, and
- Provide incentives for private investors to participate in coronavirus-related recapitalisation measures.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said “Micro, small and start-up companies face specific challenges as a result of the coronavirus crisis. They are crucial for the economic recovery of the Union. That’s why we propose to extend the Temporary Framework to enable Member States to give further support to micro and small companies, including start-up companies. Furthermore, we propose to introduce conditions that provide incentives for private investors to participate alongside the State in recapitalisations. This is welcome as it reduces the need for State aid and the risk of distortions to competition. We continue to work closely with Member States to ensure that European businesses have access to urgently needed liquidity, to contribute to the economic revival post-coronavirus.”
Micro and small companies have been particularly affected by the liquidity shortage caused by the economic impact of the current coronavirus outbreak, exacerbating their existing difficulties to access financing compared to medium-sized and large enterprises. If left unaddressed, these difficulties could lead to a large number of bankruptcies of micro and small companies, causing serious disturbances for the entire EU economy. The new proposal would allow Member States to extend aid to SMEs that qualify as being in financial difficulty on 31 December 2019 and increase the possibilities for small and start-up companies to receive support.
The new proposal also includes adaptations that incentivise private investors to contribute alongside the State, and thus limiting the risk of competition distortions and preserving effective competition in the Single Market.
Check out other COVID-19 related news and updates here on the News Portal.
The European Commission has approved a Hungarian scheme to support the agri-food value chain in the context of the coronavirus outbreak, which is expected to mobilise at least approximately €314 million (approx. HUF 111 billion). The scheme will be open to small and medium-sized enterprises (SMEs) active in all sectors, but is aimed at the wider agri-food value chain. The objective of the measure is to provide those companies with financial means to cover their immediate working capital and investment needs, and help them maintain their activities during these difficult times.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This Hungarian guarantee scheme, expected to mobilise at least €314 million, will support the Hungarian agriculture and food industry, as well as the wider agriculture and bio-economy value chain. This measure will improve the liquidity of businesses and help them continue their activities in these difficult times. We continue working closely with Member States to ensure that national support measures can be put in place quickly and effectively, in line with EU rules.”
The scheme was approved under the State aid Temporary Framework adopted by the Commission on 19 March 2020, as amended on 3 April 2020. The Temporary Framework enables Member States to combine support measures, with the exception of loans and guarantees for the same loan and exceeding the thresholds foreseen by the Temporary Framework.
The Framework allows Member States to provide the following types of aid:
- Direct grants, equity injections, selective tax advantages and advance payments
- State guarantees for loans taken by companies
- Subsidised public loans to companies
- Safeguards for banks that channel State aid to the real economy
- Public short-term export credit insurance
- Support for coronavirus related research and development (R&D)
- Support for the construction and upscaling of testing facilities
- Support for the production of products relevant to tackle the coronavirus outbreak
- Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions
- Targeted support in the form of wage subsidies for employees
More detailed information on the Temporary Framework can be found here.
The full original press release can be found here in the Commission Press Corner.