On 24 April the European Commission sent a new draft proposal to Member States for consultation, aimed at clarifying an aspect of the State aid Temporary Framework (which dates from 19 March but was amended on 3 April) to support the economy in the context of the Covid-19 pandemic.
The Commission is currently preparing another amendment to the Temporary Framework. Since 9 April, the Commission has consulted Member States on the proposal to further extend the scope of the Temporary Framework by enabling Member States to provide recapitalisations to companies in need (see EUROPE 12469/13).
This new proposed amendment, now sent for consultation, would complement the existing framework for lending by defining the conditions under which Member States could grant 'subordinated debt' on favourable terms to support their economies during the pandemic, while ensuring sufficient safeguards to limit the distortion of competition in the EU Internal Market. Member States have the opportunity to comment on the draft Commission proposal. Subordinate financing is an asset-backed loan that must be paid out when a company defaults, but only after senior debts (priority claims) have been settled.
In addition, between 24 and 27 April, the Commission approved several state aid schemes in the context of the pandemic under the Temporary Framework.
Airline industry. On Monday 27 April the Commission approved a €550 million public loan guaranteed by Germany for the national charter airline Condor. The measure is aimed at partially compensating the airline for the damage caused by the Covid-19 pandemic. Margrethe Vestager, Executive Vice-President in charge of Competition Policy, said "We cooperate with Member States to find workable solutions to support companies in these difficult times, in line with EU rules".
The exact loss suffered by Condor as a result of the pandemic will be quantified after the crisis, on the basis of the company's operating accounts for the financial year 2020. The method used to quantify the damage will be subject to the Commission's prior approval. Furthermore, should the German public support exceed the damage actually suffered by Condor due to the coronavirus outbreak a claw-back mechanism will be activated. In other words, all the public support received by Condor in excess of the actual damage suffered will have to be returned to Germany. The risk of the State aid exceeding the damage is therefore excluded.
In addition, on 24 April the Commission authorised a public guarantee from Sweden amounting to €137 million for a revolving credit line in favour of Scandinavian Airlines (SAS). The purpose of this scheme is to partially compensate the airline for the damage caused by the Covid-19 pandemic.
Finland notified the Commission of a €3 billion scheme, which has been accepted, to support businesses affected by the pandemic. Public support will take the form of direct grants, equity injections, selective tax advantages and payment benefits as well as repayable advances, public guarantees and loans.
The Commission has also authorised: - a Belgian direct grant scheme of €4 million enabling the Brussels-Capital Region to support research and development (R&D) projects; - a Belgian regional scheme of €200,000 for the agriculture and aquaculture sectors in the Brussels-Capital Region; - a €700 million Polish aid scheme (measures co-financed by the EU Structural Funds); - a €100 million Dutch state aid scheme to support small and medium-sized enterprises (SMEs); - a €215 million Maltese wage subsidy scheme to support businesses in the affected sectors. (Original version in French by Lionel Changeur)