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State support: Commission approves German umbrella scheme to help corporations in context of Russia’s invasion of Ukraine – The European Sting – Crucial News & Insights on European Politics, Financial system, Foreign Affairs, Enterprise & Expertise


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This article is dropped at you in affiliation with the European Commission.


The European Commission has accepted a German umbrella scheme with a funds of round €11 billion to help corporations throughout sectors within the context of Russia’s invasion of Ukraine. The scheme was accepted below the State support Temporary Crisis Framework, adopted by the Commission on 23 March 2022, based mostly on Article 107(3)(b) of the Treaty on the Functioning of the European Union (‘TFEU’), recognising that the EU economic system is experiencing a critical disturbance.

Executive Vice-President Margrethe Vestager, accountable for competitors coverage, mentioned: “This umbrella scheme will enable Germany to mitigate the economic impact of Putin’s war in Ukraine and to further support companies across sectors affected by the current crisis and the related sanctions. We continue to stand with Ukraine and its people. At the same time, we continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, while protecting the level playing field in the Single Market.”

The German umbrella scheme

Germany notified to the Commission, below the Temporary Crisis Framework, an umbrella scheme with a funds of round €11 billion to help corporations energetic in all sectors within the context of Russia’s invasion of Ukraine. This scheme follows one other measure that the Commission accepted on 19 April 2022 (SA.102542).

Under the German umbrella scheme, which might be administered by federal, regional and native authorities, the help will take the type of (i) ensures on loans (‘guarantee scheme’); and (ii) subsidised loans (‘subsidised loan scheme’).

In gentle of the excessive diploma of financial uncertainty attributable to the present geopolitical scenario, the scheme is aimed toward making certain that adequate liquidity is offered for the businesses in want.

The measure might be open to all sectors besides credit score and monetary establishments.

Under the assure scheme, the eligible beneficiaries might be entitled to obtain new loans that might be coated by a State assure not exceeding 90% of the mortgage quantity (35% the place losses are first attributed to the State and solely then to the credit score establishments). Under the subsidised mortgage scheme, the eligible beneficiaries can obtain loans at diminished rates of interest to deal with their funding and/or working capital wants.

The most mortgage quantity per beneficiary, which can both profit from subsidised rates of interest or from a public assure, might be (i) equal to fifteen% of its common complete annual turnover over a predefined time interval; or (ii) to 50% of the power prices incurred over a predefined 12-month interval. In distinctive circumstances and with acceptable justification, the quantity of the mortgage could also be elevated to cowl the liquidity wants of a beneficiary (i) for a 12 month-period for small and medium-sized enterprises (‘SMEs’); and (ii) for a 6 month-period for giant enterprises.

The Commission discovered that the German umbrella scheme is consistent with the circumstances set out within the Temporary Crisis Framework. In specific: (i) the maturity of the ensures and the loans can’t exceed eight years; (ii) the assure premiums and the curiosity prices on the loans respect the minimal ranges (modulated by a progressive enhance reflecting the period of the assured loans) set out within the Temporary Crisis Framework; and (iii) the ensures and the subsidised loans might be granted by 31 December 2022 on the newest.

Furthermore, the general public help will come topic to circumstances to restrict undue distortions of competitors, together with safeguards to make sure (i) a hyperlink between the quantity of support granted to corporations and the dimensions of their financial exercise; and (ii) that some great benefits of the measure are handed on to the biggest extent potential to the ultimate beneficiaries by way of the monetary intermediaries.

The Commission concluded that the German umbrella scheme is important, acceptable and proportionate to treatment a critical disturbance within the economic system of a Member State, consistent with Article 107(3)(b) TFEU and the circumstances set out within the Temporary Crisis Framework.

On this foundation, the Commission accepted the help measure below EU State support guidelines.

Background

On 23 March 2022, the Commission adopted the State support Temporary Crisis Framework to allow Member States to make use of the flexibleness foreseen below State support guidelines to help the economic system within the context of Russia’s invasion of Ukraine.

The Temporary Crisis Framework offers for the next sorts of support, which may be granted by Member States:

  • Limited quantities of support, in any type, of as much as €35,000 for corporations affected by the disaster energetic within the agriculture, fisheries and aquaculture sectors and of as much as €400,000 per firm affected by the disaster energetic in all different sectors;
  • Liquidity help in type of State ensures and subsidised loans; and
  • Aid to compensate for prime power costs. The support, which may be granted in any type, will partially compensate corporations, particularly intensive power customers, for added prices on account of exceptionalgas and electricityprice will increase. The total support per beneficiary can’t exceed 30% of the eligible prices, as much as a most of €2 million at any given time limit. When the corporate incurs working losses, additional support could also be needed to make sure the continuation of an financial exercise. Therefore, for energy-intensive customers, the help intensities are higherandMember States could grant support exceeding these ceilings, as much as €25 million, and for corporations energetic in notably affectedsectors and sub-sectors as much as €50 million.

Sanctioned Russian-controlled entities might be excluded from the scope of those measures.

The Temporary Crisis Framework consists of numerous safeguards:

  • Proportional methodology, requiring a hyperlink between the quantity of support that may be granted to companies and the dimensions of their financial exercise and publicity to the financial results of the disaster;
  • Eligibility circumstances, for instance definingenergy intensive customers as companies for which the acquisition of power merchandise quantity to not less than 3% of their manufacturing worth; and
  • Sustainability necessities. Member States are invited to contemplate, in a non-discriminatory means, establishing necessities associated to environmental safety or safety of provide when granting support for added prices on account of exceptionally excessive fuel and electrical energy costs.

The Temporary Crisis Framework might be in place till 31 December 2022. With a view to making sure authorized certainty, the Commission will assess earlier than that date if it must be prolonged. Moreover, throughout its interval of utility, the Commission will preserve the content material and scope of the Framework below evaluate within the gentle of developments concerning the power markets, different enter markets and the overall financial scenario.

The Temporary Crisis Framework enhances the ample potentialities for Member States to design measures consistent with present EU State support guidelines. For instance, EU State support guidelines allow Member States to assist corporations deal with liquidity shortages and needing pressing rescue support. Furthermore, Article 107(2)(b) of the Treaty on the Functioning of the European Union permits Member States to compensate corporations for the injury immediately attributable to an distinctive prevalence, reminiscent of these attributable to the present disaster.

Furthermore, on 19 March 2020, the Commission adopted a Temporary Framework within the context of the coronavirus outbreak. The COVID Temporary Framework was amended on 3 April8 May29 June13 October 2020, 28 January and 18 November 2021.

The non-confidential model of the choice might be made accessible below the case quantity SA.102631 within the State support register on the Commission’s competitors web site as soon as any confidentiality points have been resolved. New publications of State support choices on the web and within the Official Journal are listed within the Competition Weekly e-News.

More info on the Temporary Crisis Framework and different actions taken by the Commission to deal with the financial influence of Russia’s invasion of Ukraine may be discovered right here.




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