March 13, 2020

European Commission approves first COVID-19 related State aid measure in record time

Ever heard that European Commission procedures are long and cumbersome? Well, drastic times call for drastic measures and so yesterday, the European Commission approved a EUR 12 million Danish scheme to compensate for financial loss related to the outbreak of COVID-19.

The Commission did so within 24 hours of receiving the notification from Denmark and, according to Competition Commissioner Margrethe Vestager, the Commission “stand[s] ready to work with all Member States to ensure that possible national support measures to tackle the outbreak of the virus can be put in place as quickly and effectively as possible“. The notification from Denmark followed Tuesday’s statement from Commission President Ursula von Der Leyen that the Commission stands ready to help companies in need and that the Commission will ensure that “state aid can flow to the companies that need it“.

The Commission has a history of reacting quickly and decisively to help companies suffering sudden and unexpected losses during a financial crisis. During the financial crisis in 2008, the Commission received so many requests for State aid approval that it hired new staff and moved construction barracks into its court yard to house them in order to expedite as many requests for State aid as possible within the shortest amount of time. It is clear from its 24-hour processing of the Danish notification that the Commission has learned from the 2008 financial crisis, and aims to set a new gold standard in its handling of the short- and long-term economic consequences arising from the outbreak of COVID-19, although now the officials are more likely to work remotely from home.

The legal rules governing State aid allow the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors for harm caused by exceptional circumstances. The Commission has now clarified that it considers the outbreak of COVID-19 to be such an exceptional circumstance, and that it views interventions by the Member States to compensate companies for financial loss linked to the outbreak as justified. But the State aid granted must compensate for financial loss directly linked to the COVID-19 outbreak.

The purpose of the Danish State aid scheme was to compensate organizers of events with more than 1,000 participants or intended for designated risk groups, which had to be cancelled due to the outbreak of COVID-19. Under the Danish State aid scheme, the organizers are entitled to be compensated for tickets already sold, for example.

Companies in industries suffering financial loss as a consequence of the COVID-19 outbreak, such as tourism, travel and events, have reason to swiftly explore with relevant ministries the possibility of receiving compensation for financial loss incurred as a result of governmental measures to contain the virus. The Commission has clearly proven itself ready to expedite straightforward measures quickly. Of course, more complex aid measures are likely to follow and, although the 24-hour mark will not be possible in those cases, the Commission will give these matters full priority.

Yesterday’s press release by the Commission is available here.