Commission extends the scope and term of more flexible state aid rules
On 18 November 2021, the European Commission decided to continue the more flexible state aid rules agreed due to the coronavirus crisis until 30 June 2022. In Finland, the extension will help implement the fifth application round for business cost support. The Commission also decided that the rules would be extended to support investment and solvency. The new forms of support will remain in force until 31 December 2022 and 31 December 2023.
During 2020–2021, the Commission has provided more flexibility on the state aid rules on several occasions. The aim has been to give the Member States a wide range of tools to support companies and to mitigate the adverse economic effects of the coronavirus pandemic. According to the Commission, extending the more flexible rules will help ensure a seamless recovery in the EU in a situation where some EU Member States are introducing new restrictive measures. Certain sectors are still suffering from the adverse economic impacts of the coronavirus crisis.
Finland is of the view that the temporary state aid rules introduced during the coronavirus crisis should be discontinued as soon as the economic and pandemic situation permit that.
Continuation of rules and additional flexibilities
The current, more flexible regulation applies to grants, loans and guarantees that safeguard companies’ access to finance. In addition, the rules allow the capitalisation of companies, support for the manufacture of products related to the fight against the coronavirus as well as research, development and innovation activities. The Commission will extend the validity of these rules until 30 June 2022 and make them more flexible in certain respects.
The key flexibilities relate to increased maximum amount of aid. For example, the Commission will increase
- the maximum amount of aid that a company can receive from EUR 1.8 million to EUR 2.3 million. The aid can be allocated to any company costs and in any form.
- the maximum amount that a company can receive for fixed costs not covered by the revenues from EUR 10 million to EUR 12 million. In order to be eligible for aid, the company’s turnover must have decreased by 30% compared to the corresponding period in 2019. Aid may be granted for a certain part of the firm’s fixed costs.
In Finland, the Commission’s decisions on extending the term and scope of the rules will have an effect on the so-called state aid scheme, for example. The scheme has been widely used by various state aid authorities to mitigate the adverse economic impacts of the coronavirus. Extending the validity of the rules and increasing the maximum amount will help Finland implement the fifth application round for business cost support. The support measures require a notification of state aid to the Commission, and a prior approval by the Commission.
Wider scope of the rules
In addition to more flexible rules, the Commission will extend their scope to two areas. Widening the scope will promote recovery in the EU by allowing
- small-scale investment subsidies to support business projects related to, for example, the green and digital transition. This investment subsidy may be combined with investment subsidy granted under state aid rules during normal circumstances.
- measures to support the solvency of companies. The rules would allow government guarantees to financial intermediaries (such as private equity funds) to encourage them to make equity investments in small and medium-sized enterprises and small mid-caps that have become indebted as a result of the coronavirus pandemic.
The rules define more specific safeguards for both forms of support in order to limit distortions of competition. The new investment subsidy instrument will be available until 31 December 2022 and the solvency aid until 31 December 2023. The new support measures require a notification of state aid to the Commission, and a prior approval by the Commission.
Commission outlines future competition policy
On 18 November 2021, the European Commission also issued a new communication on EU competition policy. The communication explains how the EU competition and state aid rules support the Union’s resilience in crisis and the objectives of the green transition and digitalisation. The Government will subsequently submit a Europe communication to Parliament, which will describe the contents of the Commission’s communication and the Government’s position on it.
Olli Hyvärinen, Senior Ministerial Adviser, Ministry of Economic Affairs and Employment, tel. +358 29 504 7026
Samuli Miettinen, Chief Specialist, Ministry of Economic Affairs and Employment, tel. + 358 29 504 7364