ERU, Alm.del - 2020-21 - Bilag 166: Orientering om dansk høringssvar på Kommissionens forslag af 20. januar 2021 til justering af meddelelsen om midlertidige statsstøtteforanstaltninger som følge af COVID-19 (Temporary Framework), fra erhvervsministeren

Erhvervsudvalget 2020-21
ERU Alm.del Bilag 166
Offentligt

NOTAT

25 January 2021

2020 - 3374

Danish Government response to the urgent consultation on the 5th

amendment of Temporary Framework for State aid measures to sup-

port the economy in the current COVID-19 outbreak

The Danish Government welcomes the Commission proposal to make a 5th

amendment to the Temporary Framework clarifying the Covid-19 state aid

regime for 2021.

In particular, we welcome the proposal to increase the aid ceilings in sec-

tion 3.1 and section 3.12. Denmark has, alongside other Member States

underlined the urgent need for such an increase.

The Temporary framework has been a very useful tool in order to cope with

the negative impact on the economy and undertakings during the Covid-19

out-break.

Please find below our comments to the draft 5

amendment.

1. Prolongation

We support the prolongation of the Temporary Framework until 31 De-

cember 2021. As we also pointed out in our response to the 4

amendment

it is very difficult to predict the development of the Covid-19. Most of Eu-

rope now experience a second and third wave of the pandemic. The pres-

ence of new clusters, e.g. cluster B.1.1.7, have shown a continued need for

further lockdown and restrictions in many Member States well into 2021.

Thus, we are very pleased that the Commission’s assessment of the situa-

tion has resulted in such a prolongation of the Temporary Framework,

which will ensure predictability for undertakings in regards to necessary

support in 2021.

2. Section 3.1.

–

increased ceilings

Denmark has on several occasions urged the Commission to increase the

ceiling for liquidity support under Temporary Framework section 3.1 to

more than that the current 800.000 EUR. Hence, we welcome the proposal

ERU, Alm.del - 2020-21 - Bilag 166: Orientering om dansk høringssvar på Kommissionens forslag af 20. januar 2021 til justering af meddelelsen om midlertidige statsstøtteforanstaltninger som følge af COVID-19 (Temporary Framework), fra erhvervsministeren

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to increase this ceiling. However, we find that the proposed increase to 1.6

mio. EUR is insufficient. A further increase is necessary in parallel and in

line with the prolongation until the end of 2021. As aid can now be granted

for a longer period, where necessary, we find that there is also a need to

increase the ceiling further. If this ceiling is not increased, the state aid rules

will not be able to cope with the need of undertakings that already have

received aid up to the threshold of 800.000 EUR in 2020

–

and who are still

facing a shortage of liquidity due to the Covid-19 impact. This will espe-

cially be the case for sectors that are most affected by Covid-19.

We would propose to increase the overall ceiling of 800.000 EUR to at least

5 mio. EUR from March 2020 to 31 December 2021. Furthermore, we find

that the ceilings for aid under this section to fishery and agriculture should

be increased correspondingly. In particular, we believe that the ceiling for

agriculture due to the actual impact of COVID 19 on e.g. mink farms

should be considered increased to around [600.000 EUR] pr. undertaking.

3. Section 3.12

–

increased ceiling

We highly support the proposal for an increase of the aid ceiling in section

3.12 from the current 3 mio. EUR. However, we find the proposed increase

to 5 - 10 mio. EUR insufficient.

Until September 2020 Denmark has been able to help companies severely

affected by Covid-19 by covering their net losses under TFEU article

107(2) b in which no specific aid cap is provided other than our national

cap of 4. mio. EUR pr. month, which several companies have reached in

that period. These same companies are continuously affected by the "ex-

ceptional circumstances" required in article 107(2) b, as different contain-

ment and lock down measures have applied since then.

The sole purpose of the aid to these companies is to help them though the

Covid-19 crisis preventing them from bankruptcy and to preserve work-

places.

Since this aid, as of 1 September 2020, is unable to be approved under the

exceptional circumstance measure in article 107(2) b, it is of utmost im-

portance that the needs of these undertakings are met under section 3.12 in

the Temporary Framework. Neither the current nor the proposed new ceil-

ing is sufficient to meet the needs of all the companies affected.

Denmark would urge the Commission to increase the ceilings to meet the

actual needs of sectors that since September have been - and well into 2021

will be - severely affected by continuous containment and lock down

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measures. Denmark finds that it should be possible to provide aid corre-

sponding to DKK 4 mio. EUR pr. undertaking per month from September

2020 and until the need for Covid-19 restrictions ceases.

The provision in Temporary Framework 3.12 has to some extent matched

the principle in the Danish compensation scheme for fixed cost for compa-

nies particularly affected by the Covid-19 outbreak. The Danish compen-

sation scheme for fixed costs was from April-July 2020 state aid approved

under article 107(2) b, with a nationally decided ceiling for compensation

for net losses.

As the Commission's decision practice on article 107(2) b has been nar-

rowed since April 2020 the companies are in dire need for an alternative

provision that can grant the support. With the current ceiling of 3 mio. EUR

per undertaking Temporary Framework 3.12 is, however, not a real alter-

native. It will only be so if the aid ceiling of the provision is substantially

increased.

The main sectors that will be severely affected by a ceiling under Tempo-

rary Framework 3.12 compared to TFEU article 107 (2) b are entertain-

ment, retail, hotels and travels, aviation all heavily affected by the public

Covid-19 measures and halt of tourism since the autumn of 2020.

If the Temporary Framework 3.12 ceiling is not substantially increased it

will only reduce the potential effect for undertakings. The longer lockdown

periods

–

either fully or partially

–

the more the companies will be affected

by the ceiling in Temporary Framework 3.12.

Some undertakings in severely affected businesses will be in need of com-

pensation for a long period, e.g. September 2020

–

June 2021, considering

the extended lockdown we are facing now during the current Covid-19

surge and even more exacerbated by the B.1.1.7. cluster. In such case (10

months) with an increased ceiling of 10 mio. EUR, the monthly compensa-

tion would amount to 1 mio. EUR pr. undertaking per month. This will just

be 1/4 of the ceiling allowed in the Danish scheme from the spring that was

state aid approved under article 107(2) b. The proposed increase will there-

fore not sufficiently take into account the economic challenges some sec-

tors are facing due to the Covid-19 crisis.

Since section 3.12 contains a mechanism that prevents overcompensation

and ensures that only part of the documented net losses are covered, we

find, that a substantially increased ceiling would be proportional under sec-

tion 3.12.

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In order to meet the requirements of the companies particularly affected by

Covid-19 and the long duration of restrictions and lockdowns Denmark ad-

vocates for a substantial increase of the Temporary Framework 3.12 ceiling

as proposed above.

We find that the economic situation caused by Covid-19 should be moni-

tored carefully throughout 2021, and that an open approach should kept as

to further increases of the thresholds

–

both in section 3.1 and 3.12

–

needed also beyond this proposed 5

amendment.

4. Application of article 107(2) b

We appreciate the Commission's proposal to clarify - in the recitals - the

scope of TFEU article 107(2) b. We find that there is a need for a more

flexible application of this legal base.

We find it highly important that the scope is not further limited as we do

not find that the Tempoary Framework can in any way replace this provi-

sion in case of restrictive measures that prevents undertakings to conduct

their activities. The Temporary Framework should never exclude the ap-

proval of schemes based on TFEU article 107(2) b if the conditions for

applying this legal base are met.

We find that the Commission should provide further guidance as to which

extent TFEU article 107(2) b can apply to situations where restrictive

measures are precluding the beneficiary

de facto,

from operating its eco-

nomic activity.

5. Conversion on loans into grants

We support the proposal to allow Member States prior to the expiry of the

Temporary Framework, to convert repayable forms of aid granted under

section 3.1 into grants based on transparent and non-discriminatory condi-

tions.