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Commission approves €120 million Luxembourg scheme to support uncovered fixed costs of companies affected by coronavirus outbreak

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The European Commission has approved a Luxembourg State aid scheme to support the uncovered fixed costs of companies affected by the coronavirus outbreak. The scheme was approved under the state aid Temporary Framework.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “Many companies in Luxembourg, as in the rest of Europe, have seen their revenues significantly decline because of the restrictive measures necessary to limit the spread of the coronavirus. This scheme will enable Luxembourg to help these companies face their fixed costs that are not covered by revenues during this difficult time. We continue to work in close cooperation with member states to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules”.

The Luxembourgish support measure

Following the Commission's approval of eight Luxembourg State aid schemes to support companies facing economic difficulties due to the coronavirus outbreak, Luxembourg notified to the Commission a scheme to further support companies under the Temporary Framework. Under the scheme, Luxembourg plans to provide economic assistance to certain businesses, including those operating in the hospitality, accommodation and entertainment sectors, in order to help them face their liquidity shortages related to the coronavirus outbreak. The measure has an estimated budget of up to €120 million.

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Under the scheme, support will take the form of direct grants. The measure will allow the authorities of Luxembourg to support companies that suffered from a monthly turnover decline between November 2020 and March 2021 of at least 40% compared to the same period of 2019. The aid will help them pay 70% (90% in case of micro and small companies) of their fixed costs that are not covered by revenues, up to a maximum of €1 million per undertaking.

The Commission found that the Luxembourg scheme is in line with the conditions set out in the Temporary Framework. In particular, the aid (i) will be granted no later than 30 June 2021; (ii) will cover uncovered fixed costs incurred during a period comprised between 1 March 2020 and 30 June 2021; (iii) will be granted to undertakings that suffer a decline in turnover during the eligible period of at least 30% compared to the same period in 2019; (iv) will cover at maximum 70% of the uncovered fixed costs (90% in case of micro and small companies); (v) will not exceed EUR 3 million per undertaking; (vi) will be granted only to companies that were not considered to be in difficulty on 31 December 2019, with the exception of micro and small companies that are eligible even if already in difficulty. Finally, Luxembourg will ensure that the rules for cumulation of aid provided under the Temporary Framework are respected across all measures.

The Commission concluded that the measure under the scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

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On this basis, the Commission approved the aid measure under EU State aid rules.

Background

The Commission has adopted a Temporary Framework to enable member states to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. The Temporary Framework, as amended on 3 April8 May29 June and 13 October 2020, provides for the following types of aid, which can be granted by member states:

(i) Direct grants, equity injections, selective tax advantages and advance payments of up to €100,000 to a company active in the primary agricultural sector, €120,000 to a company active in the fishery and aquaculture sector and €800,000 to a company active in all other sectors to address its urgent liquidity needs. Member States can also give, up to the nominal value of €800,000 per company zero-interest loans or guarantees on loans covering 100% of the risk, except in the primary agriculture sector and in the fishery and aquaculture sector, where the limits of €100,000 and €120,000 per company respectively, apply.

(ii) State guarantees for loans taken by companies to ensure banks keep providing loans to the customers who need them. These state guarantees can cover up to 90% of risk on loans to help businesses cover immediate working capital and investment needs.

(iii) Subsidized public loans to companies (senior and subordinated debt) with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.

(iv) Safeguards for banks that channel State aid to the real economy that such aid is considered as direct aid to the banks' customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.

(v) Public short-term export credit insurance for all countries, without the need for the Member State in question to demonstrate that the respective country is temporarily “non-marketable”.

(vi) Support for coronavirus related research and development (R&D) to address the current health crisis in the form of direct grants, repayable advances or tax advantages. A bonus may be granted for cross-border cooperation projects between Member States.

(vii) Support for the construction and upscaling of testing facilities to develop and test products (including vaccines, ventilators and protective clothing) useful to tackle the coronavirus outbreak, up to first industrial deployment. This can take the form of direct grants, tax advantages, repayable advances and no-loss guarantees. Companies may benefit from a bonus when their investment is supported by more than one Member State and when the investment is concluded within two months after the granting of the aid.

(viii) Support for the production of products relevant to tackle the coronavirus outbreak in the form of direct grants, tax advantages, repayable advances and no-loss guarantees. Companies may benefit from a bonus when their investment is supported by more than one Member State and when the investment is concluded within two months after the granting of the aid.

(ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions for those sectors, regions or for types of companies that are hit the hardest by the outbreak.

(x) Targeted support in the form of wage subsidies for employees for those companies in sectors or regions that have suffered most from the coronavirus outbreak, and would otherwise have had to lay off personnel.

(xi) Targeted recapitalization aid to non-financial companies, if no other appropriate solution is available. Safeguards are in place to avoid undue distortions of competition in the Single Market: conditions on the necessity, appropriateness and size of intervention; conditions on the State's entry in the capital of companies and remuneration; conditions regarding the exit of the state from the capital of the companies concerned; conditions regarding governance including dividend ban and remuneration caps for senior management; prohibition of cross-subsidization and acquisition ban and additional measures to limit competition distortions; transparency and reporting requirements.

(xii) Support for uncovered fixed costs for companies facing a decline in turnover during the eligible period of at least 30% compared to the same period of 2019 in the context of the coronavirus outbreak. The support will contribute to a part of the beneficiaries' fixed costs that are not covered by their revenues, up to a maximum amount of €3 million per undertaking.

The Temporary Framework enables member states to combine all support measures with each other, except for loans and guarantees for the same loan and exceeding the thresholds foreseen by the Temporary Framework. It also enables member states to combine all support measures granted under the Temporary Framework with existing possibilities to grant de minimis to a company of up to €25,000 over three fiscal years for companies active in the primary agricultural sector, €30,000 over three fiscal years for companies active in the fishery and aquaculture sector and €200,000 over three fiscal years for companies active in all other sectors. At the same time, member states have to commit to avoid undue cumulation of support measures for the same companies to limit support to meet their actual needs.

Furthermore, the Temporary Framework complements the many other possibilities already available to member states to mitigate the socio-economic impact of the coronavirus outbreak, in line with EU State aid rules. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities. For example, member states can make generally applicable changes in favour of businesses (e.g. deferring taxes, or subsidizing short-time work across all sectors), which fall outside State Aid rules. They can also grant compensation to companies for damage suffered due to and directly caused by the coronavirus outbreak.

The Temporary Framework will be in place until the end of June 2021. As solvency issues may materialize only at a later stage as this crisis evolves, for recapitalization measures only the Commission has extended this period until the end of September 2021. With a view to ensuring legal certainty, the Commission will assess before those dates if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.59322 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

More information on the Temporary Framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.

 

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Commission proposes additional funding to support global vaccination and to respond to global emergencies

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The European Commission has proposed to amend the EU Budget 2021 to provide additional support to policy areas which need reinforcement in view of recent developments and additional needs. Concretely, this Draft Amending Budget 6 will help speed up global vaccinations. It will provide an additional €450 million to reach the €1.3 billion which are needed to secure an additional 200 million doses of vaccines against COVID-19 for low and middle-income countries through COVAX, as announced by President von der Leyen in her State of the Union speech. This Draft Amending Budget 6 also proposes reinforcing the EU Civil Protection Mechanism with €57.8m. The funds foreseen in the budget to address emergencies need to be increased to cover the costs of the response to the emergencies and natural disasters which occurred last summer, including repatriation flights for EU nationals based in Afghanistan, operations in Haiti following the recent earthquake and fighting forest fires in Europe. The Draft Amending Budget needs to be approved by the European Parliament and by EU member states in the Council. A Q&A with more information is available here.

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COVID-19 vaccination: MEPs call for EU and global solidarity

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The EU must continue its concerted efforts to fight the COVID-19 pandemic and take urgent measures to ramp up vaccines production to meet citizens’ expectations, MEPs say,  PLENARY SESSION ENVI.

In the plenary debate with the Portuguese Presidency and Commission President Ursula von der Leyen, MEPs commented on the state of play of the EU’s COVID-19 vaccination strategy.

Many members emphasized that the EU had made the right key decisions, especially on the collective European approach to vaccination and on standing up for its citizens’ rights by putting safety first and enforcing EU liability rules.

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President von der Leyen defended the EU’s choice to order vaccines collectively, the need for global solidarity and the decision not to take any shortcuts on the safety and efficiency of vaccines. Lessons must be drawn from past mistakes, she acknowledged, as “we are still not where we want to be in the fight against the virus”.

Solutions to exit the crisis must be found in the spirit of solidarity, between member states as well as at global level, MEPs underlined. The EU has a responsibility for the rest of the world and must ensure vaccines are fairly distributed across the globe, they added, reiterating that “nobody is safe until everybody is safe”.

Members acknowledged that the EU underestimated the challenges of vaccine mass production and that concrete measures to ramp up production must now be taken as a matter of utmost priority. Many MEPs urged the Commission to enforce existing contracts and at the same time support member states in their vaccine deployment strategies.

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In order to build citizens’ trust in the vaccination efforts and avoid disinformation, the EU must “tell the truth”, some MEPs pointed out. In this respect, many recalled the need for transparency with regard to contracts, as well as for comprehensive and clear data on vaccines rollout at national level.

Taking into account the large amounts of public money invested, several MEPs also called for increased parliamentary scrutiny of the implementation of the vaccines strategy.

Watch the video recording of the debate here. Click on the names below for individual statements.

Ana Paula Zacarias, Portuguese Presidency

Ursula von der Leyen, European Commission President (1st part2nd part3rd part)

Manfred Weber (EPP, DE)

Iratxe García Pérez (S&D, ES)

Dacian Cioloş (Renew Europe, RO)

Marco Zanni (ID, IT)

Ska Keller (Greens/EFA, DE)

Beata Szydło (ECR, PL)

Manon Aubry (The Left, FR)

Background

On 12 January 2021, MEPs quizzed the Commission on the latest developments regarding COVID-19 vaccines. A debate in plenary followed on 19 January focusing on the global EU strategy for COVID-19, while the Commission published an updated action plan to step up the fight against the pandemic on the same day.

During the plenary debate in January, MEPs expressed broad support for the common EU approach to fighting the pandemic and called for complete transparency regarding contracts and deployment of COVID-19 vaccines.

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EU envoy says Russia delays EMA Sputnik V vaccine inspections - media

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A health-care worker prepares a dose of Sputnik V (Gam-COVID-Vac) vaccine against the coronavirus disease (COVID-19) at a vaccination centre in Gostiny Dvor in Moscow, Russia July 6, 2021. REUTERS/Tatyana Makeyeva/File Photo

Russia has repeatedly delayed inspections by the European Medicines Agency (EMA) necessary for the certification of its Sputnik V COVID-19 vaccine in the European Union, the EU's ambassador to Moscow was quoted as saying on Friday (8 October), Reuters, write Olzhas Auyezov, Anton Zverev and Andrew Osborn in Moscow and Jo Mason in London.

The Sputnik V vaccine, widely used in Russia and approved for use in more than 70 countries, is undergoing a review by the World Health Organization and the EMA.

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Russia has accused the West of refusing to certify its flagship vaccine for political reasons. Without EMA approval, it is harder for Russians to travel throughout the EU.

"This is a technical rather than a political process," EU ambassador Markus Ederer told Russia's RBC media outlet in an interview.

"When Russian officials talk about the process being delayed and politicised by the European side, I sometimes think they are largely referring to themselves because it is them who makes this about politics."

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Russia’s sovereign wealth fund, the Russian Direct Investment Fund (RDIF), markets Sputnik V overseas. It declined to comment.

The EMA said it could not immediately comment on the matter.

Five people with knowledge of European efforts to assess the drug told Reuters earlier this year that the developers of Sputnik V had repeatedly failed to provide data that regulators deem to be standard requirements of the drug approval process. read more

RDIF said at the time that Reuters’ reporting contained “false and inaccurate statements” based on anonymous sources who were attempting to harm Sputnik V as part of a disinformation campaign.

Russian Health Minister Mikhail Murashko said this month that all the barriers to register Sputnik V with the WHO had been cleared and that only some paperwork remained to be completed. read more

The TASS news agency cited the health ministry as saying on Friday that EMA inspectors might carry out a visit to Russia in December.

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