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NextGenerationEU: President von der Leyen heads to Greece, Denmark and Luxembourg to present Commission assessment of national recovery plans

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President Ursula von der Leyen will today (17 June) visit Greece and Denmark, and tomorrow Luxembourg. She will personally hand over the result of the Commission's assessment and Recommendation to the Council on the approval of the national recovery and resilience plans in the context of NextGenerationEU, Europe's Recovery Plan. The President will be in Athens tomorrow morning, where she will meet Prime Minister Kyriakos Mitsotakis. President von der Leyen will then travel to Copenhagen. There she will meet Prime Minister Mette Frederiksen and she will be joined by Commission Executive Vice-President Margrethe Vestager. On Friday 18 June, the President will be in Luxembourg. In the morning, she will meet His Royal Highness The Grand-Duke of Luxembourg and later she will meet the Prime Minister, Xavier Bettel. In all countries, President von der Leyen will visit projects that will be funded thanks to the Recovery and Resilience Facility, focused mainly on research and the green and digital transition.

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Commission approves €88.8 million budget increase for Danish scheme supporting reduction of greenhouse gas emissions from farming

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The European Commission has found that a budget increase of €88.8 million (DKK 660m), made available through the Recovery and Resilience Facility (RRF) for an existing Danish scheme to reduce greenhouse gas emissions from farming, is in line with EU State aid rules. The increased budget to be funded via the RRF, following the Commission's positive assessment of the Danish recovery and resilience plan and its adoption by Council, (SA.63890) is allocated to an existing Danish scheme (SA. 58791) already approved by the Commission on 21 May 2021.

The measure will be in place until 31 December 2026, and had an initial budget of €238m (DKK 1.8 billion). The primary objective of this scheme is to contribute to the Danish target to reduce greenhouse gas emissions by 70% by 2030, compared to 1990 levels. The aid will contribute to removing carbon-rich farmland from production and subsequently to transforming the land into nature areas by restoring its natural hydrology through the disconnection of drains and re-wetting of the land. The existing scheme was assessed based on its compliance with EU guidelines for state aid in the agricultural and forestry sectors and in rural areas, which allow aid to facilitate the development of certain economic activities – in this case the reduction of greenhouse gas emissions from farming. The Commission has now concluded that the additional funding allocated to the existing Danish scheme through the RRF does not change the initial assessment of the scheme, which remains in line with EU State aid rules. All investments and reforms entailing State aid contained in the national recovery plans presented in the context of the RRF must be notified to the Commission for prior approval, unless covered by one of the State aid block-exemption rules, in particular the General Block Exemption Regulation (GBER) and, for the agricultural sector, the Agricultural Block Exemption Regulation (ABER).

The Commission will assess such measures as a matter of priority and has provided guidance and support to member states in the preparatory phases of the national plans, to facilitate the rapid deployment of the RRF. At the same time, the Commission makes sure in its decision that the applicable State aid rules are complied with, in order to preserve the level playing field in the Single Market and ensure that the RRF funds are used in a way that minimises competition distortions and do not crowd out private investment.

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The non-confidential version of the decision will be made available under the case number SA.63890 in the state aid register on the Commission's competition website once any confidentiality issues have been resolved.

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NextGenerationEU: European Commission endorses Denmark's €1.5 billion recovery and resilience plan

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The European Commission has today (17 June) adopted a positive assessment of Denmark's recovery and resilience plan. This is an important step paving the way for the EU to disburse €1.5 billion in grants under the Recovery and Resilience Facility (RRF) over the period 2021-2026. This financing will support the implementation of the crucial investment and reform measures outlined in Denmark's recovery and resilience plan. It will play an important role in enabling Denmark emerge stronger from the COVID-19 pandemic. The RRF – at the heart of NextGenerationEU – will provide up to €672.5 billion (in current prices) to support investments and reforms across the EU. The Danish plan forms part of an unprecedented coordinated EU response to the COVID-19 crisis, to address common European challenges by embracing the green and digital transitions, to strengthen economic and social resilience and the cohesion of the Single Market.

The Commission assessed Denmark's plan based on the criteria set out in the RRF Regulation. The Commission's analysis considered, in particular, whether the investments and reforms set out in Denmark's plan support the green and digital transitions; contribute to effectively addressing challenges identified in the European Semester; and strengthen its growth potential, job creation and economic and social resilience. Securing Denmark's green and digital transitions The Commission's assessment of Denmark's plan finds that it devotes 59% of total expenditure on measures that support climate objectives. These measures include tax reforms, energy efficiency, sustainable transport and agricultural sector initiatives. They all aim at modernising the Danish economy, creating jobs and lowering greenhouse gas emissions as well as strengthening environmental protection and protecting biodiversity.

An Economy that Works for People Executive Vice President Valdis Dombrovskis (pictured) said: “The Danish recovery plan provides a complete road map to an upgraded recovery, with a strong focus on the green transition. Over half of the total funding is dedicated to green objectives, such as clean transport and a green tax reform helping reduce greenhouse gas emissions. We welcome the ambition to future-proof the economy by supporting the roll-out of high speed internet to rural areas, and digitalising the public administration, businesses big and small as well as the healthcare sector. The implementation of the reforms and investments included in the plan will help accelerate Denmark's transition to a next-generation economy.”

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The Commission's assessment of Denmark's plan finds that it devotes 25% of total expenditure on the digital transition. Measures to support Denmark's digital transition include the development of a new national digital strategy, increased use of telemedicine, rollout of broadband in less populated parts of the country and fostering digital business investments. Reinforcing Denmark's economic and social resilience The Commission's assessment considers that Denmark's plan includes an extensive set of mutually reinforcing reforms and investments that contribute to effectively addressing all or a significant subset of the economic and social challenges outlined in the country-specific recommendations addressed to Denmark by the Council in the European Semester in 2019 and in 2020. It includes measures to frontload private investments, support the twin (green and the digital) transition and foster research and development.

The plan represents a comprehensive and adequately balanced response to Denmark's economic and social situation, thereby contributing appropriately to all six pillars of the RRF Regulation. Supporting flagship investment and reform projects Denmark's plan proposes projects in several European flagship areas. These are specific investment projects which address issues that are common to all member states in areas that create jobs and growth and are needed for the twin transition. For example, Denmark will provide €143 million to foster energy efficiency for households and industry as well as through energy renovations of public buildings. The assessment also finds that none of the measures included in the plan significantly harm the environment, in line with the requirements laid out in the RRF Regulation. The controls systems put in place by Denmark are considered adequate to protect the financialinterests of the Union.

The plan provides sufficient details on how national authorities will prevent, detect and correct instances of conflict of interest, corruption and fraud relating to the use of funds. Commission President Ursula von der Leyen said: “Today, the European Commission has decided to give its green light to Denmark's €1.5bn recovery and resilience plan. Denmark is already a front-runner in the green and digital transitions. In focusing on reforms and investments that will further accelerate the green transition, Denmark is setting a powerful example. Your plan demonstrates that Denmark is looking to the future with ambition and confidence.”

Economy Commissioner Paolo Gentiloni said: “Denmark's recovery and resilience plan will provide European support to advance its ambitious green transition, an area in which the country is already a pioneer. This is the right priority for Denmark. Considering also the plan's numerous measures to advance the digital transition, I am very confident that NextGenerationEU will deliver real benefits to the Danish people over the coming years.”

Next steps

The Commission has today adopted a proposal for a Council Implementing Decision to provide €1.5bn in grants to Denmark under the RRF. The Council will now have, as a rule, four weeks to adopt the Commission's proposal. The Council's approval of the plan would allow for the disbursement of €200m to Denmark in pre-financing. This represents 13% of the total allocated amount for Denmark. The Commission will authorise further disbursements based on the satisfactory fulfilment of the milestones and targets outlined in the Council Implementing Decision, reflecting progress on the implementation of the investments and reforms.

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EU approves €1.74 billion compensation scheme for Danish mink farmers

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The European Commission has approved, under EU state aid rules, an approximately €1.74 billion (DKK 13bn) Danish scheme to compensate mink farmers and mink-related businesses for measures taken in the context of the coronavirus outbreak. This follows the receipt of a complete notification from Denmark on 30 March 2021.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The Danish government took far reaching measures to prevent the spread of new coronavirus variants and new outbreaks among mink, which presented a serious threat to the health of citizens in Denmark and beyond. The DKK 13n scheme approved today (8 April) will enable Denmark to compensate mink farmers and related businesses for damages incurred in this context. We continue to work in close cooperation with member states to ensure that national support measures can be put in place as quickly and effectively as possible, in line with EU rules.”

The Danish support measures

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Following the detection and rapid expansion of several mutated variants of the coronavirus among mink in Denmark, at the beginning of November 2020, the Danish authorities announced their intention of culling all mink in Denmark. In order to avoid a similar situation developing in 2021, the Government also issued a ban on the keeping of minks until beginning 2022.

On 30 March 2021, Denmark sent a complete notification to the Commission on a Danish scheme to compensate mink farmers and mink-related businesses in this context, given the significant economic impact and loss of employment caused by these extraordinary measures. The scheme consists of two measures:

  • The first measure, with a budget of approximately €1.2bn (DKK 9bn), will compensate mink farmers for the temporary ban on mink farming.
  • The second measure, with a budget of approximately €538 million (DKK 4bn), will support mink farmers and mink-related businesses who are willing to give up their production capacity to the state.

Support under both measures will take the form of direct grants.

Compensation to mink farmers for temporary ban

The direct grants to compensate for the ban on mink farming will cover all fixed costs for those mink farmers that will temporarily close production until the ban on mink farming is lifted on 1 January 2022. This period may be extended by one year.

The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors for the damage directly caused by exceptional occurrences.

The Commission considers that the coronavirus outbreak qualifies as such an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by member states to avoid the emergence of new coronavirus variants and prevent new outbreaks, such as the temporary ban on mink farming, and the compensation for the damages linked to these interventions are justified.

The Commission found that the Danish measure will compensate the damages suffered by mink farmers that are directly linked to the coronavirus outbreak, since the ban on the keeping of mink until beginning 2022 can be considered as a damage directly linked to the exceptional occurrence.

The Commission also found that the measure is proportionate, as an independent valuation commission, appointed by the Danish Veterinary and Food Administration and directly reporting to them, will make an assessment of necessary fixed costs and maintenance costs on the specific farms during the shutdown period, including by carrying out on-site inspections. This will make sure that the amount of compensation only covers the actual damage suffered by the farmers.

Support to mink farmers and related businesses who will give up their production capacity to the state

This scheme will compensate mink farmers who will give up their production capacity to the Danish State for the long-term, with a view to restructuring an industry prone to the appearance of new coronavirus variants that could threaten to prolong the current crisis and the disturbance to the Danish economy. It will be calculated based on two overall loss items of mink farmers: i) their loss of income for a ten year budget period; and ii) the residual value of the mink farmer's capital stock (buildings, machinery, etc.).

Mink-related businesses that significantly rely on mink production will also be eligible for support under this measure (specialised feed centers and providers, skinning factories, the auctioneer Kopenhagen Fur, etc). A valuation commission will assess that they fulfill a number of conditions, namely that at least 50% of the businesses' turnover in the period 2017-2019 is related to the Danish mink industry and that the business cannot directly convert the production into other activities. The aid will equal the value of the part of the business that cannot directly convert its production into other activities.

A precondition for receiving support under this measure is that the State takes over the assets (all production equipment, stables, machinery, etc.), which will no longer be available to the farmers or to related businesses, respectively.

The Commission assessed the measure under EU State aid rules, and in particular Article 107(3)(b) TFEU, which enables the Commission to approve State aid measures implemented by Member States to remedy a serious disturbance in their economy. The Commission found that the Danish scheme is in line the principles set out in the EU Treaty and is well targeted to remedy to a serious disturbance to the Danish economy.

The Commission found that the Danish measure will offer support that is directly linked to the need to remedy a serious disturbance in the economy of Denmark and safeguard the European and global efforts towards the end of the pandemic also thanks to an effective vaccine, by restructuring an industry that is prone to the appearance of new coronavirus variants. It also found that the measure is proportionate, based on a clear method of calculation and safeguards to ensure that the aid does not exceed what is necessary. In particular, the calculations of the aid are tailored to the mink farming sector and related businesses, based on representative reference data, individual appraisals and acceptable valuation and depreciation methods.

The Commission therefore concluded that the measure will contribute to managing the economic impact of the coronavirus in Denmark. It 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 general principles set out in the Temporary Framework.

On this basis, the Commission concluded that the two Danish measures are in line with EU state aid rules.

Background

These measures are complementary to those already taken by the Danish authorities under Article 26 of the Agricultural Block Exemption Regulation (ABER), by which direct grants will be awarded for the culling of minks on public health grounds, as well as an “additional” bonus for their rapid culling. See SA.61782 for more information.

Financial support from EU or national funds granted to health services or other public services to tackle the coronavirus situation falls outside the scope of State aid control. The same applies to any public financial support given directly to citizens. Similarly, public support measures that are available to all companies such as for example wage subsidies and suspension of payments of corporate and value added taxes or social contributions do not fall under State aid control and do not require the Commission's approval under EU State aid rules. In all these cases, Member States can act immediately. When State aid rules are applicable, Member States can design ample aid measures to support specific companies or sectors suffering from the consequences of the coronavirus outbreak in line with the existing EU State aid framework.

On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities.

In this respect, for example:

  • Member states can compensate specific companies or specific sectors (in the form of schemes) for the damage suffered due and directly caused by exceptional occurrences, such as those caused by the coronavirus outbreak. This is foreseen by Article 107(2)(b)TFEU.
  • State aid rules based on Article 107(3)(c) TFEU enable member states to help companies cope with liquidity shortages and needing urgent rescue aid.
  • This can be complemented by a variety of additional measures, such as under the de minimis Regulations and the Block Exemption Regulations, which can also be put in place by member states immediately, without involvement of the Commission.

In case of particularly severe economic situations, such as the one currently faced by all Member States due the coronavirus outbreak, EU state aid rules allow member states to grant support to remedy a serious disturbance to their economy. This is foreseen by Article 107(3)(b) TFEU of the Treaty on the Functioning of the European Union.

On 19 March 2020, the Commission adopted a state aid Temporary Framework based on Article 107(3)(b) TFEU 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 April, 8 May, 29 June13 October 2020 and 28 January 2021, 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; (ii) State guarantees for loans taken by companies; (iii) Subsidized public loans to companies, including subordinated loans; (iv) Safeguards for banks that channel State aid to the real economy; (v) Public short-term export credit insurance;(vi) Support for coronavirus related research and development (R&D); (vii) Support for the construction and upscaling of testing facilities; (viii) Support for the production of products relevant to tackle the coronavirus outbreak; (ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions; (x) Targeted support in the form of wage subsidies for employees; (xi) Targeted support in the form of equity and/or hybrid capital instruments; (xii) Support for uncovered fixed costs for companies facing a decline in turnover in the context of the coronavirus outbreak.

The Temporary Framework will be in place until the end of December 2021. With a view to ensuring legal certainty, the Commission will assess before this date if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.61945 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 Competition 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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