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Commission approves €700 million French scheme for certain retailers and services affected by the coronavirus pandemic

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The European Commission has approved, under the EU state aid rules, a €700 million French scheme to support certain retailers and services affected by the coronavirus pandemic and restrictive measures taken by the French government to limit the spread of the virus.

Executive Vice President Margrethe Vestager (pictured) in charge of competition policy said: "Closures to limit the spread of the pandemic have resulted in very significant losses in turnover for some retailers and services. This €700 million scheme will allow France to partially compensate those companies for the losses incurred. We are continuing to work in close cooperation with member states to find workable solutions to mitigate the economic impact of the coronavirus pandemic, in line with EU rules."

The French scheme

France notified the Commission of a €700m scheme to compensate certain retailers and services for losses incurred as a result of the French government's administrative closure measures to limit the spread of the coronavirus.

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As a direct result of those restrictive measures, the turnover of the companies concerned declined, whereas their costs, particularly rent and other fixed costs, could not be adjusted downwards.

The scheme will be open to certain retail outlets (furniture, clothing, IT, sports goods, opticians, jewellers) and some services (repair of personal and household goods, hairdressing and beauty care) which were required to close down for periods between February and May 2021.

Eligible beneficiaries under the scheme will be able to obtain compensation in the form of direct grants for an amount not exceeding the amount of rent paid during the closure periods, minus, where applicable, any revenue from an increase in online sales and other forms of compensation, such as amounts paid out by insurance companies.

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With a view to avoiding overcompensation for losses incurred, the scheme also provides for a compensation cap for: (i) companies which were already recording losses in 2019; (ii) companies with a high proportion of online sales; and (iii) companies receiving more than €4m in aid per month.

The Commission assessed the measure under Article 107(2)(b) TFEU, which authorises Member States to compensate specific companies or sectors for damage directly caused by exceptional occurrences like the coronavirus pandemic.

The Commission took the view that the French aid scheme will compensate for losses that are directly linked to the coronavirus pandemic. It also found that the measure was proportionate in so far as the compensation envisaged did not exceed the amount necessary to make good the losses, taking into account the cap provided for in the specific cases referred to above.

The Commission therefore concluded that the scheme is in line with the EU State aid rules.

Background

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 wage subsidies and suspension of payments of corporate and value added taxes or social security contributions do not fall under state aid control and do not require the Commission's approval under the EU state aid rules. In all these cases, member states can act immediately. When the 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 pandemic in line with the existing EU state aid framework.

On 13 March 2020 the Commission adopted a European co-ordinated response to counter the economic impact of the Coronavirus pandemic setting out these possibilities.

In that connection, for example:

  • Member states can compensate specific companies or specific sectors (in the form of schemes) for losses incurred and directly caused by exceptional occurrences, such as those caused by the coronavirus pandemic. Article 107(2)(b) TFEU makes provision to that effect;
  • the state aid rules based on Article 107(3)(c) TFEU enable member states to help companies affected by liquidity shortages and needing urgent rescue, and aid;
  • this can be complemented by a variety of additional measures, such as under the de minimis Regulation and the General Block Exemption Regulation, which can also be put in place by member states immediately, without the Commission's involvement.

In the event of particularly severe economic situations, such as the one currently faced by all member states due to the ongoing coronavirus pandemic, the EU State aid rules allow member states to grant aid to remedy a serious disturbance in their economy. Article 107(3)(b) TFEU makes provision to that effect.

On 19 March 2020 the Commission adopted a Temporary Framework for State aid measures on the basis of Article 107(3)(b) TFEU to enable Member States to make full use of the flexibility provided for under the State aid rules to support the economy in the context of the coronavirus pandemic.

 The Temporary Framework, as amended on 3 April, 8 May, 29 June, 13 October 2020 and 28 January 2021 provides for the following types of aid to be granted by the member states: i) direct grants, equity injections, selective tax breaks and advance payments; ii) state guarantees for loans taken out by companies; iii) subsidised 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 tackling the coronavirus pandemic; ix) targeted support in the form of deferral of tax payments and/or suspension 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 pandemic.

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 that date whether it needs to be extended.

The non-confidential version of the decision will be made available under case number SA.62625 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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First suspected case of Omicron variant of COVID-19 detected in Switzerland

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The first probable case of the Omicron variant of COVID-19 has been detected in Switzerland, the government said late on Sunday (28 November), as the country tightened its entry restrictions to check its spread, writes John Revill, Reuters.

The case relates to a person who returned to Switzerland from South Africa around a week ago, the Federal Office for Public Health said on Twitter.

Testing will clarify the situation in the coming days, it added.

Switzerland has ordered that travellers from 19 countries must present a negative test when boarding a fight to the country, and must go into quarantine for 10 days on arrival.

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The list includes Australia, Denmark, Britain, Czech Republic, South Africa and Israel.

Swiss voters on Sunday backed the government's pandemic response plan by a bigger than expected majority in a referendum, paving the way for the continuation of exceptional measures to stem the rising tide of COVID-19 cases. Read more.

Some 62.01% voted in favour of a law passed earlier this year to provide financial aid to people hit by the COVID-19 crisis and laying the foundation for certificates giving proof of COVID-19 vaccination, recovery or a negative test. These are currently required to enter bars, restaurants and certain events.

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Biden warns against Omicron panic, pledges no new lockdowns

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US President Joe Biden (pictured) urged Americans on Monday (29 November) not to panic about the new COVID-19 Omicron variant and said the United States was working with pharmaceutical companies to make contingency plans if new vaccines were needed, write Susan Heavey, Alexandra Alper and Jeff Mason.

Biden said the country would not go back to lockdowns to stop the spread of Omicron, and he would lay out his strategy on Thursday (2 December) for combating the pandemic over the winter. He urged people to get vaccinated, get boosters and wear masks. Read more.

"This variant is a cause for concern, not a cause for panic," Biden said in remarks at the White House following a meeting with his COVID-19 team.

"We're going to fight and beat this new variant," he said.

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Biden said it was inevitable that Omicron cases, which were first detected in southern Africa, would emerge in the United States. He said officials were still studying Omicron but believed that existing vaccines would continue to protect against severe disease. Read more.

Biden said his administration was working with vaccine makers Pfizer (PFE.N), Moderna (MRNA.O) and Johnson & Johnson (JNJ.N) to develop contingency plans.

Travellers wait to process through a security checkpoint at Seattle-Tacoma International Airport before the Thanksgiving holiday in Seattle, Washington, U.S. November 24, 2021. REUTERS/Lindsey Wasson
Dr. Anthony Fauci listens as U.S. President Joe Biden delivers an update on the Omicron variant at the White House in Washington, U.S., November 29, 2021. REUTERS/Kevin Lamarque     

"In the event, hopefully unlikely, that updated vaccinations or boosters are needed to respond to this new variant, we will accelerate their development and deployment with every available tool," he said.

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Biden said he would direct the Food and Drug Administration (FDA) and the Centers for Disease Control and Prevention (CDC) to "use the fastest process available without cutting any corners for safety to get such vaccines approved and on the market if needed."

A U.S. travel ban took effect earlier on Monday blocking most visitors from eight southern African nations from entering the country. Earlier flights from South Africa to the U.S. did not screen passengers after the variant was found. Read more.

Biden said the travel restrictions were put in place to give the country time to get more people vaccinated.

Vaccine hesitancy in the United States and around the world has thwarted public health officials' efforts to get the pandemic under control.

Just 59% of all Americans are fully vaccinated, although almost 70% now have at least one dose. Nearly 782,000 people have died from COVID-19 in the United States, according to a Reuters tally.

Much of the United States shut down in early 2020 at the beginning of the pandemic, but economic activity and jobs have bounced back in recent months. Face masks and vaccine mandates are opposed by some Republican politicians, even as health experts tout their effectiveness. Read more.

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Commission hosts second matchmaking event to speed up the development and production of COVID-19 medicines

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Today (30 November), the Commission is hosting a pan-European matchmaking event to accelerate and upscale the development and production of COVID-19 medicines in Europe, as part of the actions under the EU Strategy on COVID-19 Therapeutics. Following a first matchmaking event on COVID-19 medicines in July 2021 and a previous matchmaking event on COVID-19 vaccines in March 2021, this event aims at strengthening the participation of EU companies in value chains for COVID-19 therapeutics and speeding up connections among the participants. It also broadens the focus: from therapeutics specifically used to treat COVID-19, to also including those used to treat the symptoms of COVID-19, as well the production of disposable materials, such as syringes, and ingredients needed for making such medicines.

The event gathers companies from the European Economic Area as well as other businesses and organisations included in the portfolio of 10 most promising treatments, presented by the Commission in the follow-up to the COVID-19 Therapeutics strategy. In order to facilitate matchmaking events, the Commission issued a comfort letter in March 2021 (based on the Antitrust Temporary Framework adopted by the Commission on 8 April 2020) providing guidance, relevant also for this event, on how the matchmaking and exchanges between participating companies, including direct competitors, can take place in compliance with EU competition rules. The matchmaking event is organised by the Commission's Task Force for industrial scale-up of COVID-19 vaccines and therapeutics, in close co-operation with the European Cluster Collaboration Platform. The event is also hosted in partnership with the Council of European BioRegions (CEBR) and the European Cluster Alliance (ECA), which are supporting the Commission in running an EU survey to assess EU capacities for COVID-19 therapeutics production. More information about the event is available here.

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