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Commission approves €24.7 million of Italian support to compensate Alitalia for further damages suffered due to coronavirus outbreak

EU Reporter Correspondent

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The European Commission has found €24.7 million of Italian support in favour of Alitalia to be in line with EU state aid rules. This measure aims at compensating the airline for the damages suffered on certain routes due to the coronavirus outbreak between 1 November and 31 December 2020.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The coronavirus crisis and restrictions to limit the spread of the virus are continuing for longer than we all hoped for. The measure approved today enables Italy to provide further compensation for direct damages suffered by Alitalia between November and December 2020 as a result of such restrictions. We continue working closely with member states to ensure that national support measures can be put in place in a co-ordinated and effective way, in line with EU rules. At the same time, our investigations into past support measures to Alitalia are ongoing and we are in contact with Italy on their plans and compliance with EU rules.”

The restrictions in place both in Italy and in foreign countries in order to limit the spread of a second wave of the pandemic have heavily affected Alitalia's operations. Italy notified to the Commission an additional aid measure to compensate Alitalia for further damages suffered on certain routes from 1 November 2020 to 31 December 2020 due to the emergency measures necessary to limit the spread of the virus. This follows the Commission decisions of 4 September 2020 and 29 December 2020 to approve Italian measures compensating Alitalia for the damage suffered from governmental restrictions between 1 March 2020 to 15 June 2020 and 16 June to 31 October 2020, respectively.

The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve state aid measures granted by member states to compensate specific companies or sectors for 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 significant economic impact. As a result, exceptional interventions by the Member State to compensate for the damages linked to the outbreak are justified.

The Commission found that the Italian measure will compensate for damages suffered by Alitalia which are directly linked to the coronavirus outbreak, as the loss of profitability on the eligible routes as a result of the containment measures during the relevant period can be considered as damage directly linked to the exceptional occurrence. It also found that the measure is proportionate, as the route-by-route quantitative analysis submitted by Italy appropriately identifies the damage attributable to the containment measures, and therefore the compensation does not exceed what is necessary to make good the damage on those routes.

On this basis, the Commission concluded that the additional Italian damage compensation measure is in line with EU State aid rules.

Background

Based on complaints received, on 23 April 2018 the Commission opened a formal investigation procedure on €900 million loans granted to Alitalia by Italy in 2017.  On 28 February 2020, the Commission opened a separate formal investigation procedure on an additional €400 million loan granted by Italy in October 2019. Both investigations are ongoing.

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 co-ordinated 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 Regulation and the General Block Exemption Regulation, 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 June, 13 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) 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 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.61676 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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Therapeutics Strategy - First rolling review of a new COVID-19 medicine

EU Reporter Correspondent

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The European Medicines Agency has today (7 May) started the rolling review of sotrovimab (VIR-7831), a monoclonal antibody developed for the treatment of COVID-19. The review follows hot on the heels of the EU COVID-19 Therapeutics Strategy presented yesterday and is a first step towards the Strategy's target of starting seven rolling reviews of COVID-19 therapeutics in 2021. The rolling review launched by EMA will assess sotrovimab's effectiveness in preventing hospitalization and death; safety and quality. A rolling review is quicker than a regular evaluation as data is reviewed as it comes in. Should the European Medicines Agency recommend authorising the treatment at the end of its review, the European Commission will move swiftly to authorize it. 

The EU Therapeutics Strategy supports the development and availability of much needed COVID-19 therapeutics and covers the lifecycle of medicines: from research, development and manufacturing to procurement and deployment. It is part of the strong European Health Union, in which all EU countries prepare and respond together to health crises and ensure the availability of affordable and innovative medical supplies – including the therapeutics needed to treat COVID-19. More details on the EU Therapeutics Strategy are available in a press release and factsheet.

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Kazakhstan to deliver humanitarian assistance to India

Astana Times

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Kazakhstan will provide humanitarian assistance to India due to the sharp deterioration of the epidemiological situation in this country, reported the Akorda Press, writes Zhanna Shayakhmetova.

President Tokayev instructed the government to provide humanitarian aid to India during the meeting with Prime Minister Askar Mamin on 7 May.

This was announced at the meeting of Kazakh President Kassym-Jomart Tokayev and Prime Minister Askar Mamin on May 7.

President Tokayev instructed the government to dispatch 6 million medical masks, 400,000 respirators, 50,000 anti-plague suits, and 105 portable artificial lung ventilation devices made in Kazakhstan.

India observed a record daily rise in coronavirus cases on Friday, bringing total new cases for the week to 1.57 million, according to Reuters.

India is now the second most corona-affected country with the overall cases standing at 21.49 million. 

On May 4, Tokayev delivered a message to Indian Prime Minister Narendra Modi to express “deep solidarity with the Indian nation over the devastating COVID-19 surge in their country.”

The President noted that Kazakhstan is ready “to unite efforts with our Indian friends to contain the spread of the pandemic and provide every possible assistance in the spirit of enduring friendship and mutual support between our states.”

Earlier, it was reported that Kazakhstan will provide humanitarian aid that consists of 10,000 tons of flour to Kyrgyzstan. 

“Guided by the principles of friendship, alliance and strategic partnership with Kyrgyzstan, President Kassym-Jomart Tokayev decided to provide humanitarian assistance to the fraternal Kyrgyz people on behalf of the Kazakh people,”  President’s spokesperson Berik Uali wrote  on his Facebook on May 6. 

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India: EU mobilizes an initial €2.2 million in emergency funding for the vulnerable during COVID-19

EU Reporter Correspondent

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The Commission has announced that it will allocate an initial €2.2 million in emergency funding to respond to the drastic surge in COVID-19 cases in India. The funding will support the World Health Organization (WHO) for a 6-month case management of COVID-19 patients, as well as strengthening laboratory capacity for COVID-19 testing. Crisis Management Commissioner Janez Lenarčič said: “We are providing additional EU support towards the fight against COVID-19 in India. This comes on top of the generous and swift assistance from EU member states that stepped up as part of Team Europe to offer critical supplies of oxygen, ventilators and medicines over the last few days. We stand ready to work with the WHO and other partners on the ground to jointly fight this battle at this difficult time – we are stronger together.”

Member states have already mobilized supplies of urgently needed oxygen, ventilators and medicines from Austria, Belgium, Czechia, Denmark, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, Romania, Spain and Sweden to India over the last week via the EU Civil Protection Mechanism.

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