Ukraine Crisis: Temporary State Aid and Competition Law Enforcement

State aid: Temporary Crisis Framework

The European Commission issued on 23 March 2022 a new temporary State aid framework allowing Member States flexibility in offering State aid to companies adversely affected by the war in Ukraine. The framework is based on Article 107(3)(b) of the TFEU, which allows the granting of aid for the purpose of remedying serious disturbances in the economies of Member States. So far, the framework is set to remain in force until 31 December 2022.

The framework is designed in the same way as the initiatives adopted by the Commission in the context of the COVID-19 crisis to support the economies of Member States in light of the special circumstances. Notifications under the previous framework were processed efficiently, and there are several examples of Danish State aid initiatives, i.a. in favour of SAS and the Danish Travel Guarantee Fund, having enjoyed urgent Commission processing and approval under the framework. 

We have previously described these cases in news articles here and here (Danish). The concept of a temporary framework was seen also in the financial crisis.

The Ukraine crisis framework offers the following State aid possibilities for Member States:

• Direct aid up to EUR 35,000 for companies affected by the crisis active in the agriculture, fisheries and aquaculture sectors and up to EUR 400,000 per company affected by the crisis active in all other sectors
• State guarantees for bank loans to businesses
• Private and public loans at favourable interest rates
• Direct aid to compensate for high energy prices.

State aid under the framework will still need to be notified to the European Commission, whose approval procedure, however, is expected to be swift. It is a crucial criterion that aid can only be granted to companies that really are adversely affected by the crisis. In addition, certain conditions apply, so that aid measures must always be assessed on a case-by-case basis and, in certain situations, may require a separate and more detailed approval procedure under general State aid rules.

The Commission’s press release with link to the Temporary Crisis Framework can be accessed here, and the framework itself can be accessed here.

Competition law: Joint statement on enforcement

The network of European competition authorities, European Competition Network (ECN), has released a joint statement on the application of competition law in the context of the war in Ukraine. In it, the authorities say they will not in the current circumstances actively intervene against temporary cooperation among competitors, as long as it is strictly necessary for avoiding a collapse or severe disruption of the markets. At the same time, however, the authorities emphasise that they will be particularly attentive to see that no companies take advantage of the crisis in contravention of competition rules.

Although it is acknowledged in the statement that the extraordinary circumstances may trigger a need for companies to temporarily cooperate, the competition rules still stand. Companies are cautioned to exercise due care and, as also expressed in the statement, are invited to consult with the relevant competition authorities for a discussion of the compatibility of any proposed cooperation.

The Danish Competition and Consumer Authority has issued a press release announcing its accession to the joint statement.

The statement can be seen here and the press release by the Danish Competition and Consumer Authority here.