EU State Aid and the COVID-19 Pandemic

Crises are a time to test the pre-existing rules and principles and reflect on whether they need to be replaced as innovative solutions should be devised. The outbreak of the COVID-19 pandemic meant that State aid law immediately took the centre stage as the ensuing crisis had instant economic repercussions on virtually all economic sectors, thus requiring financial support from a significant number of Member States. Such an unprecedented situation caused a mounting pressure on the European institutions to relax the enforcement of the EU substantial and procedural legal framework regulating the granting of aid by Member States. This prompted the Commission to adopt a Communication on a “Temporary Framework to support the economy in the context of the COVID-19 outbreak”. Based on the Treaty provision requiring the European Commission to authorise aid “to make good the damage caused by natural disasters or exceptional occurrences” and that allowing it to authorise aid “to remedy a serious disturbance in the economy of a Member State”, this piece of soft law aimed at dealing with both the short-term issues faced by European companies by ensuring that sufficient liquidity remained available in order to preserve the continuity of their economic activity, and the (possible) long-term repercussions by allowing Member States to proceed with recapitalisations of companies in need. The considerable number of support measures notified to the Commission and the huge amount of public resources they intended to pour in the real economy, together with the necessity of a very quick approval by the Commission, has led some to wonder whether the basic tenets of the system for State aid control are still in place, and others to fear that a legal framework conceived to tackle an emergency situation develop into the new normal.