European Commission approves Danish fund to enable €1.34 billion of capital support to large companies affected by coronavirus outbreak
The European Commission has approved Danish plans to set up a fund with a target size of up to DKK 10 billion (approximately €1.34 billion) to recapitalise large enterprises affected by the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The DKK 10 billion Danish fund will provide further support to large enterprises affected by the coronavirus outbreak by facilitating their access to finance. The scheme ensures that the State is sufficiently remunerated for the risk taxpayers assume and that there are incentives for the State to exit as soon as possible. The support also comes with strings attached, including a ban on dividends, bonus payments as well as further measures to limit distortions of competition. We continue to work in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.”
The Danish support measures
Denmark notified to the Commission under the Temporary Framework a fund with a target size of up to € 1.34 billion to provide capital support to large enterprises affected by the coronavirus outbreak.
Under the scheme, the support will take the form of recapitalisations, by means of acquisition of newly issued preferred shares in eligible private companies.
The scheme targets large companies that have faced substantial reductions in revenues in 2020 and that are considered of substantial importance to the Danish economy.
The Commission found that the scheme notified by Denmark is in line with the conditions set out in the Temporary Framework. In particular: (i) the support is available to companies if it is needed to maintain operations, no other appropriate solution is available, and it is in the common interest to intervene; (ii) support is limited to the amount necessary to ensure the viability of beneficiaries and does not go beyond restoring their capital structure before the coronavirus outbreak; (iii) the scheme provides an adequate remuneration for the State; (iv) the conditions of the measures incentivise beneficiaries and/or their owners to repay the support as early as possible (inter alia through progressive increases in remuneration, a dividend ban as well as a cap on the remuneration of and a ban of bonus payments to management); and (v) safeguards are in place to make sure that beneficiaries do not unduly benefit from the recapitalisation aid by the State to the detriment of fair competition in the Single Market, such as an acquisition ban to avoid aggressive commercial expansion.
Furthermore, aid to a company above the threshold of €250 million has to be notified separately for individual assessment and the support can only be granted until 30 September 2021.
Finally, only companies that were not considered to be in difficulty already on 31 December 2019 are eligible for aid under this scheme.
The Commission concluded that the measure 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 conditions set out in the Temporary Framework.
On this basis, the Commission approved the aid measure under EU State aid rules.