European Commission approves € 1.6 billion Polish scheme to compensate companies for damages suffered due to coronavirus outbreak and provide liquidity support

 

The European Commission has approved, under EU State aid rules, an approximately €1.6 billion (PLN 7.5 billion) Polish scheme that partially compensates large enterprises and certain small and medium-sized enterprises (SMEs) for the losses suffered due to the coronavirus outbreak and provides them with direct liquidity through loans. The scheme is part of a wider Polish support programme, the so-called “Financial Shield for Large Enterprises”.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The € 1.6 billion scheme will allow Poland to compensate large enterprises and certain small and medium-sized enterprises for the damage suffered as a result of the coronavirus outbreak, while supporting their immediate liquidity needs. The measure will help those businesses continue their activities during and after the outbreak. We are working in close contact and cooperation with Poland, as we continue working with all Member States to ensure that national support measures can be put in place as quickly and effectively as possible, in line with EU rules.”

The Polish support measure

Poland notified to the Commission an approximately €1.6 billion (PLN 7.5 billion) scheme to compensate affected companies for the damages caused by the coronavirus outbreak.

The scheme, which will be managed by the Polish Development Fund, is part of the “Financial Shield for Large Enterprises”, a support programme set up by the Polish authorities which has an overall budget of approximately EUR 5.5 billion and will be open to large enterprises and certain larger SMEs registered in Poland.

The support will be given in the form of subsidised loans at favourable interest rates which can be redeemed by 30 September 2021 in an amount not exceeding 75% of the actual damage incurred by the beneficiary companies from 1 March until at the latest 31 August 2020 directly due to the coronavirus outbreak.

Beneficiaries of the aid will therefore have access to immediate liquidity, through loans. The aid is planned to be granted in the form of loans to be partially written-off later by an amount equivalent to the calculated damages suffered due to the coronavirus outbreak.

The Commission assessed the measure, which provides for both compensation for damages and liquidity support, under two legal bases:

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 specific sectors (in the form of schemes) for the damages directly caused by exceptional occurrences, and
under Article 107(3)(b) TFEU, which enables the Commission to approve State aid measures implemented by Member States to remedy a serious disturbance in their economy.
The Commission considers that the coronavirus outbreak qualifies as an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. Therefore, exceptional interventions by the Member States to compensate for the damages linked to the outbreak are justified.

The Commission found that the Polish aid scheme will compensate damages that are directly linked to the coronavirus outbreak. It also found that the measure is proportionate, as the foreseen compensation does not exceed what is necessary to make good the damage, in line with Article 107(2)(b) TFEU.

Moreover, the Commission concluded that the measure for liquidity support will contribute to managing the economic impact of the coronavirus in Poland.It 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 adopted by the Commission on 19 March 2020, as amended on 3 April and 8 May 2020.

On this basis, the Commission approved the measure under EU State aid rules.

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