European Commission approves €9 billion Italian “umbrella” scheme to support economy in coronavirus outbreak
New Delhi: The European Commission has approved a €9 billion Italian “umbrella” scheme to support the Italian economy in the context of the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework adopted by the Commission on 19 March 2020, as amended on 3 April and 8 May 2020.
Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The €9 billion Italian “umbrella” scheme will enable support to companies of all sizes by Italy’s regions, the autonomous provinces, other territorial bodies and Chambers of commerce. Complementing several already approved national measures, this scheme will support Italian businesses in continuing their operations in these difficult times and help preserve jobs. We continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, in line with EU rules.”
The Italian support measures
Italy notified to the Commission under the Temporary Framework a €9 billion “umbrella” scheme to support companies affected by the coronavirus outbreak. Under the scheme, the Italian Regions and Autonomous Provinces, other territorial bodies as well as Chambers of commerce, will be able to provide support to companies of all sizes, including self-employed, small and medium-sized enterprises (SMEs) and large companies.
Under the scheme, public support can be granted through:
Direct grants, guarantees on loans and subsidised interest rates for loans.
Aid for coronavirus-related research and development (R&D), for the construction and upscaling of facilities to develop and test coronavirus-relevant products, and for the production of coronavirus-related products, such as vaccines, medical products, treatments and devices, disinfectants and protective clothing, active pharmaceutical ingredients and active substances used for disinfectants.
Wage subsidies for employees to avoid lay-offs during the coronavirus outbreak.
This scheme aims at supporting companies that face difficulties due to loss of income and liquidity shortages resulting from the economic impact of the coronavirus outbreak. In particular, it will help businesses cover immediate working capital or investment needs. This scheme will also support and promote research and production of coronavirus-related products and will help employees to avoid lay-offs in these difficult times.
The Commission found that the Italian scheme is in line with the conditions set out in the Temporary Framework. In particular:
With respect to direct grants, repayable advances, tax and payment advantages, the support per company will not exceed €800,000 per company as foreseen by the Temporary Framework (or €100,000 and €120,000 in the case of agriculture and fisheries/aquaculture, respectively).
With respect to State guarantees and loans with subsidised interest rates, (i) the underlying loan amount per company is limited to what is needed to cover its liquidity needs for the foreseeable future; (ii) it is limited in time; and (iii) the guarantee fee premiums and interest rates do not exceed the levels foreseen by the Temporary Framework; (iv) it contains safeguards to ensure that the aid is effectively channelled by the banks or other financial institutions to the beneficiaries in need.
With respect to aid for coronavirus-related R&D, (i) the aid is considered necessary in order for the company to engage in this R&D activity; and (ii) rules on eligible costs and eligible categories of research eligible are respected.
With respect to investment aid for the construction and upscaling of testing facilities and for the production of coronavirus-relevant products, (i) the aid is considered necessary in order for the company to engage in these activities; (ii) the investment project shall be completed within six months after the date of granting the aid; and (iii) eligible costs and aid intensity criteria are respected.
With respect to aid in the form of wage subsidies for employees to avoid lay-offs, (i)the wage subsidy is granted for employees that would otherwise have been laid off as a consequence of the suspension or reduction of business activities due to the coronavirus outbreak; (ii) the wage subsidy is granted over a maximum period of twelve months; and (iii)the monthly wage subsidy shall not exceed 80% of the monthly gross salary.
Finally, aid may be granted only to companies that were not in difficulty already on 31 December 2019.
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. The measure is also necessary, appropriate and proportionate to fight the health crisis and contribute to address the common European production needs in the current crisis, in line with Article 107(3)(c) TFEU and the conditions set out in the Temporary Framework.
On this basis, the Commission approved the measure under EU State aid rules.