European Commission approves German “umbrella” scheme to support research, development, testing and production of coronavirus relevant products

The European Commission has approved a German “umbrella” scheme to support research, development, testing and production of coronavirus relevant products.The scheme was approved under the State aid Temporary Framework adopted by the Commission on 19 March 2020, as amended on 3 April 2020.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This German “umbrella” scheme will support investments in research and development activities needed for the production of crucial products to fight the coronavirus outbreak, such as medicines, vaccines, ventilators and protective clothing. We continue to work closely with all Member States to find solutions to fight the outbreak, in line with EU rules.”

The German support measures

Germany notified to the Commission under the Temporary Framework an “umbrella” scheme supporting: (i) coronavirus relevant research and development (R&D) activities, (ii) investments into testing and upscaling infrastructures that contribute to developing coronavirus relevant medicinal products, and (iii) investments into production facilities for medicinal products needed to respond to the outbreak.

The scheme, called “Bundesregelung Forschungs-, Entwicklungs- und Investitionsbeihilfen”, aims to enhance and accelerate both the development and the production of products directly relevant to the coronavirus outbreak. These include medicinal products such as vaccines, hospital and medical equipment (including ventilators), and protective clothing and equipment. The public support will take the form of direct grants, repayable advances and tax advantages. Guarantees to cover losses may also be granted, either in addition to a direct grant, tax advantage or repayable advance, or as an independent aid measure.

The measure allows for the provision of aid in light of the amendments to the Temporary Frameworkapproved by the Commission on 3 April 2020. More specifically, under this “umbrella” schemepublic support can be granted in the form of (i) aid for coronavirus relevant research and development,including Seal of Excellence projects relating to coronavirus selected under Horizon 2020; (ii)investment aid for testing and upscaling infrastructures, and (iii) investment aid for the production ofcoronavirus relevant products. Furthermore, undertakings are encouraged to cooperate with each other or with research organisations by benefitting from a 15% bonus when the R&D research project is carried out in cross-border collaboration with research organisations or other undertakings, or when the research project is supported by more than one Member State.

The measure allows aid to be granted by German authorities at all levels, including the Federal government, regional and local authorities. The scheme is open to all enterprises capable to carry out such activities in all sectors.

The Commission found that the German scheme is in line with the conditions set out in the Temporary Framework. In particular, the aid will cover a significant share of the investment costs necessary for the development and testing of innovative products and processes, as well as the costs of construction of new production facilities. Furthermore, under the scheme, investment projects will have to be completed within six months after the date of granting of the aid.

The Commission concluded that the aid scheme will contribute to the achievement of a common objective of crucial importance, is necessary, appropriate and proportionate to fight the health 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.