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Covid–19 coronavirus update: an overview of European Commission State aid decisions (updated 11 December 2020)

11 December 2020

Under State aid rules, UK and EEA Member State governments may not generally provide selective assistance to businesses without prior approval from the European Commission (EC). This includes assistance in the form of government direct grants, interest and tax reliefs, loans, guarantees, forbearance of existing loan terms, export credit insurance and equity investment.

If these measures are provided selectively and on terms that the market would not provide (eg to a borrower in financial difficulty), or that are not being provided on arm’s-length commercial terms, they qualify as State aid and require prior approval from the EC. Transactions involving unapproved State aid are unenforceable. If an entity participates in/is a beneficiary of a scheme that is subsequently found to have involved unapproved State aid, it may be required to repay that aid – potentially affecting its credit risk and solvency.

The EC has adopted a ‘Temporary Framework’ to give national governments greater flexibility under the State aid rules to support their economies during the Covid-19 outbreak. The Temporary Framework continues to require notification to and prior approval of specific aid measures by the EC. Once an aid scheme has received approval, the relevant government is free to support businesses within the scope of the scheme. For further information on the Temporary Framework, please see this note, our subsequent update, and the July edition of our monthly newsletter Antitrust in focus.

See our European Commission State aid decisions table below for an overview of the State aid decisions adopted by the EC. Except where indicated otherwise, each of these decisions has been adopted under the Temporary Framework. The table reflects the position as at 11 December 2020.