European Commission is Brooding on Easing State Aid Rules

European Commission is Brooding on Easing State Aid Rules

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The European Commission is brooding on easing state aid rules as the war in Ukraine continues. It polls the EU countries about this. In particular, the transition of gas and oil from Russia to alternative energy sources would require additional measures.

 

A month after the Russian invasion of Ukraine, the commission gave governments more room to help companies affected by it. But that extra space is not enough, she thinks.

The limits on direct state aid to war-affected companies could be raised, the committee suggests. She explicitly mentions farmers and fishermen. The more flexible support regime could apply to subsidies and other forms of aid, such as guarantees for lenders.

Furthermore, investments in sustainable energy must be encouraged to get out of the grip of energy supplier Russia, says European Commissioner Margrethe Vestager (Competition). To this end, tendering rules can be relaxed. For energy-saving projects or the transition from industry to renewable energy, in some cases, no tendering process at all would be necessary. SMEs and companies that use energy particularly efficiently could claim an extra reward.

The war and subsequent EU sanctions and Russian retaliation have hit some European companies hard. Companies have lost business or suppliers. Horticulturists and fishermen find themselves in a bind because of high heating costs and fuel prices. The committee, therefore, allowed the Member States to help companies, just like during the corona crisis.

For example, European competition rules should ensure that EU countries do not favour domestic companies so that they can outcompete rivals. But they can sometimes give way to remedy a disruption in the economy. The committee consults the EU countries and then takes a decision. The existing and additional relaxations would in principle apply until the end of the year.

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