Brussels, 9 April 2020

On the 9th of April, the European Commission proposed to further extend the scope of the  State aid Temporary Framework adopted on 19 March 2020 and is consulting Member States.

First amended on the 3rd of April, the Commission is now proposing to extend further the scope of the Temporary Framework by enabling Member States to provide recapitalisations to companies in need, thereby providing public support in the form of equity or hybrid capital instruments to these severely affected companies. The proposed broadening of the scope of the Temporary Framework to aid in the form of recapitalisations complements the possibility of Member States to purchase existing shares of companies at market price or pari passu with private shareholders, which in principle falls outside the scope of EU State aid control.

This can in particular be important for interventions by Member States to prevent hostile takeovers of strategic companies by foreign purchasers. It therefore complements the tools available to Member States as set out in the Commission's guidelines to ensure a strong EU-wide approach to foreign investment screening in a time of public health crisis and related economic vulnerability.

This type of public support should remain a last resort measure as it could significantly impact competition in the Single Market. These measures will be subjected to clear conditions as regards the State's entry, remuneration and exit from the companies concerned, strict governance provisions and appropriate measures to limit potential distortions of competition.

Member States now have the possibility to comment on the Commission's draft proposal. The Commission aims to have the amended Temporary Framework in place by next week.