European Commission has approved € 700 million to a French scheme to help retailers and services affected by COVID-19
The European Commission, under the aegis of European Union (E.U.) State aid rules, has approved an aid of € 700 million to a French scheme to support certain retailers and services affected by the Coronavirus (COVID-19).
The scheme aims to compensate certain retailers and services who suffered losses due to COVID-19 led lockdown imposed by France to contain the spread of COVID-19. As a direct result of those restrictive measures, the turnover of these concerned companies declined and their costs, particularly rent and other fixed costs, could not be adjusted downwards.
The scheme is open to retail outlets (furniture, clothing, IT, sports goods, opticians, jewellers) and some services (repair of personal and household goods, hairdressing and beauty care).
Speaking on the occasion, the Executive Vice President of the European Commission for a Europe fit for the Digital Age (Competition) – Margrethe Vestager said, “Closures to limit the spread of the pandemic have resulted in very significant losses in turnover for some retailers and services. This EUR 700 million scheme will allow France to partially compensate those companies for the losses incurred. We are continuing to work in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus pandemic, in line with EU rules.”
The eligible beneficiaries will get compensated in the form of direct grants for an amount not exceeding the amount of rent paid during the closure periods, minus, where applicable, any revenue from an increase in online sales and other forms of compensation, such as amounts paid out by insurance companies.
In order to ensure that overcompensation is not paid to businesses, the scheme also provides for a compensation cap for companies which were already recording losses in 2019, companies with high proportion of online sales and companies receiving more than EUR 4 million in aid per month.
The European Commission assessed the measure under Article 107(2)(b) TFEU, which authorizes Member States to compensate specific companies or sectors for damage directly caused by exceptional occurrences like the coronavirus pandemic.
The European Commission found that the French measure was proportionate in so far as the compensation envisaged did not exceed the amount necessary to make good the losses, taking into account the cap provided for in the specific cases referred to above.
On March 13, 2020, the European Commission adopted a European coordinated response to counter the economic impact of the COVID-19. This means that Member States can compensate specific companies or specific sectors (in the form of schemes) for losses incurred and directly caused by exceptional occurrences, such as those caused by the pandemic.
