LATEST KEY DEVELOPMENTS

Competition & State Aid

  • European Commission releases State of the Union 2022 report
  • European Commission endorses final Member State recovery and resilience plan
  • Commission approves up to €5.2 billion of public support for second IPCEI in hydrogen value chain
  • European Commission approves further schemes under Ukraine Temporary Crisis Framework
  • European Commission approves further schemes under COVID Temporary Crisis Framework

Trade / Export Controls

  • European Commission publishes 40th Annual Report on EU's Anti-Dumping, Anti-Subsidy and Safeguard activities in 2021
  • European Commission publishes proposed Regulation establishing a Single Market Emergency Instrument
  • G7 Trade Ministers Meeting

Medicines and Medical Devices

  • European Commission proposes Council Recommendation for a new approach on cancer screening
  • HaDEA issues call for proposals for €5 million project to support dialogue on public procurement in health sector and crises preparedness

Cybersecurity, Privacy & Data Protection

  • European Commission proposes European Media Freedom Act
  • European Commission proposes Cyber Resilience Act

State Aid

European Commission releases State of the Union 2022 report (see here)

On 8 September 2022, the Commission published its annual State of the Union report, presenting an overview of its work and achievements over the past year (Report).

The Report states that the historic COVID-19 pandemic and Russia's war against Ukraine have confirmed that the European Commission, under President Ursula von der Leyen, was right to launch a new and ambitious course in December 2019 to build a greener, digital and socially just Europe. The pandemic lockdowns vastly accelerated the digital transition, and the Kremlin's energy blackmail is further driving the need to free the EU from dependency on Russian fossil fuels, according to the Report.

On dealing with the pandemic and Ukraine crises, the Report highlights, in particular:

  • State aid has served as an important part of the Commission's economic response to both crises (see below for further details on these State aid measures):
    • Since the COVID-19 pandemic's emergence, the Commission has adopted more than 1,430 State aid decisions, approving nearly 1,010 national measures for an estimated total amount approved of around EUR 3.2 trillion.
    • On Ukraine, the Commission adopted a State Aid Temporary Crisis Framework in March 2022 to enable Member States to support the economy in the context of the Russian invasion, while preserving competition. The Report indicated that the Commission had adopted 89 decisions, for an estimated total approved amount of nearly EUR 430 billion.
  • NextGenerationEU, the EU's historic recovery fund for rebounding from the COVID-19 crisis (and now also the energy crisis), is worth over EUR 800 billion and reaches a total of over EUR 2 trillion when combined with the EU's long-term budget towards 2027. Notably:
    • The Recovery and Resilience Facility (RRF), to recall, is the key component of NextGenerationEU. Member State recovery plans have set out the reforms and public investment projects foreseen for implementation with the RRF, which will provide up to €672.5 billion to finance reforms and investments (i.e., grants totaling €312.5 billion and €360 billion in loans). These national recovery plans must comply with State aid rules (see below for further details on the RRF). Thus far, over €100 billion has been disbursed to Member States under the RRF, or around 20% of allocated RRF funds.
    • Following Russia's invasion of Ukraine, the RRF is to serve as one of the main delivery tools to make the EU independent from Russian fossil fuels well before 2030 under the REPowerEU plan (see here and here). REPowerEU comes with nearly €300 billion in financial support, including €225 billion in loans available to Member States from NextGenerationEU (see also Jones Day White Paper, REPowerEU: A New Energy Landscape for Europe, July 2022).
    • The Commission has proposed that Member States add a REPowerEU chapter to their recovery plans to enable them to better target the pandemic recovery funds to the objective of lifting the EU's dependence on Russian fossil fuels. State aid rules fully apply to the reforms and investments included in such REPowerEU chapters.

The Commission anticipates that stimulus from NextGenerationEU investment could boost the EU's economic growth by 1.5 % by 2027 and support the creation of 2 million new jobs.

European Commission endorses final Member State recovery and resilience plan (see here)

On 8 September 2022, the Commission endorsed the Netherlands' €4.7 billion recovery plan, submitted on 8 July 2022.

This was the final Member State recovery plan to be submitted, as earlier indicated in the Commission's first Report on implementation of Recovery and Resilience Facility (RRF) in March 2022 (see Jones Day COVID-19 Update No. 78 of 4 March 2022).

As above-mentioned, Member State recovery plans set out the reforms and public investment projects foreseen for implementation with the support of the RRF, the key component of NextGenerationEU, the EU's historic recovery fund.

In evaluating Member State plans under the RRF Regulation, notably, the RRF guidelines make clear that the investment projects included in Member State recovery plans must comply with State aid rules (Jones Day Commentary, "EU Member State COVID-19 Recovery Plans Must Comply with State Aid Rules," March 2021, see here).

The Commission's appraisal of Member State plans will also, in particular, determine whether the plans dedicate at least 37% of expenditure to investments and reforms that pursue climate objectives and 20% to the digital transition.

The Commission's approval remains pending for 1 Member State plan (Hungary (€7.2 billion) (see here).

With respect to the Netherlands, the Council will have four weeks to adopt the Commission proposal for a Council Implementing Decisions for approval of the its recovery plan. Following the Council's approval, the Commission will authorize disbursements to the Netherlands based on the satisfactory fulfilment of the milestones and targets outlined in its recovery plan, reflecting progress on the implementation of the investments and reforms.

With respect to Hungary, the Commission launched a "conditionality mechanism of the rule of law procedure" against Hungary in April 2022. On 18 September 2022 (see here), it proposed budget protection measures to the Council under the EU's conditionality regulation. The Commission has proposed: (i) a suspension of 65% of the commitments for three operational programs under cohesion policy, and (ii) a prohibition to enter into legal commitments with the public interest trusts for programs implemented in direct and indirect management. Additional risks for the Hungarian economy would be the result of a failure to approve Hungary's national recovery plan for the disbursement of approx. EUR 7 billion in NextGenerationEU grants.

The Recovery and Resilience Scoreboard provides an overview of how implementation of the RRF and national plans is progressing (see here).

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