United States: COVID-19 Key EU Developments, Policy & Regulatory Update No. 99

COMPETITION & STATE AID

State Aid

European Commission conducts public consultation on mid-term evaluation of Recovery and Resilience Facility (see here)

On 16 March 2023, the Commission launched a public consultation in view of preparing the mid-term evaluation of the Recovery and Resilience Facility (RRF), established in February 2021 by RRF Regulation (EU) 2021/241 (running until end-2026) in response to the COVID-19 pandemic to support faster and more resilient Member State recovery.

The RRF is the core instrument of the €800 billion NextGenerationEU recovery plan for Europe's green and digital transformation. To date, the Commission has disbursed a total of over €144 billion under the RRF, in both grants (€97 billion) and loans (€47 billion). The Commission indicates that many more disbursements are expected as the second half of the RRF's lifetime approaches.

Member State recovery plans set out the reforms and public investment projects foreseen for implementation with the RRF's support. 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 public consultation seeks to assess the effectiveness and relevance of the RRF's implementation in responding to the RRF Regulation's objectives and bringing benefits to the EU. The consultation includes questions such as:

• "In your view, how important has the Recovery and Resilience Facility been for the recovery of the EU economy from the COVID-19 crisis"?
• "In your view, to what extent has the Recovery and Resilience Facility created unnecessary administrative burden and complexity for Member States' administrations"?

Next steps. The Commission will take into account input received (to be summarized in a synopsis report) in preparing its mid-term evaluation report, anticipated in Q1 2024. Where appropriate, the evaluation shall be accompanied by a proposal for amendments to the RRF Regulation.

The Commission further indicates that a series of targeted consultations aimed at specific categories of stakeholders throughout the year will complement the present consultation, which runs until 8 June 2023.

European Commission amends General Block Exemption rules to further promote green and digital transition (see here)

On 9 March 2023, the Commission endorsed a targeted amendment of the General Block Exemption Regulation (GBER) in view of further facilitating, simplifying and accelerating support for the EU's green and digital transitions.

Together with the new Temporary Crisis and Transition Framework for State aid, (see below item), this amended GBER, in particular, is intended to better enable Member States to grant necessary support for key sectors in line with the Green Deal Industrial Plan (see also Jones Day COVID-19 Update No. 97 of 14 February 2023).

To recall, the GBER declares specific categories of State aid, where fulfilling certain conditions, as compatible with EU law. The GBER exempts such categories from prior notification to and approval by the Commission. This enables Member States to directly grant aid and to inform the Commission on an ex-post basis.

In addition to affording Member States greater flexibility to design and implement support measures in sectors viewed as key to reaching climate neutrality and a net-zero industry, the amended GBER will also contribute to tackling economic consequences of Russia's war against Ukraine and the COVID-19 pandemic (e.g., high energy prices). In particular, the amended rules:

• Expand and streamline the possibilities for aid in areas such as environmental protection and energy (e.g., supporting the rollout of renewable energy, green mobility and investments to increase energy efficiency);
• Bolster the implementation of certain projects involving beneficiaries across several Member States, such as Important Projects of Common European Interest ("IPCEI") in the research and development field, by raising aid levels and notification thresholds;
• Block exempts aid measures established by Member States to regulate prices for energy such as electricity, gas and heat produced from natural gas or electricity;
• Significantly increase notification thresholds for environmental aid and Research, Development and Innovation ("RDI") aid; and
• Extend the GBER until end-2026 for legal certainty and regulatory stability.

Next steps: Now that the Commission's has endorsed the English text of the amended GBER, it will be formally adopted following the translation of the text in all official languages of the EU. It will enter into force on the day following its publication in the Official Journal of the European Union.

European Commission adopts new Temporary Crisis and Transition Framework for State aid to support economy in context of Russia's invasion of Ukraine (see here)

On 9 March 2023, the Commission adopted a Communication on a Temporary Crisis and Transition Framework for State Aid measures to support the economy following the aggression against Ukraine by Russia ("new TCTF").

The new TCTF replaces the previous Temporary Crisis and Transition Framework ("previous TCTF", adopted on 28 October 2022 and which already replaced the TCTF adopted on 23 March 2022 and amended on 20 July 2022) to enable Member States to support the economy in the context of Russia's war against Ukraine.

The new TCTF continues to enable Member States to cushion the economic impact of Russia's aggression of Ukraine, while also closely focusing on enhancing support measures in sectors viewed as key to transitioning to a net-zero economy in line with the Green Deal Industrial Plan (see also Jones Day COVID-19 Update No. 97 of 14 February 2023).