Will COVID-19 Make or Break EU State Aid Control? An Analysis of Commission Decisions Authorising Pandemic State Aid Measures

Abstract

EU State aid control has been a tool for the Member States to swiftly counteract the economic losses of the COVID-19 crisis and keep businesses afloat. The present paper assessed how the recent relaxation of EU State aid control by the Temporary Framework for State Aid (TF) has changed the substance and the enforcement of EU State aid rules and whether these changes will have a long-lasting impact on the internal market. An analysis of EU Commission’s Decisions authorising State aid between March and December 2020 shows that the distribution of aid has been geographically disproportionate. Thus, the Temporary Framework might have enhanced disparities between Member States and undermined the level playing field. Second, the study engages with sectoral aid, as to evaluate what sectors have been the most aided by State resources during the pandemic. Evidence shows that the traditional policy objectives, such as environmental policies, research & development & innovation (RDI) and regional aid have been set aside in order to aid companies in financial hardship. Two case studies are further analysed, RDI and the aviation sector. In conclusion, as the Temporary Framework represents a critical junction in the evolution of EU State aid control, the article aims to take stock of the lessons learnt from the Commission Decisions authorising pandemic aid to reflect on the future of EU State aid control and eventually formulate normative recommendations.