Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This €3 billion recapitalisation scheme will enable France to support companies affected by the coronavirus outbreak by facilitating their access to finance in these difficult times. We continue working in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus outbreak, in line with EU rules.”
The French support measure
France notified to the Commission under the Temporary Framework a €3 billion scheme to provide debt and capital support to companies affected by the coronavirus outbreak.
The scheme will be implemented through a fund, which goes under the name “Transition Fund for enterprises affected by the COVID-19 outbreak”, with a budget of €3 billion. Under the scheme, the aid will take the form of (i) subordinated and participating loans; and (ii) recapitalisation measures, in particular hybrid capital instruments and preferred shares without voting rights.
The measure is open to companies established in France and active in all sectors (except the financial one), which were viable prior to the coronavirus outbreak and have demonstrated the long-term sustainability of their business model. Between 50 and 100 companies are expected to benefit from this scheme.
The Commission found that the measures are in line with the conditions set out in the Temporary Framework. In particular:
- With respect to aid in the form of recapitalisation measures (i) support is available to companies only if it is needed to maintain operations, no other appropriate solution is available and it is in the common interest to intervene; (ii) support is limited to the amount necessary to ensure the viability of beneficiaries and to restore their capital position to before the coronavirus outbreak; (iii) the scheme provides an adequate remuneration for the State and it incentivises beneficiaries and/or their owners to repay the support as early as possible (including a dividend ban, and a ban on bonus payments to management); (iv) safeguards are in place to ensure that beneficiaries do not unduly benefit from the recapitalisation aid by the State to the detriment of fair competition in the Single Market, such as an acquisition ban to avoid aggressive commercial expansion; and (v) aid to a company above the threshold of €250 million has to be notified separately for individual assessment.
- With respect to aid in the form of subordinated loans, and given that under the scheme only subordinated loans with a volume exceeding the relevant limits set out in the Temporary Framework will be provided, the aid will have to fully comply with above conditions established for recapitalisation measures, in line with the Temporary Framework.
Support will be granted no later than 31 December 2021. Finally, only companies that were not considered to be in financial difficulty already on 31 December 2019 are eligible for aid under this scheme.
The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of France, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.
On this basis, the Commission approved the scheme under EU State aid rules.
