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Tuesday, July 7, 2020

European Competition Commissioner warns of public subsidies to companies in difficulty

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European Competition Commissioner Margrethe Vestager – JOHN THYS / AFP

The European Commissioner for Competition, Margrethe Vestager, warned against aid to companies challenged by the coronavirus pandemic which would take the form of public subsidies, in
daily maintenance Opinion published this Monday.

“We anticipate business recapitalization needs in the weeks and months to come. There are different ways to do this. If it’s by offering company stock for sale, no problem. But if this is a real public recapitalization, where the state pays money, be careful, “she said.

“Money must not be misused”

“At the moment, direct aid to businesses takes the form of grants, tax advantages and repayable advances of up to 800,000 euros. All this poses no problem, ”adds the European commissioner, however. It also rules that recapitalized companies should not buy back shares or pay dividends.

“The taxpayer is involved and must receive the profits if there are any. The money must not be misused and managers must have an interest in the state withdrawing, “she said, targeting bonuses and variable compensation for leaders.

The European commissioner indicates that she is currently studying the proposals of the governments as regards aid to the companies in difficulty. “We will study the comments of the States, discuss them at the Commission, and should arrive at a balanced set of rules in less than a few weeks, “she said, while warning that there” could be conflicts between member states “.

“Crucial to find European solutions”

“Another discussion in progress, which will continue in the coming weeks, concerns the financial capacities of the States. No matter how we build our public aid rules, not all countries will be able to use them. This is one of the points that could make the rules of the game very inequitable: some member states will have the means to help their businesses and others who wish will not have the necessary money “.

Margrethe Vestager welcomes the agreement of member states to a support plan of 500 billion euros, considering it “crucial to find European solutions”.

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