The European Commission has launched its largest package of economic stimulus measures in order to speed up the recovery of EU economies damaged as a result of the COVID-19 pandemic, the so-called NextGenerationEU.
The NextGenerationEU programme, with its centrepiece the “Recovery and Resilience Facility” (RRF), involves an investment of more than €750 billion aimed at building a “greener, more digital and more resilient” Europe.
The large-scale financial support offered by this new programme represents a unique opportunity for undertakings seeking to benefit from public support to achieve their goals and to carry out new projects in line with the NextGenerationEU objectives. The flip side of the coin is that recipient companies need to be very mindful that the European State aid and competition rules come with important compliance obligations that need to be observed to avoid possible later recovery of aid.
The Recovery instruments
The aim of the NextGenerationEU and the RRF is to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient, and better prepared for the challenges and opportunities of the green and digital transitions.
To achieve this, Regulation (EU) 2021/241 establishing the Recovery and Resilience Mechanism is structured around six pillars, the first two being of particular importance:
- green transition
- digital transformation
- smart, sustainable and inclusive growth
- social and territorial cohesion
- health and economic, social and institutional resilience
- next-generation policies
The general EU framework is being complemented by national Recovery and Resilience Plans (RRPs) adopted by Member States and currently being approved by the Council. For RRPs to be approved, they must effectively address EU country specific recommendations and must allocate at least 37% of the plan's total funding to climate action and 20% to digital transition.
EU State aid and Competition Law considerations
One of the frequent doubts raised by the NextGenerationEU funding concerns its compatibility with the complex set of State aid rules.
According to Regulation 2021/241, national RRPs are subject to European State aid rules, and yet, the approval of national RRPs by the relevant EU institutions does not entail the automatic approval of any aid measure contained therein.
To facilitate the correct allocation of the funds, the European Commission has published thirteen State aid guiding templates which are classified according to the European flagship areas for investment. All thirteen templates follow a similar structure, giving sector-specific information on:
- when there is no State aid and therefore no need to notify the Commission
- when there is State aid, but no notification is required
- and when there is State aid and notification is mandatory
How can Bird & Bird help you?
Companies seeking to benefit from public support will need to ensure compliance of their projects with State aid and competition rules. The rules are highly complex, and the pitfalls are many.
Failure to comply with State aid rules, notably with the obligation to notify the aid measure to the Commission when required, may result in the beneficiary's obligation to pay back the financial support, plus interest. Further, it is the beneficiary company which is ultimately responsible for making sure that State aid rules have been complied with.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.