State aid: Commission approves €6 billion German scheme to compensate public transport companies for damages suffered due to coronavirus outbreak
The European Commission has approved, under EU State aid rules, a €6 billion German scheme to compensate companies providing regional and local public passenger transport services in Germany for the damage suffered due to the coronavirus outbreak and the emergency containment measures introduced in Germany to limit the spread of the virus.
Executive Vice-President Margrethe Vestager, in charge of competition policy, recently said:
“Local and regional public transport providers have continued to provide essential services to citizens during the coronavirus outbreak. This €6 billion scheme enables Germany to compensate them for the damage suffered due to the outbreak and the emergency measures put in place to limit the spread of the virus. We continue working with all Member States to ensure that national support measures can be put in place as quickly and effectively as possible, in line with EU rules.”
The German government has put in place emergency measures necessary to limit the spread of the coronavirus such as the closure of schools and nurseries, extended telework arrangements, social distancing rules and restrictions on gatherings. This has severely affected regional and local public transport services, as passenger numbers in local public transport by road and rail decreased between 70% and 90%, resulting in a significant drop in revenues. Furthermore, transport operators had an obligation to maintain a sufficient frequency of regional and local passenger transport services to ensure mobility of people without access to alternative means of transport, including critical workers such as health professionals. The situation was exacerbated by additional costs incurred by transport operators in relation to measures aimed at containing the spread of the contagion, such as enhanced sanitary and hygiene measures. All of this has led to serious liquidity problems that risk driving many of the transport operators out of the market.
The German scheme is designed to compensate each operator of regional and local public transport services for the damages suffered while fulfilling their contractual obligations under the circumstances determined by the coronavirus outbreak and the resulting containment measures. Under the scheme, transport companies will be entitled to compensation in the form of direct grants for damages incurred between 1 March and 31 August 2020. Germany will ensure that no individual transport operator receives more in compensation than it suffered in damages and that any payment in excess of the actual damage is recovered.
The Commission assessed the measure under Article 107(2)(b) of the Treaty on the Functioning of the European Union (TFEU), which enables the Commission to approve State aid measures granted by Member States to compensate specific companies or specific sectors (in the form of schemes) for the damages directly caused by exceptional occurrences.
The Commission considers that the coronavirus outbreak qualifies as such an exceptional occurrence, as it is an extraordinary, unforeseeable event having a significant economic impact. As a result, exceptional interventions by the Member States to compensate for the damages linked to the outbreak are justified.
The Commission found that the German aid scheme will compensate damages that are directly linked to the coronavirus outbreak. It also found that the measure is proportionate, as the envisaged compensation does not exceed what is necessary to make good the damage.
The Commission therefore concluded that the scheme is in line with EU State aid rules.
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