WIREDGOV

The European Commission has approved a €2.9 billion Italian scheme to support the liquidity needs of companies in the context of Russia's invasion of Ukraine. The scheme was approved under the State Aid Temporary Crisis Framework, adopted by the Commission on 23 March 2022 and amended on 20 July 2022, based on Article 107(3)(b) TFEU, recognising that the EU economy is experiencing a serious disturbance.

Executive Vice-President Margrethe Vestager, in charge of competition policy, recently said:

“In the context of economic uncertainty caused by the current geopolitical crisis, this €2.9 billion scheme will enable Italy to support affected sectors and companies, in particular the smaller ones, by ensuring that sufficient liquidity remains available to them. We continue to stand with Ukraine and its people. At the same time, we continue working closely with Member States to ensure that national support measures can be put in place in a timely, coordinated and effective way, while protecting the level playing field in the Single Market.”

The Italian support measure

Italy notified to the Commission, under the Temporary Crisis Framework, a €2.9 billion scheme to provide liquidity support to small and medium-sized enterprises and small mid-caps in the context of Russia's invasion of Ukraine.

Under the scheme, the aid will take the form of (i) guarantees covering part of new eligible loans granted by commercial banks; and (ii) direct grants covering the guarantee premiums.

In light of the high degree of economic uncertainty caused by the current geopolitical situation, the scheme is aimed at ensuring that sufficient liquidity remains available to the affected companies by enabling banks to continue lending to the real economy.

The scheme, which will be administered by the State Guarantee Fund (“Fondo di garanzia”), will be open to companies of all sectors, with the exception of the financial one, with up to 499 employees and to self-employed persons that are affected by the current crisis.

The eligible beneficiaries will be entitled to receive new loans that are covered by a State guarantee of up to 90% of the loan principal with maximum maturities of up to eight years.

The maximum loan amount per beneficiary that can be covered by the State guarantee is equal to either (i) 15% of the beneficiary's average total annual turnover over a predefined time period; or (ii) 50% of the company's energy costs incurred over a 12-month period.

In addition, the maximum loan amounts may be increased to cover the future liquidity needs for companies experiencing, among others, severe supply chain disruptions, rising input prices or increased cybersecurity risks, due to the current geopolitical situation.

The Commission found that the Italian scheme is in line with the conditions set out in the Temporary Crisis Framework. In particular, with respect to the guarantees on loans, (i) the aid will cover guarantees on loans with a limited maturity and size; and (ii) the guarantee premiums respect the minimum levels set out in the Temporary Crisis Framework. With respect to limited amounts of aid in the form of direct grants, the aid will not exceed (i) €62,000 and €75,000 per company active in the agriculture, fisheries and aquaculture sectors respectively, and (i) €500,000 per company active in all other sectors.. Support under the scheme will be granted no later than 31 December 2022.

Furthermore, the public support will come subject to conditions to limit undue distortions of competition, including safeguards to ensure that the advantages of the measure are passed on to the largest extent possible to the final beneficiaries via the financial intermediaries.

The Commission concluded that the Italian scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Crisis Framework.

On this basis, the Commission approved the scheme under EU State aid rules.

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