WIREDGOV

The European Commission has approved, under the EU state aid rules, a €700 million French scheme to support certain retailers and services affected by the coronavirus pandemic and restrictive measures taken by the French government to limit the spread of the virus.

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

"Closures to limit the spread of the pandemic have resulted in very significant losses in turnover for some retailers and services. This EUR 700 million scheme will allow France to partially compensate those companies for the losses incurred. We are continuing to work in close cooperation with Member States to find workable solutions to mitigate the economic impact of the coronavirus pandemic, in line with EU rules."

The French scheme

France notified the Commission of a €700 million scheme to compensate certain retailers and services for losses incurred as a result of the French government's administrative closure measures to limit the spread of the coronavirus.

As a direct result of those restrictive measures, the turnover of the companies concerned declined, whereas their costs, particularly rent and other fixed costs, could not be adjusted downwards.

The scheme will be open to certain retail outlets (furniture, clothing, IT, sports goods, opticians, jewellers) and some services (repair of personal and household goods, hairdressing and beauty care) which were required to close down for periods between February and May 2021.

Eligible beneficiaries under the scheme will be able to obtain compensation in the form of direct grants for an amount not exceeding the amount of rent paid during the closure periods, minus, where applicable, any revenue from an increase in online sales and other forms of compensation, such as amounts paid out by insurance companies.

With a view to avoiding overcompensation for losses incurred, the scheme also provides for a compensation cap for: (i) companies which were already recording losses in 2019; (ii) companies with a high proportion of online sales; and (iii) companies receiving more than EUR 4 million in aid per month.

The Commission assessed the measure under Article 107(2)(b) TFEU, which authorises Member States to compensate specific companies or sectors for damage directly caused by exceptional occurrences like the coronavirus pandemic.

The Commission took the view that the French aid scheme will compensate for losses that are directly linked to the coronavirus pandemic. It also found that the measure was proportionate in so far as the compensation envisaged did not exceed the amount necessary to make good the losses, taking into account the cap provided for in the specific cases referred to above.

The Commission therefore concluded that the scheme is in line with the EU State aid rules.

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