European Commission extends business subsidies

Whatever it says, the European Commission ended up partially winning the case of the Member States, first and foremost France and Germany, who asked to be able to continue to help their businesses under more flexible conditions than what European competition law provides.

In March 2022, following the outbreak of war in Ukraine and the surge in energy prices, the community executive adopted a temporary state aid framework which allows the Twenty-Seven to financially support their companies beyond what is normally authorized, without being guilty of providing them with illegal state aid.

In this context, measures aimed at helping businesses, both SMEs and industrialists, affected by high energy prices, were to end on December 31. On Monday, November 20, the Commission finally announced that they would, in part, remain in force for six more months, until June 30, 2024. Cash support in the form of guarantees and subsidized loans, as well as financial incentives for companies that reduce their electricity consumption are not affected. In these two cases, the Twenty-Seven will have to return, from 1er January 2024, to pre-crisis practices.

Aid intended to support the transition to a carbon-free economy, also provided for in the emergency system, will remain, as planned, authorized until December 31, 2025. Berlin, which wanted to have two more years, was not heard . But it is very likely that Chancellor Olaf Scholz will return to the charge.

Fear of new price tensions

The Commission announced in September that it would stick to the initial timetable for the entire temporary state aid framework, arguing that the situation had significantly improved since Moscow turned off the tap. gas to Europeans. Energy prices have in fact stabilized and, unlike summer 2022, no one today imagines that the European Union will suffer supply disruptions.

Read also: Article reserved for our subscribers In France, from fear of shortage to overflow of gas

Under pressure from Berlin and Paris, who asked it to extend by one year the possibility of helping companies affected by energy inflation, the Commission nevertheless agreed, on November 6, to grant them three more months before finally to make its decision, Monday, on the deadline of June 30, 2024.

But the stagnation of the war in Ukraine, which seems likely to last, and the resurgence of the Israeli-Palestinian conflict, since the Hamas terrorist attacks on October 7, raise fears of new tensions on energy prices, argues the Commission. What’s more, adds a senior European official, “companies will pay their winter energy bill after March, which justifies extending the existing framework until June”.

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