State aid to shipbuilding

State aid to shipbuilding

Over the last few days, press reports have revealed that countries such as Germany and the Netherlands have apparently been diverting public funding to the tune of around EUR 620 million away from their programmes to tackle the pandemic and channelling it into aid for the shipbuilding sector.

Furthermore, it is reported that the Commission has declined to comment on the admissibility of such aid under EU law. It would also appear that the Dutch aid scheme has not actually been examined by Brussels and that the aid granted by Germany to the MV Werften shipbuilding company has similarly eluded EU scrutiny.

On 2 November 2020, Member of the European Parliament (MEP) Nicolás González Casares (S&D) raised a written question to the European Commission asking

1. In view of this, is the Commission investigating or planning to investigate the legality of aid to the shipbuilding sector in these two countries and the admissibility thereof under competition and State aid rules?

2. Will it take official action if the aid or aid programmes are not submitted to it for examination?

3. Will it take measures to ensure that the relaxation of the State aid rules in response to the pandemic does not undermine competition on the internal market, thereby giving certain operators in this sector an unfair advantage? How does it intend to achieve this if, as the above reports appear to indicate, it is declining to take official action?

The Executive Vice-President, Margrethe Vestageron responded on behalf of the European Commission on 30 November stating that “The Commission is not aware of individual aid measures for the shipbuilding sector in Germany and the Netherlands since the start of the COVID-19 outbreak. If aid was granted under schemes approved by the Commission, it is the responsibility of Member States, in this case Germany and the Netherlands, to ensure that they comply with conditions of State aid decisions.”

Vice President Vestageron  continued “In July 2020, the Commission approved under the State aid Temporary Framework the German “Wirtschaftsstabilisierungsfond” providing liquidity and capital support to companies affected by the outbreak and a Dutch scheme to provide support in the form of subsidised interest rates for loans.”

Margrethe Vestageron  highlighted that “The Temporary Framework does not exclude the shipbuilding sector from its scope. Consequently, Member States are entitled to provide State support to the shipbuilding sector, unless they are larger undertakings that were already in financial difficulty (within the meaning of the General Block Exemption Regulation) prior to the COVID-19 outbreak, i.e. on 31 December 2019. The Commission has no indications that the shipyard MV Werften or Dutch shipyards would have been undertakings in difficulty on 31 December 2019 and could therefore not benefit from State aid under the approved schemes.” Concluding she added that “ When approving the measures under the Temporary Framework, the Commission makes sure that the measures are necessary, appropriate and proportionate to remedy a serious disturbance in the economy of the Member State concerned in order to ensure a level playing field in the internal market.”

Photo Credit : https://www.livemint.com/Industry/IeL5m9KfnNkj8hdQwrELGK/State-aid-gives-troubled-shipyards-a-ray-of-hope.html

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