State aid: Commission approves €38 million Swedish scheme to compensate damages caused by cancelled or postponed cultural events due to coronavirus outbreak

The European Commission has approved under EU State aid rules a SEK 420 million (approximately €38 million) Swedish scheme that compensates companies affected by the coronavirus outbreak for the loss of revenue or additional costs related to the cancellation or postponement of cultural events.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The culture sector is also one of the sectors hard hit by the coronavirus outbreak. This €38 million Swedish scheme enables Sweden to compensate businesses active in the organisation of cultural events for the damages suffered in these difficult circumstances. We will continue to cooperate closely with Member States to find solutions to help companies get through these difficult times, in line with EU State aid rules.”

Sweden notified to the Commission a SEK 420 million (approximately €38 million) aid scheme to compensate operators active in the organisation of cultural events that were negatively affected by the coronavirus outbreak.

Under the scheme, those operators will be entitled to compensation for the damages suffered, in the form of direct grants covering 75% of their loss of revenue or additional costs up to SEK 1 million (approx. €90,600), and 50% for the part of the losses above SEK 1 million. Aid may be granted up to a maximum amount of SEK 10 million (approx. €906,000) per beneficiary.

The compensation provided under the scheme is foreseen for events scheduled between 12 March 2020 and 31 May 2020 that had to be cancelled or postponed.

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 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 Swedish aid scheme will compensate damages that are directly linked to the coronavirus outbreak. It also found that the measure is proportionate, as the foreseen 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.

Background

Financial support from EU or national funds granted to health services or other public services to tackle the coronavirus situation falls outside the scope of State aid control. The same applies to any public financial support given directly to citizens. Similarly, public support measures that are available to all companies such as for example wage subsidies and suspension of payments of corporate and value added taxes or social contributions do not fall under State aid control and do not require the Commission’s approval under EU State aid rules. In all these cases, Member States can act immediately.

When State aid rules are applicable, Member States can design ample aid measures to support specific companies or sectors suffering from the consequences of the coronavirus outbreak in line with the existing EU State aid framework. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities.

In this respect, for example:

•  Member States can compensate specific companies or specific sectors (in the form of schemes) for the damage suffered due and directly caused by exceptional occurrences, such as those caused by the coronavirus outbreak. This is foreseen by Article 107(2)(b)TFEU.
•  State aid rules based on Article 107(3)(c) TFEU enable Member States to help companies cope with liquidity shortages and needing urgent rescue aid.
•  This can be complemented by a variety of additional measures, such as under the de minimis Regulation and the General Block Exemption Regulation, which can also be put in place by Member States immediately, without involvement of the Commission.

In addition to the existing possibilities already foreseen by existing EU State aid rules, on 19 March 2020, the Commission adopted a State aid Temporary Framework to enable Member States to use the full flexibility foreseen under State aid rules to support the economy in the context of the coronavirus outbreak. It was amended on 3 April 2020.

The Temporary Framework, based on Article 107(3)(b) TFEU, recognises that the entire EU economy is experiencing a serious disturbance. To remedy that, the Temporary Framework provides for the following types of aid: (i) Direct grants, selective tax advantages and advance payments; (ii) State guarantees for loans taken by companies from banks; (iii) Subsidised public loans to companies; (iv) Safeguards for banks that channel State aid to the real economy; (v) Public short-term export credit insurance; (vi) Support for coronavirus related research and development (R&D); (vii) Support for the construction and upscaling of testing facilities; (viii) Support for the production of products relevant to tackle the coronavirus outbreak; (ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions; (x) Targeted support in the form of wage subsidies for employees.

The Temporary Framework will be in place until the end of December 2020. With a view to ensuring legal certainty, the Commission will assess before that date if it needs to be extended.

The non-confidential version of the decision will be made available under the case number SA.57501 in the State aid register on the Commission’s competition website. New publications of State aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

More information on the temporary framework and other action the Commission has taken to address the economic impact of the coronavirus pandemic can be found here.