State aid: Commission consults Member States on proposal to further expand State aid Temporary Framework to subordinated debt

On 24 April, the European Commission has sent to Member States for consultation a further draft proposal to clarify one aspect of the State aid Temporary Framework adopted on 19 March 2020 to support the economy in the context of the coronavirus outbreak, as first amended on 3 April 2020. The Commission is preparing a second amendment to the Temporary Framework. In particular, as of 9 April the Commission has consulted Member States on the proposal to further extend the scope of the Temporary Framework by enabling Member States to provide recapitalisations to companies in need. This further proposed amendment now sent for consultation would complement the existing Framework as regards loans, by defining the conditions under which Member States could grant subordinated debt on favourable terms to support their economies during the coronavirus outbreak, while ensuring sufficient safeguards to limit the distortion of competition in the EU Internal Market. It follows requests by several Member States in the first consultation. Member States have the possibility to comment on the Commission’s draft proposal.