Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Airports are among the companies that have been hit particularly hard by the coronavirus outbreak. With this measure, Belgium will contribute to reinforcing Brussels South Charleroi Airport's equity position and help the company face the economic effects of the outbreak. At the same time, the State aid will come with strings attached to limit undue distortions of competition. We continue working in close cooperation with Member States to ensure that national support measures can be put in place in a coordinated and effective way, in line with EU rules.”
The Belgian recapitalisation measure
BSCA is a company managing the Brussels South Charleroi Airport. The airport is the second airport serving the city of Brussels. Belgium (through the Walloon Region) is the majority shareholder in BSCA.
Due to the coronavirus outbreak and the travel restrictions that Belgium and other countries had to impose to limit the spread of the virus, BSCA suffered substantial losses while still facing significant operational costs. As a result, this had a negative impact on the financial situation of the company and on its viability.
Belgium notified to the Commission, under the Temporary Framework, its plans to grant up to €9.8 million for the recapitalisation of the BSCA.
This recapitalisation measure will follow a first capital increase of around €10.8 million to be subscribed to by one of BSCA's private shareholders. Both the private and public shareholders will then subscribe to the further capital increase of €19.2 million pro rata their shareholding participation, with the public shareholders subscribing up to €9.8 million. The total capital increase is therefore expected to amount to up to €30 million.
The Commission found that the recapitalisation measure notified by Belgium is in line with the conditions set out in the Temporary Framework. In particular:
- Conditions on the necessity, appropriateness and size of the intervention: The measure will not exceed the minimum needed to ensure BSCA's viability and will not go beyond restoring its capital position before the coronavirus outbreak;
- Conditions regarding the exit of the State from the capital of the company concerned: In order to demonstrate the exit of the State, BSCA will have to provide an evaluation by an independent entity indicating a positive market value. In the absence of such an evaluation, the BSCA will be subject to the governance conditions under the Temporary Framework until the State has exited in full or at the latest four years after the last capital increase;
- Conditions regarding governance: Until the State has exited in full, or at the latest three years after the last capital increase, BSCA will be subject to an acquisition ban, bans on dividends and share buybacks, other than in relation to the State. Moreover, until at least 75% of the recapitalisation is redeemed, a strict limitation of the remuneration of BSCA's management, including a ban on bonus payments, is applied. These conditions aim at incentivising an exit of the State as soon as the economic situation will allow.
- Prohibition of cross-subsidisation and ban from aggressive commercial expansion: Until the State has exited in full, or at the latest four years after the last capital increase, the company cannot use the aid to support economic activities of integrated companies that were in financial difficulties prior to 31 December 2019, nor use the aid for an aggressive commercial expansion. This is to ensure that BSCA does not unduly benefit from the recapitalisation aid by the State to the detriment of fair competition in the Single Market.
The Commission concluded that the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework. The measure aims at restoring the financial position and liquidity of BSCA in the exceptional situation caused by the coronavirus pandemic, while maintaining the necessary safeguards to limit competition distortions.
On this basis, the Commission approved the measures under EU State aid rules.
Background
The Commission has adopted a 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. The Temporary Framework, as amended on 3 April, 8 May, 29 June, 13 October 2020, 28 January and 18 November 2021, provides for the following types of aid, which can be granted by Member States:
(i) Direct grants, equity injections, selective tax advantages and advance payments of up to €290,000 to a company active in the primary agricultural sector, €345,000 to a company active in the fishery and aquaculture sector and €2.3million to a company active in all other sectors to address its urgent liquidity needs. Member States can also give, up to the nominal value of €2.3 million per company zero-interest loans or guarantees on loans covering 100% of the risk, except in the primary agriculture sector and in the fishery and aquaculture sector, where the limits of €290,000 and €345,000 per company respectively, apply.
(ii) State guarantees for loans taken by companies to ensure banks keep providing loans to the customers who need them. These state guarantees can cover up to 90% of risk on loans to help businesses cover immediate working capital and investment needs.
(iii) Subsidised public loans to companies (senior and subordinated debt) with favourable interest rates to companies. These loans can help businesses cover immediate working capital and investment needs.
(iv) Safeguards for banks that channel State aid to the real economy that such aid is considered as direct aid to the banks' customers, not to the banks themselves, and gives guidance on how to ensure minimal distortion of competition between banks.
(v) Public short-term export credit insurance for all countries, without the need for the Member State in question to demonstrate that the respective country is temporarily “non-marketable”.
(vi) Support for coronavirus related research and development (R&D) to address the current health crisis in the form of direct grants, repayable advances or tax advantages. A bonus may be granted for cross-border cooperation projects between Member States.
(vii) Support for the construction and upscaling of testing facilities to develop and test products (including vaccines, ventilators and protective clothing) useful to tackle the coronavirus outbreak, up to first industrial deployment. This can take the form of direct grants, tax advantages, repayable advances and no-loss guarantees. Companies may benefit from a bonus when their investment is supported by more than one Member State and when the investment is concluded within two months after the granting of the aid.
(viii) Support for the production of products relevant to tackle the coronavirus outbreak in the form of direct grants, tax advantages, repayable advances and no-loss guarantees. Companies may benefit from a bonus when their investment is supported by more than one Member State and when the investment is concluded within two months after the granting of the aid.
(ix) Targeted support in the form of deferral of tax payments and/or suspensions of social security contributions for those sectors, regions or for types of companies that are hit the hardest by the outbreak.
(x) Targeted support in the form of wage subsidies for employeesfor those companies in sectors or regions that have suffered most from the coronavirus outbreak, and would otherwise have had to lay off personnel.
(xi) Targeted recapitalisation aid to non-financial companies, if no other appropriate solution is available. Safeguards are in place to avoid undue distortions of competition in the Single Market: conditions on the necessity, appropriateness and size of intervention; conditions on the State's entry in the capital of companies and remuneration; conditions regarding the exit of the State from the capital of the companies concerned; conditions regarding governance including dividend ban and remuneration caps for senior management; prohibition of cross-subsidisation and acquisition ban and additional measures to limit competition distortions; transparency and reporting requirements.
(xii) Support for uncovered fixed costs for companies facing a decline in turnover during the eligible period of at least 30% compared to the same period of 2019 in the context of the coronavirus outbreak. The support will contribute to a part of the beneficiaries' fixed costs that are not covered by their revenues, up to a maximum amount of €12 million per undertaking.
(xiii) Investment support towards a sustainable recovery to support private investment as a stimulus to overcome an investment gap accumulated in the economy due to the crisis.
(xiv) Solvency support to leverage private funds and make them available for investments in small and medium-sized enterprises (SMEs), including start-ups, and small midcaps.
The Commission will also enable Member States to convert by 30 June 2023 repayable instruments (e.g. guarantees, loans, repayable advances) granted under the Temporary Framework into other forms of aid, such as direct grants, provided the conditions of the Temporary Framework are met.
The Temporary Framework enables Member States to combine all support measures with each other, except for loans and guarantees for the same loan and exceeding the thresholds foreseen by the Temporary Framework. It also enables Member States to combine all support measures granted under the Temporary Framework with existing possibilities to grant de minimis to a company of up to €25,000 over three fiscal years for companies active in the primary agricultural sector, €30,000 over three fiscal years for companies active in the fishery and aquaculture sector and €200,000 over three fiscal years for companies active in all other sectors. At the same time, Member States have to commit to avoid undue cumulation of support measures for the same companies to limit support to meet their actual needs.
Furthermore, the Temporary Framework complements the many other possibilities already available to Member States to mitigate the socio-economic impact of the coronavirus outbreak, in line with EU State aid rules. On 13 March 2020, the Commission adopted a Communication on a Coordinated economic response to the COVID-19 outbreak setting out these possibilities. For example, Member States can make generally applicable changes in favour of businesses (e.g. deferring taxes, or subsidising short-time work across all sectors), which fall outside State Aid rules. They can also grant compensation to companies for damage suffered due to and directly caused by the coronavirus outbreak.
The Temporary Framework will be in place until 30 June 2022, with the exception of investment support towards a sustainable recovery, which will be in place until 31 December 2022, and of solvency support, which will be in place until 31 December 2023. The Commission will continue to monitor closely the developments of the COVID-19 pandemic and other risks to the economic recovery.
The non-confidential version of the decision will be made available under the case number SA.63245 in the State aid register on the Commission's competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition 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.
Tags: European Commission, Brussels South Charleroi Airport SA
