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Industrial Policy

EU allows more state aid to companies hurt by Ukraine crisis

The European Commission adopted new state-aid rules allowing EU countries to support businesses harmed by the crisis in Ukraine.

The Commission created a temporary crisis framework, similar to one for the coronavirus pandemic, to complement its normal state-aid rules.

As part of the framework, companies will be able to grant up to €400,000 to businesses affected by the crisis, or the sanctions and countersanctions, the Commission said. For agriculture, fisheries and aquaculture companies, that amount will be limited to €35,000.

EU countries will also be allowed to ensure sufficient liquidity is available to businesses through state guarantees on bank loans and subsidized interest rates on public and private loans.

“We need to mitigate the economic impact of this war and to support severely impacted companies and sectors,” Commission Executive Vice President Margrethe Vestager said in a statement. “And we need to act in a coordinated manner.”

Companies, in particular energy-intensive users, can further be compensated for additional costs incurred due to exceptionally high gas and electricity prices. The overall aid per beneficiary cannot exceed 30 percent of the eligible costs, up to a maximum of €2 million at any given point in time, the Commission specified.

When the company incurs operating losses, further aid can be allowed — “up to €25 million for energy-intensive users, and up to €50 million for companies active in specific sectors [including aluminum and other metals and basic chemicals],” according to the Commission.

The framework will also contain safeguards to preserve the EU level playing field, including on proportionality and sustainability.

The framework will be in place until the end of 2022. The Commission will assess before that date if it needs to be extended.

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