State aid: Ukrainian crisis and State aid to hauliers

On 27 April 2022, the European Commission approved Irish State aid worth EUR18m to support the road haulage sector given the Ukrainian crisis. Ukrainian Temporary Framework The European Commission’s approval of State aid used to be somewhat exceptional.

Since the financial crisis, Covid-19 and Ukraine, it has become much more common. The European Commission adopted a Temporary Crisis Framework to deal with the Ukrainian crisis. The Framework recognised that the EU economy is experiencing a serious disturbance.

The Framework was adopted on the basis of Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU). The Temporary Crisis Framework provides for the following types of aid, which may be granted by Member States:

  • Limited amounts of aid, in any form, of up to EUR35,000 for businesses affected by the crisis active in the agriculture, fisheries and aquaculture sectors and of up to EUR400,000 for each business affected by the crisis active in all other sectors
  • Liquidity support in form of State guarantees and subsidised loans
  • Aid to compensate for high energy prices. The aid, which can be granted in any form, will partially compensate companies, in particular intensive energy users, for additional costs due to exceptional gas and electricity price increases.

The overall aid for each beneficiary may not exceed 30% of the eligible costs, up to a maximum of EUR2m at any given point in time.

When the business incurs operating losses, further aid may be necessary to ensure the continuation of an economic activity. Therefore, for energy-intensive users, the aid intensities are higher and Member States may grant aid exceeding these ceilings, up to EUR25m, and for companies active in particularly affected sectors and sub-sectors up to EUR50m. Given the risk of inappropriate aid being granted in a crisis, the Temporary Crisis Framework has a number of safeguards:

  • Proportional methodology, requiring a link between the amount of aid that may be granted to businesses and the scale of their economic activity and exposure to the economic effects of the crisis
  • Eligibility conditions, for example defining energy intensive users as businesses for which the purchase of energy products amount to at least 3% of their production value
  • In terms of sustainability requirements, Member States are invited to consider, in a non-discriminatory way, setting up requirements related to environmental protection or security of supply when granting aid for additional costs due to exceptionally high gas and electricity prices.

The Temporary Crisis Framework is in place until 31 December 2022.

The Commission may extend it. Moreover, during its period of application, the Commission will keep the content and scope of the Framework under review in the light of developments regarding the energy markets, other input markets and the general economic situation. Irish Measure

Ireland sought approval for an EUR18m scheme to support the road haulage sector given the Ukrainian crisis. The Commission described the Irish measure as involving: “The purpose of the scheme is to provide liquidity support to road haulage operators affected by the fuel prices increase caused by the current geopolitical crisis and the related sanctions. The measure aims at mitigating the risk of insolvency for these businesses while ensuring the uninterrupted movement of goods by road.

The measure will be open to road haulage operators of all sizes with a valid operating licence in Ireland that are affected by the current crisis. Under the scheme, the beneficiaries will be entitled to receive limited amounts of aid in the form of direct grants.” European Commission Analysis of the Irish Measure

The Commission found that the Irish scheme complied with the conditions set out in the Temporary Crisis Framework. In particular, the aid:

  • will not exceed EUR400,000 for each beneficiary
  • will be granted no later than 31 December 2022.

The Commission concluded that the Irish scheme 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 Crisis Framework. Commissioner Vestager’s Reaction

European Commission Competition Commissioner, Margrethe Vestager, said: “this scheme will enable Ireland to support the road haulage sector affected by the fuel prices increase caused by the current geopolitical crisis.” Conclusion The combination of Ukraine and high energy prices crises means that it was not surprising that the haulage sector sought support from the Irish exchequer.

The European Commission’s approval of the Irish scheme is in line with other approvals by the European Commission.