Massive German state aid to virus-hit firms? Others in EU doing as much or more: Vestager

Although Germany makes up for 51% of the total EU state aid approved during the COVID-19 crisis, the government only paid out about 25-27% of the total, says Margrethe Vestager, the EU Commissioner for Competition. [Source: EC - Audiovisual Service]

Concerns that Germany may have an unfair competitive advantage because of billions of euros pumped into its virus-hit companies are not backed by data which show other EU states doing as much if not more for their businesses, Europe’s antitrust chief said.

Since the start of the COVID-19 pandemic last year, European Union Competition Commissioner Margrethe Vestager has approved €3.1 trillion ($3.7 trillion) in state aid to airlines, restaurants, farmers, entertainers and others across the 27-country bloc suffering from the economic hit of COVID-19.

Germany accounts for 51% of the total approved aid to date, trailed by Italy with 14.7%, France at 13.9% and Spain at 4.8%.

That has triggered concerns among some EU countries that German aid may tilt the level playing field, giving companies in Europe’s largest economy an unfair advantage.

Vestager, in an interview with Reuters on Monday, cautioned against reading too much into the approved sums versus the amounts that were actually disbursed by EU governments.

“What we saw when we looked at the funds paid out, we saw quite a different pattern. And this is of course why it is really interesting to see what are the real sums that are being paid out,” Vestager said.

“Germany paid out about 25-27% of the total (approved) aid, France more or less the same, maybe a little bit more actually, then Spain and Italy. So you get a much more nuanced picture when you look at the actual spending,” she said.

EU countries use looser state aid rules to uphold troubled firms

Member states are making use of the new flexibility within EU state rules mainly to guarantee liquidity for all companies heavily affected by the economic fallout of the COVID-19 outbreak. EURACTIV has looked into the different schemes that have been approved so far.

Vestager was referring to the period between mid-March and end June last year when she gave the green light to €2.3 trillion in state aid, of which €354 billion was paid out.

Of this total, France disbursed €123 billion, Germany €96 billion, Spain €65 billion and Italy €26 billion.

In relative terms, the Spanish payout amounted to 5.3% of its gross domestic product, France’s figure was 5.1%, Poland 2.9% and Germany 2.8% in the same period.

“I think it is important because it shows that the worries a lot of people had about a complete fragmentation of the single market, of course it is good to have that worry, but also when you look at the nuance, it is not a given that the worry will actually materialise,” Vestager said.

The European Commission is now seeking the latest data from EU countries on their disbursements to get a more comprehensive picture.

EU to launch review of state aid rules in early 2021

The European Commission will launch a ‘comprehensive review’ of EU competition rules in early 2021, Ursula von der Leyen said on Friday (2 October).

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