THE LEVEL PLAYING FIELD IN CRISIS MODE 43 3. THE COMMISSION’S FIRST REACTIONS TO THE COVID-19 OUTBREAK FROM A STATE AID ASPECT When the first news about the appearance of COVID-19 hit the media across Europe in January-February 2020, nobody could predict how severe the situation would be within a couple of weeks. The situation escalated quickly and Member States introduced curfew measures. The European Commission as the guardian of the European Treaties and the authority responsible for controlling the Member States’ State aid policy has issued its first general document about how to handle the COVID-19 outbreak on 13 March33. As the Commission always strives to keep the spending of State aid within limits, it is not surprising that in this communication the Commission put emphasis on the then existing State aid legal framework, and explained how those rules can be best used to fight against the impact of COVID-19. It acknowledged that the effects on tourism and related economic activities (event sectors, catering etc.) are unprecedented and coordinated reaction is needed both at EU and at international level. The pressure and negative impact on the banking sector as well as the expected consequences on credit flows and debt services were also mentioned in the document. The communication explained how different the economic impact of COVID-19 is34 from, for instance, the previous economic crisis, but it was very optimistic by saying that “[T]he shock will be temporary, but we need to work together to ensure that it is as short and as limited as possible, and that it does not create permanent damages to our economies.”. This was the reason why the Commission did not propose to modify State aid rules at that point of time35. Rather, the Commission proposed in the Communication to apply more flexibility in the activity of European development institutions and the disbursing of European Funds. This sounds a bit controversial as the Commission was aware of the fact that “[g]iven the limited size of the EU budget, the main fiscal response to the Coronavirus will come from Member States’ national budgets.” Using public funds of the Member States means that national measures would most probably constitute State aid in the sense of Article 107(1) TFEU. 33 Source: https://ec.europa.eu/info/sites/info/files/communication-coordinated-economic-responsecovid19-march-2020_en.pdf (accessed on 10 March 2021). 34 Causing demand and supply side socks and liquidity shortage at the same side. 35 The Commission, as the independent competition authority, changes state aid rules only if there is a real need for it, or structural changes at the market require a different approach.
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