EC Approved French Covid Support


On Sep. 14, EC approved €3bn aid scheme for firms affected by Covid.


  • EC approved French plans to set up a €3bn fund that will invest through debt, hybrid and equity instruments in companies affected by the coronavirus outbreak.
  • The scheme was approved under the EC's State aid temporary framework.
  • Follows EC Mar. 2020 proposed temporary Covid State aid framework, see #73925.
  • French Aid Scheme
  • France notified the support measure to the EC under the temporary framework.
  • Scheme will be implemented through a fund, which goes under the name transition fund for enterprises affected by the COVID-19 outbreak, with a budget of €3bn.
  • The aid will take the form of subordinated and participating loans; and recapitalization measures, e.g. hybrid capital instruments and preferred shares without voting rights.
  • Between 50 and 100 companies are expected to benefit from this scheme.
  • EC Assessment
  • The EC found the measures are in line with conditions set out in temporary framework.
  • The EC concluded the measure is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of France, in line with Article 107(3)(b) TFEU.
  • Re recapitalization measures, support is available to firms only if needed to maintain operations, no other appropriate solution, and it is in common interest to intervene.
  • Support is limited to the amount necessary to ensure the viability of beneficiaries and to restore their capital position to before the coronavirus outbreak.
  • The scheme provides adequate remuneration for the State, incentivizes beneficiaries and/or their owners to repay the support as early as possible, including dividend ban.
  • Safeguards are in place to ensure beneficiaries do not unduly benefit from the recapitalization aid by the State to detriment of fair competition in the Single Market.
  • Such as an acquisition ban to avoid aggressive commercial expansion; and aid to a firm above the €250mn threshold has to be notified separately for assessment.
  • Regarding aid in the form of subordinated loans, and given that under the scheme only subordinated loans with a volume exceeding relevant limits set out in temporary framework will be provided, aid must comply with above conditions for recapitalization.
  • Executive Vice-President Statement
  • Executive Vice-President Margrethe Vestager, in charge of competition policy, said the scheme enables France to support firms affected by Covid by easing access to finance.
  • Effectiveness
  • Support will be granted no later than Dec. 31, 2021, and only companies that were not considered to be in financial difficulty already on Dec. 31, 2019 are eligible for the aid.

Regulators EU CMSN
Entity Types B/D; Bank; Corp; Ins
Reference PR, 9/14/2021; TFEU; COVID-19
Functions BCS; Financial; Legal; Risk
Countries European Union
Products Banking; Corporate; Equity; Insurance; Insurance-Property; Loan
Regions EMEA
Rule Type Guidance
Rule Date 9/14/2021
Effective Date 12/31/2021
Rule Id 115858
Linked to Rule :73925
Reg. Last Update 9/14/2021
Report Section EU

Last substantive update on 09/15/2021