Air France KLM : COVID-19 Key EU Developments, Policy & Regulatory Update No. 49
June 09, 2021 at 03:08 pm
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This regular alert covers key regulatory EU developments related to the COVID-19 situation. It does not purport to provide an exhaustive overview of developments and contains no analysis or opinion.
LATEST KEY DEVELOPMENTS
Competition & State Aid
EU General Court annuls COVID-19-related State aid decisions for inadequate reasoning
European Commission receives Recovery and Resilience Plans from 23 Member States
EU approves new and amended Member State measures to support the economy
Trade / Export Controls
European Parliament's Committee on International Trade adopts Report on trade-related aspects and implications of COVID-19
Medicines and Medical Devices
European Commission announces first Member States to issue EU Digital COVID Certificate
Cybersecurity, Privacy & Data Protection
European Commission announces launch of technical backbone of EU Digital COVID Certificate
COMPETITION & STATE AID
State Aid
EU General Court annuls COVID-19- related State aid
decisions for inadequate reasoning (see
here and
here)
On 19 May 2021, the General Court ("GC") annulled two
decisions of the European Commission, following Ryanair's
challenges of State aid granted to respectively TAP (Portugal's
national airline) and KLM (subsidiary of the Air France-KLM holding
company).
In June and July 2020, TAP and KLM received government cash
injections through Portuguese and Dutch aid measures of
respectively EUR 1.2 billion and EUR 3.4 billion to address
immediate liquidity needs amid the COVID-19 outbreak
In annulling the two decisions, the GC set out its view that the
Commission had failed to provide adequate reasons for approving the
aid measures:
Regarding the TAP decision, in the GC's opinion, in
particular, the Commission had merely provided details on the
beneficiary's financial situation and the difficulties caused
by the COVID-19 pandemic, rather than conducting the requisite
assessment (e.g., whether TAP belongs to a group and, if so,
whether the difficulties faced by TAP were intrinsic and not the
result of an arbitrary allocation of costs within the group and
whether those difficulties were too serious to be dealt with by the
group itself).
Regarding the KLM decision, in the GC's opinion, in
particular, the Commission had not adequately set out the elements
necessary for assessing a complex situation, featuring the parallel
grant of two State aid measures to two subsidiaries of the same
holding company (in May 2020, Air France, another subsidiary of the
same Air France-KLM holding company, had already received €7
billion in State aid). Rather, the Commission simply concluded that
KLM was the beneficiary of the contested aid measure and that the
Dutch authorities had confirmed that the financing granted to KLM
would not be used by Air France.
Nevertheless, the GC temporarily suspended the effects of the
annulment of the two decisions pending the adoption of new
Commission decisions.
The GC deemed that in light of the serious disturbances to the
economy caused by the COVID-19 pandemic, calling into question such
aid would have particularly damaging consequences for the
Portuguese and Dutch economies and air transport services.
On the same day, the GC dismissed another Ryanair challenge to a
EUR 10 billion Spanish solvency support fund for companies
experiencing temporary difficulties due to the pandemic. The GC
rejected all of Ryanair's claims, indicating its view that the
economic support granted by the Spanish government constitutes a
State aid scheme that is proportionate and non-discriminatory (see
here).
Since 1 May 2020, Ryanair has brought a total of 21 appeals
against Commission decisions authorizing State aid granted by
Member States to the benefit of national air carriers.
On 17 February 2021 and 14 April 2021, the GC rejected five of
those appeals. On 10 June 2020 and 13 July 2020, Ryanair appealed
the first two GC rulings before the European Court of Justice.
European Commission receives Recovery and Resilience
Plans from 23 Member States (see
here)
As of 2 June 2021, the Commission has received Recovery and
Resilience Plans from an additional 5 Member States, for a total of
23 Member States (see also Jones Day COVID-19 Update No. 46 of 5
May 2021).
These Member State plans set out the reforms and public
investment projects foreseen for implementation with the support of
the Recovery and Resilience Facility (RRF), the key component of
NextGenerationEU, the EU's plan for rebounding from the
COVID-19 crisis. The RRF will provide up to €672.5 billion to
finance reforms and investments (i.e., grants totaling €312.5
billion and €360 billion in loans).
The latest Member State plans request the following total
amounts under the RRF:
Czechia (€7.1 billion)
Finland (€2.1 billion)
Ireland (€1 billion)
Romania (€29.3 billion)
Sweden (€3.2 billion)
18 Member State plans had already requested the following total
amounts under the RRF: Austria (€4.5 billion); Belgium
(€5.9 billion); Croatia (€6.4 billion); Cyprus (€1.2
billion); Denmark (€1.6 billion); France (€40.9 billion);
Germany (€27.9 billion); Greece (€30.5 billion); Hungary
(€7.2 billion); Italy (€191.5 billion); Latvia (€1.8
billion); Lithuania (€2.2 billion); Luxembourg (€93
million); Poland (€23.9 billion); Portugal (€16.6
billion), Slovakia (€6.6 billion); Slovenia (€2.5
billion); and Spain (€72 billion).
Commission assessment of plans. The Commission
will assess the Member State plans within the next two months.
The RRF guidelines, notably, make clear that the investment
projects included in Member State recovery plans must comply with
State aid rules. The Commission published practical guidance for
swift treatment of projects under State aid rules, as well as a
number of sector-specific templates to help Member States design
and prepare the State aid elements of their recovery plans (Jones
Day Commentary, "EU Member State COVID-19 Recovery Plans Must
Comply with State Aid Rules," March 2021, see
here).
In assessing the Member State plans, the Commission will also,
in particular, determine whether the plans dedicate at least 37% of
expenditure to investments and reforms that pursue climate
objectives and 20% to the digital transition.
Based on the Commission's proposals, the Council will then
have four weeks to approve the Member State plans.
The Commission will continue to closely engage with the
remaining Member States to deliver robust national recovery
plans
EU approves new and amended Member State measures to
support the economy (see
here and
here)
Since the onset of the coronavirus outbreak, the European
Commission has adopted a significant number of State aid measures
under Article 107(2)b, Article 107(3)b and under the Temporary
Framework.
The most recent measures adopted to support the economy and
companies affected by coronavirus outbreak include:
€8.4 million Bulgarian scheme to support tour operators
affected by the coronavirus outbreak
€9.35 million Latvian scheme to support operators in the
poultry sector affected by the coronavirus outbreak
€5.3 million Estonian scheme to support film producers and
distributors and cinemas in the context of the coronavirus
outbreak
Modifications to Maltese wage subsidies scheme to support
companies affected by the coronavirus outbreak, including an
increase in budget to €750 million
€6 million Slovenian scheme to support beef cattle
breeders affected by the coronavirus outbreak
€25 million Irish scheme to support commercial venues,
producers and promoters of live performances in the context of the
coronavirus outbreak
€20 million Italian scheme to support companies active in
road passenger transport affected by the coronavirus outbreak
€7.9 million Czech scheme to support workers and companies
in the audiovisual sector in the context of the coronavirus
outbreak
€10 billion German scheme to compensate companies for
damages suffered due to the coronavirus outbreak
Up to €31 million scheme to support mink-fur animal
farmers in the context of the coronavirus outbreak
TRADE / EXPORT CONTROLS
European Parliament's Committee on International
Trade adopts Report on trade-related aspects and implications of
COVID-19 (see
here)
On 25 May 2021, the European Parliament's Committee on
International Trade ("INTA") adopted its own-initiative
Report on trade-related aspects and implications of COVID-19, with
29 votes in favor, 3 against, and 9 abstentions.
The Report is one facet of INTA's assessment of the role of
trade as a tool for sustainable recovery and for attaining open
strategic autonomy under the European Commission's
previously-announced Trade Policy Review (see Jones Day COVID-19
Update No. 43 of 7 April 2021).
Towards tackling health emergencies, the Report calls for
international cooperation, rather than competition or
protectionism. In this respect, the Report urges the lifting of
export restrictions by US, the UK, China and India, while advising
that the EU's own temporary export authorization scheme should
shift towards serving as a transparency tool.
The Report also advocates, as supported by some INTA members,
that the EU should engage with the World Trade Organisation
("WTO") regarding a temporary waiver from the
intellectual property rights protection for COVID-19 vaccines (see
Jones Day COVID-19 Update No. 48 of 26 May 2021).
On supply chains, the Report highlights that the pandemic
revealed vulnerabilities and global dependencies. Calling for
diversified, fair, resilient and sustainable EU supply chains, the
Report supports measures such as mandatory due diligence across
supply chains, as well stronger trade defence tools
During the 5-8 July 2021 plenary session, the Parliament is
expected to vote on the Report.
MEDICINES AND MEDICAL DEVICES
European Commission announces first Member States to
issue EU Digital COVID Certificate (see
here)
On 1 June 2021, the Commission announced that seven Member
States (Bulgaria, Czechia, Denmark, Germany, Greece, Croatia, and
Poland) had decided to start issuing the first EU Digital COVID
Certificates. This follows the launch on the same day of the
so-called "EU Gateway," the technical backbone of the EU
Digital COVID Certificate that will ensure the authenticity of
certificates. The seven Member States above-mentioned have
successfully tested and connected to the Gateway.
The Certificate, which will facilitate safe free movement of
citizens in the EU during the COVID-19 pandemic, will serve as
proof that a person: (i) is vaccinated against COVID-19; (ii)
received a negative test result; or (iii) recovered from COVID-19
(see also Jones Day COVID-19 Update No. 48 of 26 May 2021).
The Regulation governing the COVID Certificate will apply from 1
July 2021. Still, all Member States can now start using the system
on a voluntary basis, following successful testing of the Gateway
(23 Member States thus far) and where ready to issue and verify
certificates. An overview of the status of Member States on Gateway
testing and issuance of the COVID certificates is available
here.
For further details on the Digital COVID Certificate, please
see below Section on Cybersecurity
CYBERSECURITY, PRIVACY & DATA PROTECTION
European Commission announces launch of technical
backbone of EU Digital COVID Certificate (see
here)
On 1 June 2021, the Commission announced the launch of the
so-called "EU Gateway," the technical backbone of the EU
Digital COVID Certificate that will ensure the authenticity of
certificates (see also Jones Day COVID-19 Update No. 48 of 26 May
2021).
The EU Gateway enables verification of the digital signatures
contained in the QR codes of all COVID certificates, without the
processing of personal data.
Through the Gateway, the signature keys needed for such
verification are stored on servers at national level. These keys
can be accessed by national verification apps or systems all across
the EU. Personal data encoded in the certificate will not pass
through the Gateway, as this is unnecessary for verifying the
digital signature.
The Regulation will apply as from 1 July 2021 with a six week
phasing-in period for the issuance of the COVID certificates for
Member States that need additional time.
For further details on the Digital COVID Certificate, please
see above Section on Medicines.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Mr Renato Antonini
Jones Day
Rue de la Régence
Regentschapsstraat 4
Brussels
1000
BELGIUM
Tel: 2165863939
Fax: 2165790212
E-mail: info@JonesDay.com
URL: www.jonesday.com
Air France-KLM is one of the world's leading airline companies. Net sales break down by activity as follows:
- passenger and freight transportation (85.4%): 72.1 million people and 0.9 Mt of merchandise transported in 2023;
- low-cost passenger transportation (8.8%; Transavia): 21.5 million people transported;
- maintenance services (5.7%);
- other (0.1%).
At the end of 2023, the group had a fleet of 551 aircraft (including 271 owned and 280 leased) divided between the domestic fleets of Air France (258), KLM (176) and Transavia (117).