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In response to the ongoing coronavirus crisis, and following a similar announcement by the European Commission, on 17 March the Serbian Commission for State Aid Control ("Commission") published the Notice on the Application of the Rules for Granting State Aid in the Emerging COVID-19 Situation ("Notice").
The Notice clarifies the applicable legal framework on measures and instruments available to grantors of state aid to alleviate the current crisis. The Commission, referring largely to the recent EU case law, specifically lists the following available measures:
The Commission emphasises that: (i) measures aimed at compensating the damage caused by natural disasters or other extraordinary situations, including aid to specifically affected sectors such as aviation and hospitality, represent compatible aid; and (ii) measures aimed at removing the serious disruption to the national economy can also be compatible; and (iii) rescue and restructuring measures are also possible in certain cases. A number of instruments to implement these measures (e.g. subsidies, favourable loans, tax relief measures) are in principle available to grantors.
However, caution must be exercised regardless of the crisis. The Commission warns that only necessary and proportionate aid would be compatible, while any excess aid may be subject to ex-post state aid control and recovery.
The Notice demonstrates that the Commission will closely follow the European Commission's approach to mitigating the negative impact of the COVID-19 crisis. The Commission also announced that it is ready to provide assistance to state aid grantors in the preparation of quick and appropriate measures to tackle upcoming crises. This is a positive signal for both the Serbian Government and market players, since it clearly demonstrates that the newly established Commission has the capacity to respond proactively to ensure that public spending is used in the most appropriate and legal manner, without causing harm to competition on the market.
Market players should already assess their concerns and potential needs and take adequate steps to secure that their interests are protected. This is especially important for undertakings, particularly SMEs, in heavily affected industries, such as hospitality, transport, banking and insurance, etc. There are various models and measures for how business could be supported in these kinds of events, so it is import to closely monitor the actions of the state authorities and to engage in dialogue with them so that the best possible measures are chosen.
authors: Zoran Šoljaga and Jelena Obradović