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Law360 (April 13, 2020, 8:39 PM EDT ) European Union regulators have approved a €10 billion ($10.9 billion) French program of guarantees to the domestic credit insurance market to help businesses cope with the novel coronavirus pandemic.
On Sunday, the European Commission, the EU's main executive body, approved the program on the grounds that it didn't violate state aid rules governing the bloc.
The guarantee program will ensure that domestic trade credit insurance in France can continue to be issued, EU Competition Commissioner Margrethe Vestager said in a statement.
"This will protect the liquidity needs of French companies and will help them carry on their commercial activities in these difficult times," she said.
Trade credit insurance shields companies that supply goods and services from the risk of nonpayment by their clients. Given the pandemic's economic impact, the risk that insurers wouldn't be willing to issue such insurance had grown, the commission stated. France's plan will ensure that trade credit insurance continues to be available to all companies, avoiding the need for buyers of goods or services to pay in advance, therefore reducing their immediate liquidity needs.
The commission will continue working closely with member countries to ensure that their own support measures can be enacted in a coordinated and effective manner, in line with EU rules, said Vestager, who is also the panel's executive vice president.
The approval followed commission decisions Saturday to grant state-aid clearances to several other countries' plans for countering the outbreak of the virus, which causes the respiratory disease COVID-19. These included a program to defer payment of concession fees by airports in Belgium's Walloon region, a Belgian guarantee scheme mobilizing €50 billion support for companies, a €3.3 billion Romanian program to back small and medium-sized enterprises and a €455 million Swedish plan to provide guarantees to airlines. In addition, the commission on Saturday approved amendments to previously approved German economic support plans amid the pandemic.
Monday was a holiday throughout Europe, so commission and other EU officials weren't available to comment.
The weekend moves added to dozens of plans — totaling at least €152 billion as of Friday — the commission has cleared since mid-March to help EU nations coordinate domestic pandemic responses without running afoul of state aid rules. Typically, a country in the bloc is barred from giving specific businesses or sectors an advantage, such as a tax break or subsidy, unless the competition-distorting effect is outweighed by potential economic benefits.
As of Friday, the commission counted 46 state aid decisions signing off on direct grants, loan guarantees and other measures, totaling 58 projects from 21 EU members and the United Kingdom, in the face of the pandemic. Member countries aren't required to report the total budget for their projects, but of those announced by the commission.
On Thursday, the commission announced a proposal that would let EU members help recapitalize companies severely hurt by the pandemic, a move that would further expand the body's guidelines for allowing aid to virus-combating programs.
--Additional reporting by Bryan Koenig. Editing by John Oudens.
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