European Commission approves €5 billion French “umbrella” scheme to support research, development, testing infrastructures and production of coronavirus relevant products

New Delhi: The European Commission has approved a €5 billion French “umbrella” scheme to support research and development, testing and upscaling infrastructures and production of coronavirus relevant products. The scheme was approved under the State aid Temporary Framework adopted by the Commission on 19 March 2020, as amended on 3 April and 8 May 2020.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “This €5 billion French “umbrella” scheme will support research and development, and investments in testing and upscaling infrastructures and in the production of coronavirus relevant products, such as medicines, vaccines, and protective clothing. It will contribute to the European effort in the fight against the coronavirus outbreak. We continue to work closely with all Member States to find solutions to tackle the outbreak, in line with EU rules.”

The French support measure

France notified to the Commission under the Temporary Framework an “umbrella” scheme (“régime cadre temporaire”) supporting (i) coronavirus relevant research and development (“R&D”) projects; (ii) construction and upgrade of testing facilities; and (iii) investments in production of coronavirus relevant products and technologies.

The aim of the scheme is to stimulate the R&D into medicinal products such as vaccines, medicaments, hospital and medical equipment (including ventilators), and protective clothing and equipment. The measure will also enhance the rapid construction of production facilities for these products, as well as the provision of necessary raw materials and ingredients.

The scheme has a total estimated budget of €5 billion, possibly co-funded by EU structural funds. The public support will take the form of direct grants, repayable advances and tax advantages. Guarantees to cover losses may also be granted either in addition to a direct grant, tax advantage or repayable advance, or as an independent aid measure.

Furthermore, undertakings are encouraged to cooperate with each other or with research organisations by benefitting from a 15% bonus when the R&D research project is carried out in cross-border collaboration with research organisations or other undertakings, or when the research project is supported by more than one Member State.

The measure allows aid to be granted by French authorities at all levels, including the government, regional and local authorities. The scheme is open to all enterprises capable to carry out such activities in all sectors.

The Commission found that the French scheme is in line with the conditions set out in the Temporary Framework. In particular, the aid will cover a significant share of the R&D project costs, as well as of the investment costs necessary for deploying testing infrastructures or for setting up new production facilities. Furthermore, under the scheme, investment projects will have to be completed within six months after the date of granting of the aid.

The Commission concluded that the French measure is necessary, appropriate and proportionate to fight the health crisis and contribute to address the common European production needs in the current crisis, in line with Article 107(3)(c) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the measures under EU State aid rules.