The arrival of the recovery funds "NextGenerationEU" and the observance of State Aid rules

On 12 February 2021, the European Commission approved Regulation (EU) 2021/241, establishing the Recovery and Resilience Facility (“RRF”), the key component of the recovery instrument NextGenerationEU. This is the most ambitious economic stimulus plan in the history of the European Union, with around €750 billion aimed to create a “greener, more digital and more resilient” Europe. 

During the second quarter of this year, Member States (“MS”) have designed their own Recovery plans that have later been approved by the Commission. In order to assist MS in the execution of these funds, several templates have already been published regarding different sectors in relation to the Commission’s Annual Sustainable Growth Strategy for 2021. Significant amounts of public money translate into the need to carefully observe compliance with State aid rules when supporting projects and undertakings who seek to benefit from this new scheme. 

The recovery instruments 

The NextGenerationEU is the Star Trek-based name of the recovery instrument created by the European Union. On purpose or not, the sci-fi movie reference is fully pertinent, as its objective is to help the recovery of MS’s damaged economies after the Covid-19 pandemic. The RRF is the centrepiece of this facility, providing up to €672.5 billion, €312.5 billion of which will be grants and €360 billion will take the form of loans.

Nevertheless, not just any project will be able to qualify to benefit from these aids. Only those aligned with the objectives of the Recovery plans can expect to profit from them. The RRF provides a classification of the European flagship areas for the investment: 

  • Power up: clean technologies and renewables.

  • Renovate: energy efficiency of buildings.

  • Recharge and refuel: sustainable transport and charging stations.

  • Connect: roll-out of rapid broadband services.

  • Modernise: digitalisation of public administration.

  • Scale up: data cloud and sustainable processors.

  • Reskill and Upskill: education and training to support digital skills.

It is worth noting that all recovery and resilience national plans need to include at least 37% for climate investment and 20% for digital transition. 

Competition law considerations

A package of public economic assistance to enterprises always raises the question of its compatibility with State aid law. Regulation (EU) 2021/241 clearly states that such rules are to be respected when giving the aids. 

In order to facilitate the correct allocation of the funds, eleven guiding templates have been published by the European Commission, classified in relation with the European flagship areas for investment. All eleven templates follow a similar structure, giving sector-specific information on

  • when there is no State Aid and therefore no need to notify the Commission;

  • when there is State Aid, but no notification is required;

  • and when there is State Aid and notification is mandatory.
Beneficiary enterprises submitting projects will certainly need assistance complying with requirements under competition law so that funds can be allocated to their projects. Beware that not complying with the obligation of notifying the Commission when it is mandatory to do so may result in the MS (and consequently the beneficiary undertaking) being compelled to return the aid plus interests. 

For more information please contact José Rivas and Ana Manzaneque.


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