The European Commission has approved, according to EU state aid rules, a Danish scheme of approximately 1.74 billion euros (DKK 13 billion) to compensate producers of farms and mink-related products for measures taken in the context of a coronavirus outbreak. This follows the receipt of full notification from Denmark on 30 March 2021.
Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The Danish government has taken far-reaching measures to prevent the spread of new variants of coronavirus and new epidemics among minks, posing a serious threat to the health of citizens in Denmark and beyond. The DKK 13n scheme, approved today (April 8), will allow Denmark to compensate farmers and related companies for the damage incurred in this context. We continue to work closely with Member States to ensure that state support measures can be put in place as quickly and efficiently as possible, in line with EU rules. “
Danish support measures
Following the discovery and rapid spread of several mutated variants of the coronavirus among minks in Denmark, in early November 2020, the Danish authorities announced their intention to eliminate all minks in Denmark. To avoid a similar situation that developed in 2021, the government also issued a ban on keeping burrows until early 2022.
On 30 March 2021, Denmark sent the Commission a full notification of the Danish compensation scheme for farmers and mink-related products in this context, given the significant economic impact and job loss caused by these extraordinary measures. The scheme consists of two measures:
- The first measure, with a budget of approximately 1.2 billion euros (DKK 9 billion), will compensate mink farmers for a temporary ban on mink farming.
- The second measure, with a budget of approximately 538 million euros (DKK 4 billion), will support mink breeders and mink-linked companies willing to cede their production capacity to the state.
Support under both measures will take the form of direct grants.
Fee for temporary bans on mink farmers
Direct aid to compensate for the ban on mink farming will cover all fixed costs for those kuna breeders who will temporarily close production until the ban on mink farming is lifted on 1 January 2022. This period may be extended by one year.
The Commission assessed the measure under Article 107 (2) (b) Treaty on the Functioning of the European Union (TFEU), which allows the Commission to approve State aid measures granted by Member States to compensate certain companies or certain sectors directly for emergencies.
The Commission considers that the outbreak of coronavirus qualifies as such an exceptional occurrence, as it is an extraordinary, unpredictable event that has a significant economic impact. As a result, exceptional interventions by Member States are justified in order to avoid the emergence of new variants of coronavirus and to prevent new epidemics, such as a temporary ban on mink farming, and compensation for the damage associated with these interventions.
The Commission has determined that the Danish measure will compensate for the damage suffered by mink farmers directly related to the coronavirus outbreak, as the ban on keeping mink until early 2022 can be considered as damage directly linked to the exceptional occurrence.
The Commission also found that the measure was proportionate, as an independent assessment commission, appointed by the Danish Veterinary and Food Administration and reporting directly to them, would assess the required fixed and maintenance costs on certain farms during the closure period, including inspections. on the spot. This will ensure that the amount of compensation only covers the actual damage suffered by farmers.
Support to mink farmers and related companies that will transfer their production capacities to the state
This scheme will compensate kuna farmers who will cede their production capacities to the Danish state in the long run, with the aim of restructuring an industry prone to new coronavirus variants that could jeopardize the ongoing crisis and disruption of the Danish economy. It will be calculated on the basis of two total losses of kuna breeder losses: i) loss of income for the ten-year budget period; and ii) the residual value of the share capital of mink farmers (buildings, machinery, etc.).
Mink-related companies that rely heavily on mink production will also be eligible for support under this measure (specialized food and food centers, clothing factories, Copenhagen fur auctions, etc.). The evaluation commission will make them meet a number of conditions, namely that at least 50% of the company’s turnover in the period 2017-2019 is related to the Danish mink industry and that the business cannot directly convert production into other activities. The aid will be equal to the value of the part of the business that cannot directly convert its production into other activities.
The precondition for receiving support under this measure is that the state takes over the property (all production equipment, stables, machines, etc.), which will no longer be available to farmers, ie related companies.
The Commission has assessed the measure in accordance with EU state aid rules, in particular Article 107 (3) (b) TFEU, which allows the Commission to approve State aid measures implemented by Member States to remedy serious disturbances in their economies. The Commission has found that the Danish program is in line with the principles set out in the EU Treaty and is well aimed at tackling serious disturbances in the Danish economy.
The Commission has determined that the Danish measure will provide support directly linked to the need to address the serious disturbances in the Danish economy and protect European and global efforts towards an end to the pandemic also thanks to an effective vaccine, restructuring industries prone to new coronavirus variants. It also found that the measure was proportionate, based on a clear calculation method and safeguards to ensure that the aid did not exceed what was needed. The aid calculations are specifically tailored to the mink farming sector and related companies, based on representative reference data, individual estimates and acceptable valuation and depreciation methods.
The Commission therefore concluded that the measure would contribute to the management of the economic impact of coronavirus in Denmark. Serious disturbances in the economy of a Member State should be remedied in an appropriate and proportionate manner, in accordance with Article 107 (3) (b) TFEU and the general principles laid down in Temporary framework.
On this basis, the Commission concluded that the two Danish measures were in line with EU state aid rules.
These measures complement those which the Danish authorities have already taken over under Article 26 of the Agricultural Block Exemption Regulation (ABER), which will award direct grants for shooting nora for public health reasons, as well as an “additional” bonus for their quick shooting. You see SA.61782 for more information.
Financial support from EU or national funds provided to health services or other public services to combat the coronavirus situation does not fall within the scope of state aid control. The same applies to any public financial support given directly to citizens. Similarly, public support measures available to all companies, such as wage subsidies and suspension of corporate and value added tax or social security contributions, do not fall under state aid control and do not require Commission approval under EU rules on state aid. In all these cases, Member States may act immediately. Where State aid rules are applicable, Member States may devise comprehensive aid measures to support certain companies or sectors suffering from the effects of a coronavirus outbreak in accordance with the existing EU state aid framework.
On March 13, 2020, the Commission adopted a Communication on a Coordinated Economic Response to the COVID-19 Outbreak outlining these possibilities.
In this regard, for example:
- Member States may compensate certain companies or certain sectors (in the form of schemes) for damage suffered as a result of and directly caused by exceptional occurrences, such as those caused by coronavirus outbreaks. This is provided for in Article 107 (2) (b) TFEU.
- State aid rules based on Article 107 (3) (c) TFEU allow Member States to help companies cope with liquidity shortages and need emergency rescue aid.
- This can be complemented by various additional measures, such as de minimis and block exemption rules, which Member States can adopt immediately, without the involvement of the Commission.
In the event of particularly difficult economic situations, such as those currently facing all Member States due to a coronavirus outbreak, EU state aid rules allow Member States to grant support to address serious disturbances in their economies. This is provided for in Article 107 (3) (b) TFEU of the Treaty on the Functioning of the European Union.
On March 19, 2020, the Commission adopted a temporary state aid framework pursuant to Article 107 (3) (b) TFEU in order to allow Member States to use the full flexibility provided for in the State aid rules to support the economy in the context of coronavirus outbreaks. Temporary framework, as amended April 3,, May 8,, June 29,, October 13 2020 and 28 January 2021 provide for the following types of assistance, which Member States may grant: (i) direct grants, capital injections, selective tax breaks and advance payments; (ii) government guarantees for loans taken by companies; (iii) Subsidized public loans to companies, including subordinated loans; (iv) safeguards for banks directing state aid to the real economy; (v) Public short-term export credit insurance (vi) Support for research and development related to coronavirus (R&D); (vii) support for the construction and improvement of test facilities; (viii) support for the production of products relevant to the control of coronavirus outbreaks; (ix) Targeted support in the form of tax deferrals and / or suspension of social security contributions; (x) Targeted support in the form of employee wage subsidies; (xi) targeted support in the form of equity instruments and / or hybrid capital; (xii) Support for uncovered fixed costs for companies facing declining turnover in the context of coronavirus outbreaks.
The temporary framework will be in force until the end of December 2021. In order to ensure legal certainty, the Commission will assess before this date whether it should be extended.
A non-confidential version of the decision will be available under case number SA.61945 in case state aid register at the Commission competition website after resolving any privacy issues. New publications of state aid decisions on the Internet and in the Official Gazette are listed in Weekly e-news contest.
More information on the Temporary Framework and other actions taken by the Commission to address the economic impact of the coronavirus pandemic can be found here.