Letter

1(3) 19 October 2023 Mr Didier Reynders European Commissioner for Justice, Responsible for Competition matters European Commission Joint Statement with minister endorsement of Belgium, Denmark, Estonia, Finland and the Netherlands Dear Commissioner, The Temporary Crisis Framework (hereafter TCF) was adopted by the Commission on the 23 March 2022 as a response to support the economies of the Member States after Russia initiated a war of aggression against Ukraine. The instrument offered support, inter alia, with relaxations on the limited amounts of aid (section 2.1), liquidity support in the form of guarantees (section 2.2), liquidity support in the form of subsi- dies loans (section 2.3) and later on, after amendments, also with aid for additional reduction of electricity consumption (section 2.7). When the TCF was amended on 17 March 2023 to cover also the support for green transition and thereby renamed as the Temporary Crisis and Transition Framework (hereafter TCTF), the aforementioned sections became known as the crisis part of the TCTF. On 20 July Commission ap- proached the Member States with a survey asking for views on the need to prolong the TCTF crisis part be- yond its expiration on 31 December 2023. Further prolongation not necessary in light of the current economic state The crisis part of the TCTF has proven its worth at supporting undertakings amid the immediate effects of the crisis. It has enabled Member States to grant support for those companies that were seriously affected by the sudden economic consequences of the war by allowing targeting the aid to compensate, inter alia, higher energy prices. However, now, 18 months after the adoption of temporary crisis rules, the overall economic outlook and situation in the energy markets has improved significantly in the whole EU. Energy prices have fallen and EU’s gas storage facilities have reached 90 per cent capacity in August 2023. This, among other things, pro- vides an indication that there is not a serious disturbance of the economy anymore and therefore neither the need, nor the legal basis in the TFEU for the existing exceptional crisis response in the field of State aid control. For these reasons and with the current expectations, we are firmly of the opinion that the crisis part of the TCTF should not be extended beyond 31 December 2023. It should also be noted that the crisis response was appropriate since the Russian aggression in Ukraine caused a sudden, serious and unforeseen shock to the economy. However, maintaining the exceptionally flexible crisis rules as a precautionary measure or as a tool mitigating normal economic fluctuation is not justified. In order to prolong the crisis rules, there should be strong evidence to support their need, but no such evidence has been presented. While the war may also have some long-lasting economic effects, those effects are not unforeseen anymore, nor do they any longer pose such serious disturbance that would jus- tify the prolongation of the crisis part of the TCTF. The prevailing market conditions have largely formed the so-called “new normal”, to which the companies should adjust without the support of the temporary crisis rules of State aid.  2(3) Possible detrimental effects with the prolongation Expiry of the crisis part of the TCTF is also in line with the temporary and targeted nature of crisis State aid frameworks. The crisis response should be necessary and proportionate, and therefore it should also be truly temporary and phased out as soon as possible when the economic situation improves. Prolonging the temporary State aid rules thus risks causing detrimental effects and distortion on the level playing field in the internal market. Maintaining temporary rules can also seriously undermine addressing EU’s long-term objectives in different policy areas. State aid has the capacity to suppress the market incentives and thus hinder the necessary ad- justments and restructuring of the economy or the incentives for innovation. Unnecessary prolongation of the crisis aid rules that allow flexible support also to companies in difficulties is harmful to EU’s long-term competitiveness. Aid to compensate higher energy prices, in turn, can slow down the green transition. In addition, EU’s efforts to promote the level playing field globally are affected. EU’s ability and credibility to tackle distorting subsidies by third countries with trade policy tools or with the Foreign Subsidies Regulation are weaker the longer the temporary rules are in place. A real level playing field is an opportunity we should strive for. Careful continuous monitoring of the economic situation is crucial We nonetheless acknowledge that the overall situation in the markets remains somewhat uncertain. There- fore, we welcome the readiness by the Commission to monitor the situation closely and respond swiftly, should the economic situation change with regard to energy prices or other serious unforeseen economic circumstances. In the event of any new crisis situation threatening to create a new serious disturbance, the Commission is called upon to act to reintroduce appropriate, temporary and targeted State aid measures, so Member States will be able to swiftly apply or reintroduce aid schemes to support their economies. Pierre-Yves Dermagne, Deputy Prime Minister and Minister of the Economy and Employment Jo Brouns, Flemish Minister for Economy, Innovation, Work, Social economy and Agriculture Barbara Trachte, Secretary of State of the Brussels-Capital Region, responsible for Economic Transition and Scientific Research and Willy Borsus Vice-President of the Walloon Government and Minister of Economy, Foreign Trade, Research and Innovation, New Technologies, Urban and Spatial Planning, Agriculture, IFAPME, Competence centers Belgium Morten Bødskov Minister of Industry Business and Financial Affairs Denmark  3(3) Mart Võrklaev Minister of Finance Estonia Arto Satonen Minister of Employment Finland Micky Adriaansens Minister of Economic Affairs and Climate Policy The Netherlands