DIn view of the war in Ukraine, Germany is allowed to support energy-intensive companies with state aid of up to five billion euros. The EU Commission approved a corresponding regulation on Thursday. “This means that the energy cost containment program for energy-intensive industries can start tomorrow,” announced the Ministry of Economics and Finance.
The program was announced in early July. With state subsidies, the federal government wants to avoid bankruptcies of companies that consume a lot of energy, since prices have risen sharply in the wake of the war.
Commenting on the situation in Ukraine, EU Competition Commissioner Margrethe Vestager said: “Energy- and trade-intensive companies have been hit particularly hard by the current geopolitical crisis and the resulting rise in energy prices.”
If the state wants to use tax money to help domestic companies, strict EU rules apply, which are monitored by the Commission. This is to ensure that there is no distortion of competition. Rules have been relaxed to cushion the impact of Russia’s war on Ukraine and EU sanctions.
If companies make use of the subsidies that have now been approved, this will have consequences for the boardroom: the management must declare that they are waiving bonus payments. This is to ensure that only those companies that are in real distress “communalize” their costs.
