Vestager Hits Back as Vienna Bemoans EU’s Virus-Aid Rules

(Bloomberg) -- Margrethe Vestager, the European Union's antitrust chief, rejected Austria's call for state-aid rules to be put on hold while nations deal with the economic fallout from the Covid-19 pandemic.

EU regulators have been duty bound to check about 2 trillion euros ($2.2 trillion) in state money poured out to support businesses so far, Vestager told Austrian Finance Minister Gernot Bluemel and Economy Minister Margarete Schramboeck in an April 30 letter seen by Bloomberg.

Without EU supervision, a subsidy free-for-all in one country would “risk undermining measures taken in other member states and the level playing field across the EU,” Vestager said. “We are in a crisis that affects all of Europe and Europe must respond as one,” she said.

Bluemel earlier this month called on the EU to temporarily abandon state aid rules to allow governments move more quickly to pump money into companies that need help. His spokesman reiterated in a statement in reaction to Vestager's letter on Thursday that “the current European rules prevent quick, direct support to Austrian companies.”

Vestager said in the letter that turning a blind eye would breach EU treaty rules and failing to check aid before it's paid out isn't something the European Commission could agree to.

While emergency support is necessary now “to avoid an asymmetric and long-lasting shock to our economy,” EU competition law has to ensure companies don't gain an unfair advantage from subsidies because of where they are based.

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“Uncoordinated national actions would be harmful to cohesion and fair competition in the EU to the detriment of all European citizens and businesses,” Vestager wrote. EU actions are aimed to “avoid negative spillover effects of an economic downturn in one part of the EU on cross-border supply chains and the whole EU economy.”

Vestager said regulators would “very soon” further loosen state aid rules to ease governments grant subordinated debt and public recapitalizations to companies in need.

The commission didn't immediately respond to a request for comment on Vestager's letter.

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