The Legal Impacts of COVID-19 in the Travel, Tourism and Hospitality Industry

governments will decide how to spend the money and to whom it will be given, and there will probably not be enough money for all. Governments generally have wide discretion in how they shape aid measures. However, aid measures, including those that are suitable to be approved by the Commission, must not distort competition more than necessary. Under EU State aid rules, the competitor of a beneficiary of State aid can challenge the grant. We have already seen that the European rail industry is not happy with the massive support announced to benefit the airline industry. Competition law is indeed a double-edged sword that leaves room for strategic use. This being said, to the extent that State aid is correctly notified and in line with the Commission’s principles, it would seem difficult to have the grant overruled on the ground that the COVID- 19 aid is not compatible with the Single Market (the substantive legal standard). Where national aid is not properly notified and approved or not in line with the EU rules, complainants can seize the national courts and seek temporary reimbursement pending the outcome of the Commission’s assessment. Where the government intervenes in the form of capitalisation (short of nationalisation), there will likely be counterparts. The support to the financial services industry after the financial crisis of 2008 came with conditions, including dividend bans, limits on management remuneration or the requirement to spin-off non-core activities. Thus, State support does not always come for free. Note that in recent years, Europe has seen a surge in foreign direct investment control. Historically, State intervention to prevent take-overs by third country buyers (private or State- owned) focused on “critical industries” such as companies operating in technology, defence, telecommunications and infrastructure. Recently, the French Commissioner Thierry Breton made a statement that governments should also protect companies in the tourism sector. Where the State acquires a golden share in such companies, this will be even easier. These measures nevertheless place a question mark on the principle of a globalised economy. Normally, no company can be bought unless the owner is willing to sell it. Limiting the international flow of capital by giving the government a right of first refusal would also have a price, both in the short and long term. A proper balance needs to be found.