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

7 Given that it is a very complex concept, with each of its elements subject to detailed assessment, the European Commission, as a part of the State aid Modernisation initiative 23 , published a communication in 2016 about the notion of State aid to provide guidance for stakeholders 24 . The concept of aid shows that sectoral State measures are selective, and the European Commission usually does not treat these measures as having positive impact on the whole community, but prefers to grant aid horizontally, meaning available for all economic sectors. Although, with the COVID-19 pandemic this approach has changed, and State measures helping in a targeted way for sectors badly affected are more accepted by the Commission than in the past. 2.3. When Is State Aid Compatible with the Internal Market? The prohibition to grant State aid is not absolute; Article 107(1) TFEU uses the term “[S]ave as provided otherwise in the Treaties”, meaning that there might be exemptions defined in the primary EU Law. These can be found in different articles of the TFEU. Articles 42 and 93 define special treatment for agriculture and certain transport activities and Article 107(2) and (3) list the more horizontal exemptions. As regards the exemptions listed in Article 107(2), their main characteristic is that these “shall be” compatible with the internal market, where the Commission has no real freedom of assessment, needing only to verify whether the TFEU conditions are met. By contrast, the exemptions listed in Article 107(3) “ may be considered as compatible”. Regarding the group of exemptions which “may be” compatible with the internal market, the European Commission has wide discretion to define the conditions for compatibility, 25 especially if this decision involves assessments of an economic and social nature, which must be made within an EU context 26 . Essentially, this assessment is a balancing act of the interest of having an undistorted internal market and of granting 23 Source: https://ec.europa.eu/competition/state_aid/modernisation/index_en.html ( accessed on 10 March 2020). 24 Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union ( OJ C 262, 19.7.2016, pp. 1–50), hereinafter “NoA”. 25 See the judgment in case C-464/09 P Holland Malt (ECLI:EU:C:2010:733), paragraph 46. 26 C-110/03 Belgium v Commission (ECLI:EU:C:2005:223) paragraph 68, Case C-303/88, Italy v Commission (ECLI:EU:C:1991:136), paragraph 34, Germany and Others v Kronofrance, C-75/05 P and C-80/05 P, EU:C:2008:482, paragraph 59, and Banco Privado Português and Massa Insolvente do Banco Privado Português, C-667/13, EU:C:2015:151, paragraph 67