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

10 shock will be temporary, but we need to work together to ensure that it is as short and as limited as possible, and that it does not create permanent damages to our economies.” This was the reason why the Commission did not propose to modify State aid rules at that point of time. 34 Rather, the Commission proposed in the Communication to apply more flexibility in the activity of European development institutions and the disbursing of European Funds. This sounds a bit controversial as the Commission was aware of the fact that “[g]iven the limited size of the EU budget, the main fiscal response to the Coronavirus will come from Member States’ national budgets.” Using public funds of the Member States means that national measures would most probably constitute State aid in the sense of Article 107(1) of the TFEU. Then, the Commission also gave a couple of hints on how to design State measures to escape the label of State aid (general tax and employment measures, helping consumers directly), and also emphasised that economic incentives can be notified and approved under Article 107(3)(b) TFEU. This legal basis in the TFEU allows Member State to grant aid to remedy a serious disturbance in the economy of a Member State. Thereafter, the Commission mentioned that under the TFEU damages caused by exceptional occurrences can be compensated by Member States under Article 107(2)(b) TFEU, which is an option used rarely so far. 35 Disregarding the rapid spread of the virus, the Commission considered the application of Article 107(3)(b) TFEU only in the case of Italy in the communication, 36 where the consequences were disastrous in early March compared to other Member States. 37 Albeit the Commission did not exclude the possibility to apply Article 107 (3) b) for other Member States, it acknowledged that it was “a live and developing situation” and undertook to monitor the evolution of the virus outbreak and its impact in close contact with the Member States. Last, but not least the Commission foreshadowed, “in case of need”, the preparation of a new Temporary Framework, as it did during the 2008-2012 economic and financial 34 The Commission, as the independent competition authority, changes state aid rules only if there is a real need for it, or structural changes at the market require a different approach. 35 See the cases referred to in Chapter 4.1. 36 ”Currently, the impact of the COVID-19 outbreak in Italy is of a nature and scale that allows the use of Article 107(3)(b) TFEU.”. 37 These two legal grounds and conditions required to apply them are explained in the next chapter.