A €5 billion French aid package that will offer grants, loans, and tax advantages to support testing infrastructure and the production of items used to combat the coronavirus is in line with state aid rules.
The European Commission said in a June 5 release that the French scheme meets the conditions set out in the state aid temporary framework and “is necessary, appropriate and proportionate to fight the health crisis and contribute to address the common European production needs in the current crisis.”
Margrethe Vestager, commission executive vice president in charge of competition policy, said the French scheme will support research and development and the production of medicines, medical equipment, vaccines, and protective clothing.
The €5 billion package, which may be funded in part by EU structural funds, will deliver relief in the form of direct grants, repayable advances, and tax advantages to businesses and research institutions, according to the release.
All businesses engaged in or capable of executing R&D, testing, and production may take advantage of the scheme. Aid may be granted at the local, regional, or federal government level. When research organizations and other entities carry out a cross-border R&D project, or are supported by more than one member state, projects may receive a 15 percent bonus, the commission said.
Aid will cover “a significant share” of R&D project costs and investment costs for setting up testing infrastructure or building new production facilities, according to the release. A condition of the scheme is that investment projects must be finished within six months of aid being granted.
The French government said the scheme will encourage R&D for medicine and equipment used to treat COVID-19 patients and "enhance the rapid construction of production facilities for these products, as well as the provision of necessary raw materials and ingredients.”
The approval of France’s scheme follows an international spat in May when the CEO of French pharmaceutical company Sanofi said any vaccine the company develops would likely first go to Americans because the United States put $600 million toward its R&D.
Many French leaders, including President Emmanuel Macron, were shocked at the comments. Sanofi receives €150 million in tax exemptions from France annually. Eventually, a company board member walked back the comments.