Statement by Bente Angell-Hansen, President of the EFTA Surveillance Authority, to the 26th joint meeting of the EFTA Consultative Committee on 10 March 2021 (statement delivered via videoconference).

Thank you for inviting ESA to address this meeting.

In my speech to the Consultative Committee in November the focus was on ESA's handling of the pandemic. Unfortunately, we continue to be in its grips as the third wave - with its more contagious mutations - is impacting countries all over the world. Still in many European countries, figures are coming down as vaccines are being rolled out at increasingly high speed. Therefore, one can be optimistic as to the handling of the pandemic itself. However, we might well experience that the impact on businesses and jobs will remain with us for years to come.

It is against this background that ESA continues to give priority to Covid-19 work, coupled with tasks related to the greening of the economy and digitalisation. The latter reflects the strong efforts on the EU side, where things are moving at high speed to transition to a green and more digitalized economy. Let me in this context underline what I said at our last meeting: Use the funds now being made available from public finance, not only to save companies but to strengthen skills and build for a stronger future.

In January the Temporary Framework on state aid was prolonged till the end of this year, allowing ESA to apply the flexibilities in this framework while safeguarding the homogeneity of the Internal Market.

The last revision of this Framework significantly increases some of the maximum caps for how much aid States can grant under this simplified procedure. We expect to see EEA EFTA States making use of these increases, and we stand ready to accommodate on our side.

Last year ESA passed a total of 68 state aid cases, of which 52 were pandemic related. The Commission saw a similar surge in cases.

So far this year, Covid-19 related state aid measures have been prolonged by ESA, and we are presently handling new cases linked to the pandemic, reflecting the priorities of EEA EFTA countries. We will continue to handle these cases with urgency.

Through our constructive dialogue with the states we note that to some extent, they are aiming to shift the focus of their Covid-19 related state aid from covering losses incurred towards spurring new growth and thus paving the way for the future. However, in no small part, the objectives of many aid measures remain the same as in early 2020. This is no surprise as we see that present challenges to a significant extent mirror what we experienced in spring last year.

We are still seeing state aid schemes across the economy, some broad schemes covering large parts of the economy, and others targeting particular sectors, such as tourism and transport. Moreover, we see plans for individual aid grants to certain companies, for example to specific airports, sports and convention centres. At the same time we see that the EEA EFTA states come with their digital infrastructure projects and measures to support the Green Agenda.

We expect a certain shift from state aid to compensate for damages directly caused by the pandemic, towards aid to alleviate the disturbance in the economy caused by the pandemic. For example, more wage subsidies to keep people at work and perhaps less subsidies to simply cover losses. We expect that corona crisis state aid may take up the lion’s share of our time and resources also this year in our competition and state aid department.

ESA's dialogue with our states focuses on reducing litigation risks further down the road. The first pandemic related cases have already been brought to the European Court of Justice, the ECJ, in the aviation area. We note that the Court ruled in favour of the Commission. This is of direct relevance for ESA and our decisions.

ESA regularly intervenes in the ECJ. Last month, reversing a long-standing precedence to the contrary, the ECJ decided to allow ESA and the EEA EFTA states to intervene in so-called direction action cases, that is infringement action the Commission brings against an EU member state. This is of great importance as the ECJ, through its judgements, shapes the internal market rules, as well as clarifies the values and democratic principles underpinning the Internal Market. This reflects the unique 2-pillar system of the EEA Agreement we must all strive to protect, that allows the EFTA Court, the EEA EFTA States and ESA to take part in the interpretation of and thereby shaping of the internal market rules.

On the Internal Market side, we continue our oversight and compliance tasks. We follow the situation as regards public service obligations to ensure minimum domestic and international transport services. We monitor the enforcement of passenger rights in light of COVID-19. Based on the experience from last year we expect to continue to handle notifications and requests for pandemic related exceptions, notably in the transport sector.

The pandemic is impacting the functioning of the Internal Market as regards the free movement of people. Many countries have closed their borders and the movement of people is severely restricted due to health concerns. Like the Commission on the EU side, ESA is monitoring such measures in the EEA EFTA states, for example as regards the proportionality and even-handed application of such measures. This work will continue in the coming months.

Furthermore, the Audit and Inspection work of ESA is impacted. Together with the Commission we have found new ways to carry out this work. On the veterinary side we have worked around the travel restrictions, but it is inevitable that there are challenges and limitations working this way. Also, on the transport side modified inspections have taken place. All this would not have been possible without the excellent cooperation with the EEA EFTA states and the Commission, as well as various EU Agencies.

Despite the immense efforts of all our staff, we have been running up backlogs throughout the organisation. This workload and added challenges posed by prolonged operation in a fully virtual environment are increasingly being felt by our staff. We know ESA is not alone in this. College is grateful for the dedication and hard work of our staff and we do all we can to mitigate adverse effects. Therefore, let me on behalf of College sincerely thank the EEA EFTA countries for this year’s budget which gives us flexibility to increase our staff on a temporary basis to deal with some of the backlog.

Finally, it is the legal framework and the decisions taken now and, in the months to come, that will be crucial as to how the EEA countries emerge from the pandemic. We continue to stand ready to support our states.