At the time of the covid-19 pandemic, the German federal government, like other European countries, adopted a number of restrictions to prevent people from meeting and thus spreading the covid-19 disease, which hit many companies hard and caused significant financial losses. Most companies, not only at the beginning of the pandemic, were forced to cover these losses from their own resources in order to keep operations running.

For the above reasons, the German Federal Government has introduced a number of support programmes to save companies affected by the covid-19 pandemic from collapse and prevent the economy from falling into recession. Two of these schemes were subsequently challenged by German companies before the General Court of the Court of Justice of the European Union (“the General Court”) on the grounds that these aid schemes, or the criteria for obtaining money from them, were considered by some companies to be discriminatory and incompatible with the internal market and EU law.

One of the contested aid schemes had as a criterion a 30 % reduction in turnover due to covid-19 measures compared to the previous period. The second contested aid scheme provided that the activities of the companies affected by the restriction on the free movement of persons must account for at least 80% of the turnover of those companies, if the company concerned also performs other activities, some of which are not affected at all by the restriction on the free movement of persons.

The applicants complained that the first aid scheme, or rather its criterion of a 30 % fall in turnover within the reference period, was incompatible with the principle of proportionality and infringed the principle of equal treatment. The General Court noted that compliance with the principle of proportionality involves three components, namely: (i) the appropriateness of the measure, consisting in its capacity to achieve the legitimate aim pursued; (ii) its necessity, i.e. the impossibility of achieving the objective pursued by less restrictive means; and finally (iii) the proportionality of the measure, meaning that there are no disadvantages of the measure, which are disproportionate to the aim pursued. All those elements were fulfilled in the measure in question and, at the same time, the General Court did not consider that the criterion of a reduction in turnover infringed the principle of equal treatment as it was appropriate and proportionate to remedy the disturbance in the economy of the State concerned and therefore dismissed the action for annulment of the first aid scheme.

The second aid scheme was challenged by the company on the grounds that it considered that it did not qualify for the aid because of the aforementioned requirement of an 80% share of the activity restricted by the ban on free movement of persons in the company’s turnover. The General Court found that the company was not excluded from the scheme because its e-commerce activities were considered to be related to the retail business constituting the company’s core business. The suing company has therefore failed to establish a legal interest in the annulment of the contested decision, which is a condition for bringing an action for annulment before the General Court, on the ground that it was eligible for aid under the criteria of the scheme, which led the General Court to reject the action.

The contested German measures in relation to COVID 19 have successfully passed a review by the General Court of the CJEU. It has also indicated what criteria it will take into account when reviewing such measures. These conclusions are thus also relevant for Czech courts and persons challenging these measures adopted by the Czech government.

Author: Veronika Odrobinová, Tomáš Přibyl