The annual report of the Competition Council considered that the rapid withdrawal of the support provided by the State for the benefit of companies during the period of the “Covid-19” pandemic, can lead them to bankruptcy and double the concentration rate in some markets, but in return, their late withdrawal may give rise to the consolidation of the dependency of some companies.
The report adds that resorting to public aid is an urgent need during the recovery period after the health crisis, but the system for granting such aid must maintain a favorable climate for competition.
The report for the year 2021 indicated that it is necessary to clarify the State’s policy on business support, and highlight the contexts to activate aid, either to respond to economic crises or address market imbalances.
In the current context, the report noted that attention should be paid to the steps that precede the abandonment of this support after the end of the crisis, highlighting that this aid crystallized within the framework of agreements and contracts signed with sectoral federations that included initiatives of landscape character. nature, as well as measures aimed at sectors significantly affected by the repercussions of the pandemic.
At the top of the benefited sectors, tourism, event organization, catering for parties, entertainment and gaming spaces, says the report, noting that the pandemic affected the resilience of businesses; To the difficulties of recovery were added the obligations associated with the payment of pending debts and the performance of pending expenses at the social and fiscal level.
The same source stated that several contractors went bankrupt as they were in a position of inability to pay outstanding debts, but instead of resorting to rescue procedures, most chose to follow the judicial liquidation procedure.
The annual report noted that production costs have reached unusually high levels, and this has placed a burden on current procurement costs and on its investment capacity and better competition in markets, including foreign ones.
And the report added that contracting companies suffered a significant reduction in profit margins, prompting them to raise prices to absorb the loss of income, noting that the number of companies that went bankrupt in 2020 was less than in the years thanks to government measures.
According to the available data, the procedures for guaranteed loans aimed at financing the current expenses of the companies and that are not subject to postponement, as well as the compensation granted by the National Social Security Fund, have contributed to the rescue of many companies.