State aid and Structural Funds Carlos Tenreiro DG

State aid and Structural Funds Carlos Tenreiro DG Competition Brussels 9 April 2003 DG Competition

EC TREATY n EC Treaty provisions (Art. 87, 88, 89) n SA is in principle incompatible with the common market n SA can be accepted only in exceptional cases, specified in the Treaty (exemptions from the ban on State aid) n Commission controls the application of these exemptions n Rationale : n Avoid distortion of competition within the internal market n Contribute to sound public finances n Promote economic and social cohesion DG Competition

FOUR CRITERIA DEFINING STATE AID EU State aid rules apply only to aid that satisfies each of the following conditions: n Granted by a MS or through State resources in any form whatsoever n Advantage that distorts competition n Selectivity: - specific regions, sectors - discretionary power n Effect on trade between Member States DG Competition

COMPATIBLE STATE AID - 1 Aid objectives and instruments n Regional develop. - Aid for initial investment by firms of any size Operating aid in exceptional circumstances n SME promotion - Aid for initial investment Aid for advisory services and participation in trade fairs n R&D n Environment Aid for basic and applied research projects - Aid for environmental investment (incl. energy saving - renewables, cleaning-up polluted sites, plant relocat. ) Operating aid for recycling and renewables n Training n Employment - Aid for training of employees Aid for net job creation Aid for employment of handicapped people n Risk capital n DG De minimis Competition Aid for risk capital funds Small amounts of aid for anything

COMPATIBLE STATE AID - 2 Regional aid n Regional aid maps n Art. 87(3)(a) regions: GDP/Cap < 75% of EU average n Art. 87(3)(c) regions: basis of EU & national criteria Other assisted areas defined on the n Regional investment aid n Aid for initial investment projects (no replacement investment) n Eligible costs Value of the investment Two year labour costs of net job creation DG Competition

COMPATIBLE STATE AID - 3 Regional aid (continued) n Regional investment aid (continued) n Max. aid intensity (a)-regions: 40% or 50% of eligible costs (+15% for SME) (c)-regions: 20% of eligible costs (+10% for SME) n Large projects: lower aid intensities n Operating aid n Aid towards normal running costs of companies n Only in (a)-regions in exceptional circumstances (clearly identified handicap; aid does not overcompensate; temporary and degressive in time) DG Competition

STATE AID CONTROL IN CCs - 1 n Europe Agreements: State aid will be assessed on the basis of the criteria arising from EU acquis in the State aid field n Effective State aid control was pre-condition for the closure of the Competition Chapter: n Adoption of State aid legislation n Establishment of State aid monitoring authorities n Assessment of “enforcement record” DG Competition

STATE AID CONTROL IN CCs - 2 “Legal” aid after accession n Aid that can be granted from the date of accession n New aid notified and approved by the Commission n “Existing aid” : Aid that entered into effect before 10/12/1994 Aid included in a list attached to the Treaty Aid approved under the “interim procedure” n Interim procedure n n entry into effect before accession approved by the SAA submitted to the Commission did not raise any objections DG Competition

STATE AID AND STRUCTURAL FUNDS - 1 General regulation n General Regulation n All operations must be compatible with State Aid rules (Art. 12) n Each OP should contain information on State aid (Art. 18(2)) n OPs are approved only if all requirements of the Regulation are fulfilled (Art. 28(1)) n MA is responsible for ensuring compliance with EU policies (Art. 34(1)) n Requirements OP n State aid article in Commission decision n State aid table DG Competition

STATE AID AND STRUCTURAL FUNDS - 2 State aid table - Format DG Competition