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Friday, 26.04.2024, 13:38
State aid control: Commission balances public-private interests
The Commission has exempted public support measures in a
number of areas from prior Commission state aid control. This facilitates
public investments in key infrastructure, e.g. ports and airports, in public
support for a cultural sector, sport arenas, etc. Commissioner M. Vestager
responsible for competition issues in the EU, made a statement (Brussels
17.05.2017) concerning simplified rules for public investment in ports and
airports, as well as in culture and regional development.
Background
EU State aid rules ensure that companies can compete on
equal terms in the EU Single Market to the benefit of European consumers. The
EU Treaty gives the Commission the task of enforcing those rules. Fair
competition in the EU is not just a question of what private companies do; the
Commission looks at what governments are doing, i.e. how state-owned companies
operate and what subsidies governments provide for them.
The EU member states are normally required to notify their
plans for state aid to the Commission; they go ahead only if the Commission
gives a corresponding agreement.
This allows the Commission to prevent measures that distort
competition, hinder trade across national borders and undermine the EU Single
Market. For example, it is illegal if a state provides a better tax treatment
to its national companies at the expense of more efficient competitors abroad.
Vast majority of public support measures in the member
states do not cause such problems: either such measures do not constitute “state
aid” and/or fall outside the scope of EU state aid control; or if they do
amount to state aid but do not distort competition. They can all be implemented
by the EU states without asking the Commission for permission in advance.
Thus, it is important for the EU states, companies and the
citizens, to have clear guidance on State aid.
Present changes are only the latest step in the Commission's
recent efforts to modernise EU state aid control. The Commission has
implemented several initiatives to stimulate investment by reducing the
administrative burden for public authorities and companies and by increasing
legal certainty for companies receiving aid.
Clarifying state aid
In May 2016, the Commission clarified
public “measures” in the state aid category in a special “Notice on the notion
of state aid”, which covered, for example, public investments in roads, inland
waterways, rail, and water distribution networks.
The Commission has also taken a
series of decisions, which show that measures are not state aid where their
impact is essentially local, without affecting competition and trade among EU states,
e.g. public investments in hospitals, old age homes, sports facilities and
regional news media.
For public measures that are
covered by the EU state aid control, but do not harm competition, the
Commission set out clear criteria in the “General Block Exemption Regulation”
and the states can rely on these criteria to support investment in important
areas such as energy, environment, broadband and innovation (it could be done without
asking the Commission's approval). This Regulation already exempts about 95% of
all state aid measures – that's around €28 billion in state aid per year.
This reduces the administrative
burden for member states and increases legal certainty for companies that
receive state aid. However, less control by the Commission requires the states
to take responsibility: to show citizens where public funds go and what their
impact is. Therefore, cooperation between the EU states and the Commission is a
key issue in making modernized state aid control.
The Commission is presently giving
flexibility to the EU states to grant state aid directly, without asking the
Commission's approval first, in a number of additional, important sectors while
setting out clear criteria to make sure the aid does not distort competition.
Main changes in state aid
Commission’s main changes relate to ports and existing
airports. Over the past few years the Commission has taken more than 30 State
aid decisions on ports and more than 50 State aid decisions on airports. Thus,
presently the states have a good idea of which measures they are likely to
distort competition.
In particular, the new provisions exempt from prior control
by the Commission public investments in existing regional airports (as long
as they serve less than 3 million passengers per year; there are more than 420
airports of this size in the EU and they account for more than 80% of all
airports in the EU but only about 13% of air traffic). These airports will be
able to receive aid to maintain and upgrade their infrastructures, if they
respect Regulation’s criteria.
For small existing airports, the Regulation also allows EU states
to help cover operating costs. By small airports is meant those handling less
than 200 000 passengers per year. These may not always be as profitable as
larger airports, but they can play an important role for the connectivity of a
region and are unlikely to have much effect on competition. Airports of this
size account for almost half of all EU airports but less than 1% of air
traffic. Therefore, it should be up to the relevant region and its citizens to
decide if they want to spend public funds to support these small airports.
For seaports, the Regulation now exempts
investments by the EU states of up to €150 million in seaports and up to €50
million in inland ports. This includes dredging costs that certain ports need
to incur to keep the waterway deep enough for ships to dock. For ports these
costs are non-negotiable because of their geography, regardless of how
efficient and competitive they are.
These are significant changes for public investments in seaports
and airports, which clarify the rules, simplify procedures and allow the states
to invest in these sectors more quickly. This can help create jobs and spur
economic growth, whilst preserving competition in the EU market.
The Commission has also simplified EU state aid control in
other areas, namely culture and multi-purpose sports arenas. Support in
these areas often does not amount to state aid anyway, as was clarified in the “Notice
on the notion of state aid”. Only a few large size projects are – and for
these, in future even fewer projects will need to be notified to the Commission
for approval.
The Commission has also made it simpler for public
authorities to compensate companies for additional costs they face in the EU's outermost regions and sparsely populated
areas. These regions often face significant economic challenges because
they are remote and dependent on a few traded products. EU state aid rules
allow support for these regions to meet those challenges.
Furthermore, in addition to the important existing
exemptions under the “General Block Exemption Regulation” to support
innovation, the Commission has clarified that states can support projects with
a so-called “Seal of Excellence” quality
label. These are innovation projects funded by the EU states that also meet
the conditions for funding under the EU Horizon 2020 instrument. Present clarification
helps ensuring that these projects can be implemented as quickly as possible; this
can especially benefit SMEs.
Finally, the Commission has addressed another issue that is
at the heart of fair competition in the Single Market: EU state aid rules do
not allow the EU states to use state aid to incentivise the relocation of jobs
from one EU country to another. New changes add safeguards to ensure that the
rules work well in practice.
Thus, from now on, to benefit from the procedural speed of
the “General Block Exemption Regulation”, the company benefitting from
investment aid has to confirm that it did not relocate this activity from
elsewhere in the EU (it will not do so in the future too).
The point of all this is to facilitate public investments
that serve citizens while preserving competition. Its aim is to make it easier
to grant aid on clear and simple conditions that contributes to European common
goals on jobs and growth, climate, innovation and social cohesion.
Bottom line: the
EU’s political objective is to focus the Commission's action on those issues
that really matter to people, taking European action only where it is necessary
and leaving the states to take responsibility for everything else. Similarly, the
state aid policy is to ensure that responsibility for public measures is taken
at the appropriate level in the Commission, if it genuinely affects competition
and European consumers across borders, and by national authorities, if the
effect is local.
Thus, the EU institutions and the states have to work
together to make sure that the Commission can be “big on big things and small
on small things” (as proposed in the recent “Future of Europe” program, to the
benefit of EU citizens and companies.
Reference: http://europa.eu/rapid/press-release_STATEMENT-17-1367_en.htm?locale=en