The new guidelines on regional State aid ('RAG') for 2014-2020 Please edit the Master Layout to include information specific to the presentation. For slides for the DG/DeputyDG, delete [Unit].

Regional aid and EU cohesion policy Other horizontal aid (training, employment SME) (€ 168 bn)* Non-cofinanced State aid Support to enterpise and innovation (€ 70-80 bn) Environment aid (€ 91 bn)* EU cohesion policy 2007-2013 (€ 347 bn) R&D&I aid (€ 74bn)* Regional aid (€ 98 bn)* Total State aid 2007-2013 (€ 360 bn)* * estimates

Regional aid expenditure (2007-2011) Significant proportion of all State aid: 0.11% of EU GDP (± € 67 bn) Concentrated on most disadvantaged regions: € 57 bn in 'a' areas (more disadvantaged assisted areas) € 10 bn in 'c' areas (less disadvantaged assisted areas) Tendency towards more aid being block-exempted: 40% (€ 26 bn) under block-exemption regulations (→ 50% in 2011)

Number of regional aid measures (2007-2012) * Large investment projects (eligible costs > €50 m)

RAG part of State Aid Modernisation (SAM) Commission Communication of May 2012: Main objectives: More with less: support economic growth with constrained public budgets Prioritisation: target enforcement on most distortive cases Better control: simplify rules and streamline procedures For RAG: Link with Europe 2020 and cohesion policy is crucial

RAG 2014-2020 Conditions under which State aid can be granted for the development of disadvantaged regions in the EU Criteria for maps designing disadvantaged areas where regional can be granted Legal basis: Articles 107(3)(a) and (c) TFEU Slides Font: Verdana Font sizes: Heading: 44 First level bullet points: 32 Second level bullet points: 28 Do not use third level bullet points Notes Do not have to be full sentences. Should expand on the points in the slides and provide background information. Font size: 14 If there is too much text to fit on a page (View… NotesPage), then put ALL notes for the presentation in a separate Word document, with notes for each slide starting on a new page.

Links between RAG and General Block Exemption Regulation (GBER) New regional aid in GBER: Multi-sectoral schemes Transport aid schemes for outermost regions + sparsely populated areas Operating aid schemes for outermost regions up to 10% of annual sales revenues or turnover Other types of ad hoc aid (option in draft GBER) Measures to be notified and assessed under RAG: Individual aid > notification thresholds Aid linked to relocation (closing down similar activities in the EEA in 2 years before or after) Other types of ad hoc aid (if not block-exempted) Sectoral schemes Large schemes (annual budget > 0.01% of MS GDP + > € 100 million)

Sectoral scope and forum shopping Excluded from RAG but covered by other guidelines: Agriculture, forestry Fisheries, aquaculture Transport, incl. airports Energy sector Regional aid prohibited: Steel Synthetic fibres No aid under GBER but notifiable under RAG: Shipbuilding Covered by RAG but with specific additional conditions (transparency, fair access): R&D infrastructure Broadband networks

Main changes More emphasis on soundness of aid (necessity, proportionality, avoidance of distortions of competition) Aid limited to 'extra costs'; generally lower aid intensities Proceedings regarding infringements of Article 101/102 TFEU may be taken into account when assessing compatibility with Article 107(3) TFEU No aid if it attracts an investment from a more disadvantaged region, or if an investment is relocated, or investment in a market with structural overcapacity Transparency and evaluation requirements Overall population coverage slightly increased; generous treatment of 'programme countries'

Aid to large enterprises (LEs) In 'a' areas (more disadvantaged assisted areas), regional investment aid can be granted to SMEs and LEs Economic studies and enforcement experience: serious doubts about incentive effect of aid to LEs In 'c' areas (less disadvantaged assisted areas), regional investment aid can only be granted to LEs for aid that creates new economic activities in 'c' areas, or for the diversification of existing establishments into new products or new process innovations In 'a' areas operating aid only to SMEs Stricter treatment of LEs in 'c' areas but broader possibilities for Europe 2020 investments under other thematic guidelines

Medium-sized enterprises Aid intensities Assisted area (% EU GDP/head) Large enterprises Medium-sized enterprises Small enterprises 'a' areas (<45%) 50% 60% 70% 'a' areas (45%-60%) 35% 45% 55% 'a' areas (60%-75%) 25% Former 'a' areas (until end 2017) 15% Sparsely populated areas, external border areas Non-predefined 'c' areas 10% 20% 30%

Notified individual awards Objective of common interest: demonstration that aid contributes to regional development strategy Appropriateness: aid instrument is appropriate Incentive effect: formal requirements (start of the project after submission of application form); demonstration of the counterfactual scenario Proportionality: net extra cost + cap (aid intensity on total costs) Black list (negative effects outweigh any positive effects): NO investment aid if it attracts an investment from a poorer region NO investment aid if relocation of an investment due to the aid NO investment aid if investment takes place on a market with structural overcapacity Slides Font: Verdana Font sizes: Heading: 44 First level bullet points: 32 Second level bullet points: 28 Do not use third level bullet points Notes Do not have to be full sentences. Should expand on the points in the slides and provide background information. Font size: 14 If there is too much text to fit on a page (View… NotesPage), then put ALL notes for the presentation in a separate Word document, with notes for each slide starting on a new page. 12

Assessment of schemes Objective of common interest: Assumed for co-financed schemes To be demonstrated for other schemes Appropriateness: schemes are appropriate instrument Incentive effect (formal requirements): start of the project after application for aid For SMEs: application form For large enterprises: application form +documentary evidence of the counterfactual Credibility check by granting authority for SMEs + LEs Proportionality: net extra cost + cap (aid intensity on total costs) For SMEs: total costs + aid intensity For large enterprises: net extra cost with a cap (aid intensity on total costs) Limitation of negative effects: to ensure that aid is not attracting an investment from a poor(er) region (i.e. higher or same aid intensity as the target region) Slides Font: Verdana Font sizes: Heading: 44 First level bullet points: 32 Second level bullet points: 28 Do not use third level bullet points Notes Do not have to be full sentences. Should expand on the points in the slides and provide background information. Font size: 14 If there is too much text to fit on a page (View… NotesPage), then put ALL notes for the presentation in a separate Word document, with notes for each slide starting on a new page. 13

Transparency and evaluation 'Full recipient disclosure'  MS must publish on a central public website: Aid scheme + implementing provisions Name of the granting authority + individual beneficiary Aid amount, aid intensity Commission may limit the duration of largest, potentially most distortive schemes to 4 years and impose an evaluation before prolonging the scheme Evaluations must be undertaken by an independent expert Precise scope + methodology of evaluation to be defined in Commission decision limiting the duration of the scheme

Geographical scope ‒ regional aid maps EU population coverage: 46.5% (→ 47.2%) Regions with GDP <75% of EU average + outermost regions ('a' areas): 25.2% Former 'a' areas + sparsely populated areas (predefined 'c' areas): 7.5% Rest (non-predefined 'c' areas): 13.8% Quota allocated among MS with formula combining EU and national disparities Non-predefined 'c' areas designated by MS MS benefitting from macro-financial assistance keep 100% of their current coverage

Total coverage per MS MS ‘a’ areas Predefined ‘c’ (ex-'a '+ sparsely populated areas) Non-predefined ‘c’ / safety net Total 2014-2020 [current situation] Austria 25.8 25.8 [22.5] Belgium 12.1 17.9 29.9 [25.9] Bulgaria 100 100 [100] Czech Republic 88.1 88.1 [88.6] Cyprus 0 / 50 50 [50] Denmark 8.0 8.0 [8.6] Estonia Finland 0 + 24.2 1.85 26.03 [33] France 2.9 21.2 24.1 [18.4] Germany 11.9 13.9 25.8 [29.6] Greece 45.9 10.1 + 0.2 = 10.3 (23.4) / 43.8 Hungary 70.4 6.3+ 0 76.7 [100] Ireland 51.28 51.28 [50] Italy 29.0 5.0 +0 34.1 [34.1] Latvia Lithuania Luxembourg 0 / 8 8 [16.0] Netherlands (4.3) / 7.5 7.5 [7.5] Malta Poland 86.3 13.7 Portugal 69.2 15.8 85 [76.7] Romania 89.4 10.6 Slovakia 88.5 88.5 [88.9] Slovenia 52.9 47.1 Sweden 12.3 12.3 [15.3] Spain 6.8 28.2 + 0.5 = 28.8 33 68.6 [59.6] United Kingdom 3.9 0 + 0.4 22.8 27.0 [23.9] EU-27 25.2 6.8 + 0.6 = 7.4 14 / 0.6 47.2

Timing RAG: GBER: Adoption: 19 June 2013 Entry into force: 1 July 2014 Current RAG + maps extended until 30 June 2014 Transitory measures for MS GBER: Adoption: 1st semester 2014