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

EC TREATY EC Treaty provisions (Art. 87, 88, 89) SA is in principle incompatible with the common market SA can be accepted only in exceptional cases, specified in the Treaty (exemptions from the ban on State aid) Commission controls the application of these exemptions Rationale : Avoid distortion of competition within the internal market Contribute to sound public finances 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: Granted by a MS or through State resources in any form whatsoever Advantage that distorts competition Selectivity:- specific regions, sectors - discretionary power Effect on trade between Member States

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

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

DG Competition COMPATIBLE STATE AID - 3 Regional aid (continued) Regional investment aid (continued) Max. aid intensity (a)-regions: 40% or 50% of eligible costs (+15% for SME) (c)-regions: 20% of eligible costs (+10% for SME) Large projects: lower aid intensities Operating aid Aid towards normal running costs of companies 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 Europe Agreements: State aid will be assessed on the basis of the criteria arising from EU acquis in the State aid field Effective State aid control was pre-condition for the closure of the Competition Chapter: Adoption of State aid legislation Establishment of State aid monitoring authorities Assessment of enforcement record

DG Competition STATE AID CONTROL IN CCs - 2 Legal aid after accession Aid that can be granted from the date of accession New aid notified and approved by the Commission 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 Interim procedure entry into effect before accession approved by the SAA submitted to the Commission Commission did not raise any objections

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

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