1. The General Block Exemption Regulation 2014-2020 (GBER)
Camelia Grozea-Knuth
Policy officer – DDG03 State aid policy and case support
DG COMPETITION
European Commission

2. Context: State Aid Policy in the EU
The State aid policy aims at preventing undue distortions of competition that can result from the granting of State aid, …
Lack of level playing field
State aid may limit incentives and sanctions that should create efficiency, innovation, creativity and competitiveness
Distortion of market prices and lower benefits for consumers
… , at focusing State intervention where it has the maximum positive effect in terms of economic and social development and competitiveness…
Market does not deliver (market failures)
Equity and cohesion
… and it contributes to a better use of scarce public resources.
Reducing wasteful spending increases the resources available for "good aid", for other public expenditures or allows for tax cuts

3. SAM: Evolving rules to cater for new challenges and opportunities
EU policies
Impact of the crisis
Enforcement challenges & feedback from stakeholders
Challenges and opportunities for the revision of instruments and necessity of a common approach

4. Objectives of the SAM
Foster growth in a strengthened, dynamic and competitive internal market
Encourage “good aid”
Discourage useless or counter-productive aid
Focus enforcement on cases with the biggest impact on internal market
Less ex-ante control
Better focus on ex-post monitoring, evaluation and transparency
Streamline rules and faster decisions
Simplification and harmonisation of rules
Improvement of procedures

5. The GBER
The GBER is a set of 43 exemptions that can be used to provide effective and compliant State aid.
Aid under GBER can be provided without prior approval from the Commission.
To use the GBER, the granting body must publish a scheme on the internet and complete an online form which goes to the Commission.

6. Reasoning: Interdependent Features
Extend
Simplify
Safeguard

7. Extend Aid amount Type of aid Existing GBER
notified (guidelines/Treaty)
Notification (guidelines/Treaty)
Notified aid
Block-exempted
De minimis
GBER extended (notification and intensity threshold)
Existing
GBER
GBER
extended
(new types and
categories)
Aid amount
GBER extension
De minimis
De minimis
Type of aid

8. Extend
Between 2014 and 2020, it is estimated that 66% of aid amounts and 75% of aid measures are likely to be exempted under the new GBER.
Data: analysis based on aid amounts awarded in 2012, aid measures notified/block-exempted in 2012

9. Simplify
A significant number of rules have been simplified or clarified
During four consultations, Member States have provided feedback on areas of difficulty. The Commission has revised parts of the document to address these.
For example, we have simplified the test for "incentive effect", conditions for start-up aid and innovation aid for SMEs.

10. Safeguards
State aid is only exempted under GBER where all compatibility conditions are met.
There will be more ex-post checks.
Member States should have appropriate processes in place to administer the GBER.
The Commission may suspend or withdraw the GBER where non-compliance is identified.

11. General Provisions (Articles 1-12)

12. When GBER applies Certain types of aid excluded in Article 1, such as:
Aid for export related activity
Some aid measures to the fishery and aquaculture sector
Some aid measures in the primary agricultural production sector
Aid to facilitate the closure of uncompetitive coal mines
Aid to undertakings in difficulty
Notification thresholds – GBER does not cover aid above the levels set out in Article 4: such measures must be notified.
Aid must be transparent (it is possible to calculate precisely the GGE of the aid ex ante).
Broadband: 70 Mio total investment cost - here we apply funding gap so, depending on the calculation, the entire investment cost may be covered by subsidies

13. Single undertaking and Annex 1
Approach remains consistent with previous GBER – both de facto and de jure criteria are to be taken into account to determine the single undertaking => 'economic unit';
SME –definition in Annex 1 - In principle, the SME definition has no geographical 'boundaries' (C – 110/13 HaTeFo Gmbh v Finanzamt Haldensleben )
Different from de minimis approach that only concerns de jure control – links through natural persons in the context of de minimis considered inasmuch as natural person acts as an 'undertaking'.
C – 110/13 HaTeFo Gmbh v Finanzamt Haldensleben
Two or more enterprises may constitute a single undertaking when their owners and/or managers are related in a way that they can act jointly to exercise influence over the decision of those enterprises.
“Enterprises may be regarded as ‘linked’ […] where it is clear from the analysis of the legal and economic relations between them that, through a natural person or a group of natural persons acting jointly, they constitute a single economic unit, even though they do not formally have any of the relationships referred to in the first subparagraph of Article 3(3) of the annex [of the SME definition]. Natural persons who work together in order to exercise an influence over the commercial decisions of the enterprises concerned which precludes those enterprises from being regarded as economically independent of each other are to be regarded as acting jointly” [paragraph 39].

14. Firms in difficulty - Art. 2(18)
Conditions of the R&R Guidelines apply;
3 hard criteria (a, b and e) and two soft criteria (c, d)
The definition of a firm in difficulty (a) require that half of the subscribed share capital of a LLC has disappeared, regardless of when the losses were incurred. It would, therefore, be incorrect to take into account only a net loss for the last accounting period.
Debt = book value of interest-bearing short-term and long-term financial liabilities
According to point e) of the deffintion, an undertaking that is not an SME is considered to be in difficulty, where, for the past two years its:
(1) book debt to equity ratio has been greater than 7.5 and
(2) EBITDA interest coverage ratio has been below 1.0.
It is clear that both of the above criteria must be met in each of the two years.
According to Article 2(18) of the GBER, "undertaking in difficulty" means an undertaking in respect of which at least one (emphasis added) of the circumstances described in points (a) – (e) occurs. Therefore, it is not possible to choose an assessment criterion. As soon as a firm fulfils at least one of the criteria of Article 2(18) of the GBER, it must be considered as being in difficulty and thus, pursuant to Article 1(4) c) thereof, the undertaking is not eligible for the categories of aid covered by the GBER, with the exception of aid schemes to make good the damage caused by certain natural disasters.

15. Transparency of aid
Aid shall be transparent as long as the GGE can be calculated ex ante:
Loans: aid calculated based on the reference rate
Guarantees: (i) GGE calculated based on the Guarantees Notice or (ii) methodology notified and approved by the Commission (can be in the context of a specific aid.
Tax advantages: cap has to be set ex-ante to make sure that the notification threshold is not exceeded
Aid intensity shall be calculated as the proportion of aid to the eligible cost of the project (defined in each article)
Infrastructures: total investment costs minus operating profits are the eligible costs – intensity usually 100%

16. Incentive Effect
State aid should encourage the beneficiary to undertake an activity in the common interest. SMEs + LEs aid under schemes - incentive effect present if they have not started the activity before applying for the aid. In case of ad hoc aid to large enterprises – additional documentation needed.

17. Cumulation of aid
public funding = EU centrally managed (i.e. COSME, Horizon) + State aid;
Structural funds pass through national budget => considered State aid;
Cumulation rules apply to State aid (including structural funds):
Free cumulation if concerning different identifiable eligible cost;
If concerning the same eligible cost, only up to the highest intensity under GBER
Tax reductions usually target the alleviation of a current company cost – usually operating aid;
Grants target a specific investment – calculated in relation to defined cost base. Cumulation will usually not be a problem.
If both tax reductions and grants are in relation to the same eligible cost (take for example the cost of a infrastructure depending on which a tax rebate is given – de facto tax rebates as forms of investment aid), investment aid coming from both tax and grants shall be added up and not exceed the notification threshold for that infrastructure.

18. Transparency Member States are required to:
establish comprehensive State aid websites, at regional or national level
publish Legal basis of the measure and summary information sheet (under the GBER)
publish information on individual awards above EUR
Information must be published within 6 months from the date the aid was granted (for tax schemes - within 1 year from the date declaration is due)
MS shall comply with the requirements by July 1, 2016

19. Evaluation in the GBER
Concerns aid schemes in some aid categories (regional, SMEs, R&D&I, environment and broadband), with an average annual budget (not expenditure) over €150 million
Exchange rate from the date of notification
( n.html )
These schemes are covered by the GBER for an initial period of 6 months
Can be extended by the Commission upon approval on an evaluation plan (describing e.g. scope of evaluation, result indicators, methods and timeline). Failure to approve => notification

20. Possible withdrawal of the GBER
Commission may adopt a decision stating that all or some of the future aid measures are to be notified:
if MS does not comply with conditions and after having provided the MS with the possibility to make its views known
Can refer to measures in favor of certain beneficiaries or adopted by certain granting authorities

21. Specific Provisions (Articles 31-35)

22. Training aid

23. Training aid NEW: no distinction between general and specific training
Aid intensity: basic intensity 50% + bonuses – up to 70%:
• 10% for training to workers with disabilities or disadvantaged workers
• 20% for small enterprises
• 10% for medium-sized enterprises
Notification threshold: EUR 2 mil per training project

24. Training aid
Eligible costs include: • trainers' personnel costs • trainers' and trainees' operating costs relating to the training project (e.g. travel expenses and equipment) • costs of advisory services linked to the project • trainees personnel costs and general indirect costs

25. Recruitment of disadvantaged workers
Two definitions with a broader scope: Aid for the recruitment of disadvantaged workers • 'disadvantaged worker' (includes young people between yrs, people without regular paid employment in the previous 6 months, over the age of 50, etc.) • 'severely disadvantaged' (includes unemployed for at least 24 months and unemployed for at least 12 months and having one of other disadvantages) Notification threshold: EUR 5 million per undertaking per year, maximum aid intensity - 50%

26. Employment of workers with disabilities
Notification threshold: EUR 10 mil per undertaking per
year
• aid intensity up to 75% of eligible costs
Aid for compensating the additional costs of employing workers with disabilities
Eligible costs extended (costs of training staff to assist workers with disabilities, transport to and from working place, wage costs for time spent on rehabilitation by a worker with disabilities) – maximum aid intensity – 100%

27. NEW: aid for compensating the costs of assistance provided to disadvantaged workers
- measures supporting the disadvantaged worker's autonomy and adaptation to the work environment Notification threshold: EUR 5 million per undertaking per year Maximum aid intensity: 50%

28. GBER and Simplified cost options

29. Compliance with GBER and ESIF
SCO based on methodologies which make it possible to identify the eligible costs and to exclude costs which are ineligible;
Using statistical data (Article 67(5) (a) (i) CPR) appropriate to some GBER aid categories (e.g. training aid, ETC ); See:
In other cost categories (e.g. Articles 25(e) and 29(d) GBER on research and innovation) would not seem appropriate as only "cost (…) incurred directly as a result of the project" is eligible.

30. SCO Methodology
Methodology used must comply with sound financial management and with the co-financing principle;
Simplified costs must represent a reliable proxy for the real costs;
Methodology will be subject to checks to ensure that it is in line with the applicable ESIF and possible monitoring under State aid rules.

31. Thank you!