1. State aid – Trainee training Sarah Ward 15 September 2015

2. Overview What is State aid? Definition and scope Examples of things falling in and out of the rules Exemptions Practical approach to dealing with State aid issues Procedural points Notification process Risks for clients www.blplaw.com Page 2 © Berwin Leighton Paisner

3. blplaw.com What is State Aid? Article 107(1) TFEU “Any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods and affects trades between member states.” Four cumulative elements Transfer of State resources Selective benefit Actual / potential distortion of competition Effects on intra-EEA trade

4. Example types of aid instrument Direct grants Transactions at undervalue / overvalue Government guarantees Loans on favourable terms Tax relief Equity investments on unequal terms www.blplaw.com Page 4 © Berwin Leighton Paisner

5. blplaw.com Activities that might not involve State Aid Market Economy Investor Principle (MEIP) Buying or selling at market value Provision of infrastructure, provided not dedicated to sole user Equity investments on certain terms

6. blplaw.com Market Economy Investor Principle (MEIP) Where State acting in the same way as private investor would Demonstration of market E.g. buying or selling something at market price Joint ventures where risk and reward shared equally

7. blplaw.com Sale of land and buildings Commission Communication Competitive sale process Independent valuation

8. blplaw.com Provision of public open access infrastructure Roads, pathways, cycleways No single end user (i.e. public open access) Position with utilities more complex Infrastructure must be procured

9. Exceptions and authorisations Just because a measure constitutes State aid does not mean that it is not allowed Some measures automatically authorised in advance: General Block Exemption Regulation Existing approved schemes Approval from European Commission Last resort Lengthy process Not just a rubber-stamping exercise www.blplaw.com Page 9 © Berwin Leighton Paisner

10. blplaw.com Exceptions to rules against grant of State aid Presumption that State aid unlawful General Block Exemption Regulation “De minimis” aid Approved schemes Frameworks, guidelines and communications

11. General Block Exemption Regulation Covers: Aid to SMEs Training aid Environmental aid Regional aid Specific conditions Aid intensity thresholds Monetary caps www.blplaw.com Page 11 © Berwin Leighton Paisner

12. Services of general economic interest What is an SGEI? Does their funding amount to State aid? Altmark judgment Commission communication Exemption decision (e.g. transport, health, social housing) Special De Minimis Regulation for SGEIs www.blplaw.com Page 12 © Berwin Leighton Paisner

13. Sector-specific rules Banks Audiovisual / Broadcasting Broadband Electricity Postal services Shipbuilding Steel Transport www.blplaw.com Page 13 © Berwin Leighton Paisner

14. Other guidelines etc. Environmental aid Regional aid Research, development & innovation Restructuring & recovery aid Risk capital Training aid www.blplaw.com Page 14 © Berwin Leighton Paisner

15. Practical approach: Do you need to notify? Does it fall within the definition of State aid? Does it fall within the General Block Exemption Regulation? Is it covered by an existing approved scheme? Will it be cleared if notified to the European Commission? What are the risks? www.blplaw.com Page 15 © Berwin Leighton Paisner

16. Risks for clients Recovery of aid (plus interest) Damages actions Public perception Scrutiny of future projects www.blplaw.com Page 16 © Berwin Leighton Paisner

17. Notification procedure One or two phase notification procedure (depending on complexity) Preliminary procedure: 2 months In-depth investigation: A further 18 months Pre-notification discussions Simplified procedure under certain conditions Standstill clause www.blplaw.com Page 17 © Berwin Leighton Paisner

18. Complaints & infringement cases Special infringement procedure against Member States Commission can adopt decisions declaring aid to be unlawful (even in non-notified cases) Decision always against the Member State, even if aid not granted by central government 10-year limitation period Best practices code www.blplaw.com Page 18 © Berwin Leighton Paisner

19. This document provides a general summary only and is not intended to be comprehensive. Specific legal advice should always be sought in relation to the particular facts of a given situation.