Titre du slide show

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Cohesion policy and state aid 18th ANNUAL
MEETING OF EUROPEAN FINANCIAL CONTROL AUTHORITIES
OF STRUCTURAL FUNDS,THE HOMOLOGUES
GROUPLjubljana, 12-13 October, 2009
Dr. Johann Sollgruber
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Overview

• CONTENT
• SF-2007-2013
• Standard clause
• Cohesion Policy and State aid-links
• Horizontal framework
• Regional state aid
• RecoveryTemporary state aid framework

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Compliance

• Under Article 9 (2) of the Council General
  Regulation for the Structural Funds EC (1083)
  2006, operations financed by the Funds shall
  comply with the provisions of the Treaty and of
  acts adopted under them. The Commission and the
  Member States shall ensure that assistance from
  the Funds and the Member States be consistent
  with the activities, policies and priorities of
  the Community.

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Standard clause in Operational Programmes

• Any aid granted under an operational programme
  must comply with the State aid rules that are in
  force.

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Cohesion policy and State aid-links

• The concept of less and better targeted aid and
  aid for regions most in need and the objective of
  Cohesion policy are similar.
• Both policies focus on Lisbon oriented targets.
• Both policies, Cohesion and Competition responded
  to the Crisis-recovery package - see later
• Acceleration of programme implementation

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List of aid schemes

• Article 37 SF REG indent i) Chapter II,
• Programming content, Section 1 to include an
  indicative list of the proposed aid schemes,
  under Article 87 of the Treaty, which are
  expected to be submitted within the programming
  period for Commission approval.

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Cohesion policy and State aid-links

• The fact that Article 55 (6) modified of the
  General Regulation governing the Structural Funds
  2006/1063 refers to state aid and to the
  provisions of Article 87 (1) EC-Treaty proves how
  close both policies act together.
• Either financing gap analysis or maximum allowed
  state aid intensities

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Cohesion policy and State aid-links

• The 5 years' minimum period to keep an aided
  investment also
• stems from state aid rules ( "relocation in the
  context of
• regional development). In essence it requires a
  Member
• State to recover any co-funded state aids where a
  project is
• terminated within five years after its completion
  (three years for
• SMEs). This Member States then informs all other
  Member
• States and the Commission of the recovery and as
  a
• consequence no other Member State will grant EU
  funding to
• the same undertaking.

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State aid principles-Treaty provisions

• The basic substantive rules on the control of
  State aid in the EU are set out in Article 87 of
  the EC Treaty. This article provides that State
  aids are in principle incompatible with the
  common market. The principle of incompatibility
  covers measures that meet all the criteria listed
  in Article 87(1), i.e. they
• a) involve a transfer of State resources
• b) entail an economic advantage for
  undertakings
• c) distort competition by selectively1
  favouring certain beneficiaries and
• d) produce an effect on intra-Community trade.
• 1 Selectivity could be with respect of the
  type of firms (e.g. SMEs), their location (e.g. a
  specific region) or their sector of activity. In
  the extreme, aid could be addressed at one
  specific firm.

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State aid principles-Treaty provisions

• In the context of Structural Funds operations,
  the most relevant exemption clauses are those of
  Article 87(3)(a) and 87(3)(c) of the Treaty
• Article 87(3)(a) states that the Commission may
  consider compatible aid to promote the economic
  development of areas where the standard of living
  is abnormally low or where there is serious
  underemployment
• Article 87(3)(c) states that the Commission may
  consider compatible aid to facilitate the
  development of certain economic activities
  where such aid does not adversely affect trading
  conditions to an extent contrary to the common
  interest.

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Regional Aid guidelines

• Regional state aid guidelines. They give
  substance to the articles 87(3)(a) and 87(3)(c)
  of the Treaty. In essence they indicate the
  maximum grant rates allowed for certain
  specifically designated regions. Under the
  Regional Aid Guidelines 2007-2013, Member States
  were invited to notify a single regional aid map
  for 2007-2013 covering their entire territory as
  soon as possible after the publication of the
  Guidelines. The provisions for "statistical
  effected regions" to be revised in 2010 and their
  financial envelope as well as degressive state
  aid intensities are similar and prove coherence
  between both policies.

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Regional aid guidelines

• Regional aid may be approved
• Article 87(3)(a) economic cohesion at Community
  level
• Article 87(3)(c) national disparities
• Award maxima under the Regional Aid Guidelines
• Large firms-Medium-firms-Small firms
• a regions GDP per head lt45 EU25 average
• a regions GDP per head lt60 EU25 average
• a regions GDP per head lt75 EU25 average
• c areas (general case)

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State aid maps
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Assessment of compatibility-a risk-based approach
to State aid assessment
Large regional aid
eg risk capital
RDI
Specified aid categories
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Compatibility

• In broad terms, from a compliance perspective,
  three categories of measure can be
  distinguished(i) de minimis support (ii)
  measures which fit within the General GBER and
  (iii) measures which require notification. This
  classification gives rise to important issues to
  be addressed at the domestic level, since each of
  the three groups carries different risks and
  responsibilities. Indeed, the lower the level of
  scrutiny by the Commission, the higher the
  administrative burden at the national and
  subnational levels in terms of ensuring
  compliance.

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Horizontal aid

• Block Exemption Regulation for the following
  categories have been adopted
• Environmental protection
• Small and medium sized enterprises (SME)
• Employment
• Training
• RDI
• Risk capital
• Those elements which do not distort competition
  have been included into a  General Block
  exemption Regulation
• OJ L 214, 9.8.2008, p. 347

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Services of general economic interest

• Difficult area but highly relevant for Cohesion
  policy
• Services of general economic interest
• The Decision specifies the conditions under which
  compensation to companies for the provision of
  SGEI is compatible with state aid rules and does
  not have to be notified to the Commission in
  advance.
• Conditions a clearly defined public service
  mandateno over-compensationcompensation of less
  than 30 million per year per undertaking and
  annual turnover of less than 100 million per
  undertaking. no limits for amount of
  compensationfor hospitals, social housing air
  and sea transport to islands airports and
  ports.

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The economic downturn-recovery measures

• Temporary State aid framework (December 2008)
  The consolidated version including the February
  2009 amendments is Temporary Community framework
  for State aid measures to support access to
  finance in the current financial and economic
  crisis (OJ No C 83/1 of 7 April 2009).
• This framework allows for a compatible limited
  aid amount of 500 000 to be paid in the years
  2008-2010. In the light of the financial and
  economic crisis it can exceptionally be paid to
  firms that fall under the definition of firms in
  difficulties . But all measures apply only to
  firms which were not in difficulty on 1 July 2008
  

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The economic downturn-recovery measures-Temporary
state aid framework

• Cohesion policy and firms in difficulties
• While rescue and restructuring aid by Member
  States is therefore allowed under restrictive
  conditions it has never been a priority under
  Cohesion Policy. This is for several reasons
• The priority of Cohesion policy has been on
  promoting innovation, business start up and
  developing the capacity for entrepreneurship that
  can contribute to productivity gains in the
  medium and long term
• The added value of EU investment in rescue and
  restructuring is highly dubious because of the
  difficulties of choosing which companies to
  rescue and restructure. The risk is that such
  measures would not be well targeted but used too
  widely with modest, low or zero medium term
  impact.
• There is a high risk of wasting public resources
  softening the impact of the closure of
  uncompetitive companies (often due to over
  capacity or unproductive work practices) rather
  than allowing market forces work.

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Rescue aid

• The fact that state aid measures are allowed in
  a particular field does not automatically imply
  that such measures are priorities for Cohesion
  Policy.

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Credit squeeze

• This framework allows for a compatible limited
  aid amount of 500 000 to be paid in the years
  2008-2010. In the light of the financial and
  economic crisis it can exceptionally be paid to
  firms that fall under the definition of firms
  in difficulties
• Financial crisis is affecting the real economy
  (businesses and jobs).
• High risk aversion on the part of banks ? credit
  squeeze.
• All companies are affected and especially SMEs.
• Negative impact at short-medium term for EU
  companies and at long term on EU investments.
• THEREFORE
• ?Need for additional State aid measures but
  they have to be well targeted.

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Objective of the Communication on temporary state
aid framework

• Part of  European Economic Recovery Plan .
• of 26 November 2008-COM(2008) 800 final
• To facilitate companies access to finance,
  thereby
• Ensuring continuity in their activities.
• Encouraging companies to continue investing in
  the future, in particular in a sustainable growth
  economy.

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Main principles of the Communication
Recall the existing aid instruments. Propose
additional aid measures ? Based on Art. 87(3)(b)
? Limited in time (31.12.2010) Applicable to
all sectors, SMEs and large companies.
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Measures
Compatible limited amount of aid
Aid in the form of guarantees

• Aid in the form of subsidised interest rate
• Aid for the production of green products

Other measures-Risk Capital

• Temporary derogation of risk capital guidelines.
• Simplification of the requirements to use the
  "escape clause" contained in the export credit
  Communication.

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Compatible limited amount of aid

• Not an increase of de minimis threshold ?
• New aid of EUR 500 000 per undertaking
• Aid may be granted until 31.12. 2010.
• Prior to the granting, MS shall verify that any
  possible de minimis aid received the new aid
  will not exceed the threshold of EUR 500 000
  during the period 1.01.2008- 31.12. 2010.

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Compatible limited amount of aid

• Only applicable to aid schemes.
• Firms active in the fisheries sector and in some
  agricultural activities are not eligible.
• (But applicable to the transport sector)
• Excluded export aid or aid favouring domestic
  products.
• The measure only applies to firms which were not
  in difficulty on 1 July 2008.

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Aid in the form of guarantees

• Reduction of the annual guarantee premium to be
  paid during a period of two years following the
  granting of the guarantee in relation to both
  investment and working capital loans. max. 90
  of the loan
• Loan must not exceed the total annual wage bill
  of the beneficiary for 2008.
• For companies created after 1.01.2008 ? the
  estimated amount for the first two years in
  operation.
• Guarantee premium is calculated in accordance
  with the safe-harbour provisions of the Notice
  on guarantees.

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Aid in the form of guarantees

• Reduction of up to
• 25 for SMEs
• 15 for large companies
• This reduction can also be applied for new
  guarantees granted on the basis of methodologies
  already accepted by a Commission decision.
• The measure only applies to firms which were not
  in difficulty on 1 July 2008.

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Interest aid for the production of green products

• Interest rate reduction for investment loans.
• Loans should be granted before 31.12.2010.
• For financing of new products which significatly
  improve environmental protection.
• Starting point to calculate the aid is the
  reference rate of the beneficiary calculated in
  accordance with the  subsidised interest rate 
  methodology. Then, reduction of up to
• 25 for large companies
• 50 for SMEs

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Interest aid for the production of green products

• Reduction applied for a period of two years
  following the granting of the loan.
• The measure only applies to firms which were not
  in difficulty on 1 July 2008.

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Cumulation

• De minimis compatible limited amount of aid ?
• max. EUR 500 000 for the period of 1.01.08
  31.12.2010.
• De minimis rest of the measures contained in
  the Communication ?
• de minimis granted after 1.01.08 shall be
  deducted from the aid granted.
• Temporary aid measures can be cumulated with
  other compatible aid provided that the maximum
  aid intensities are respected.

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Notification requirements
New measures should be notified The Commission
will ensure swift adoption of decisions
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• Merci !
• Gracias!
• Thank you !
• Vielen Dank !