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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
Cohesion policy and state aid
18th ANNUAL MEETING OF EUROPEAN FINANCIAL
CONTROL AUTHORITIES OF STRUCTURAL FUNDS,
“THE HOMOLOGUES GROUP”
Ljubljana, 12-13 October, 2009
Dr. Johann Sollgruber
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
Overview
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CONTENT
SF-2007-2013
Standard clause
Cohesion Policy and State aid-links
Horizontal framework
Regional state aid
Recovery&Temporary state aid
framework
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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.
Ljubljana, 12-13 October 2009
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Republika Slovenija
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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.
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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
Ljubljana, 12-13 October 2009
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Republika Slovenija
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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.”
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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.
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
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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 selectively[1] 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.
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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”.
Ljubljana, 12-13 October 2009
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Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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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Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
Regional aid guidelines
Regional aid may be approved:
• Article 87(3)(a) : economic cohesion at Community
level
• Article 87(3)(c): national disparities
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•
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Award maxima under the Regional Aid Guidelines
Large firms-Medium-firms-Small firms
‘a’ regions GDP per head <45% EU25 average
‘a’ regions GDP per head <60% EU25 average
‘a’ regions GDP per head <75% EU25 average
‘c’ areas (general case)
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Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
State aid maps
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Homologues Group Meeting
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Republika Slovenija
Assessment of compatibility-a riskbased approach to State aid
assessment
Large regional aid
eg risk capital
RDI
Specified aid
categories
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Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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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Republika Slovenija
Homologues Group Meeting
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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. 3–47
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Republika Slovenija
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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 mandate;no
over-compensation;compensation of less than €30
million per year per undertaking; and annual turnover of
less than €100 million per undertaking. no limits for
amount of compensation:for hospitals, social housing; air
and sea transport to islands; airports and ports.
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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.
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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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Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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.
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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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Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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
Communication.
Ljubljana,
12-13export
October credit
2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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 safeharbour provisions of the ‘Notice on guarantees’.
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Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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.
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
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.
Ljubljana, 12-13 October 2009
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European Union
Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
Notification requirements
New measures should be notified
The Commission will ensure swift
adoption of decisions
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European Union
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Republika Slovenija
Homologues Group Meeting
Slovenia, October 2009
Merci !
Gracias!
Thank you !
Vielen Dank !
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