Transcript Slide 1

Seminar on JESSICA and State Aid
Brussels, 4 May 2011
JESSICA: using existing State
aid provisions
Eglé Striungyté and Christian Harringa
DG Competition, European Commission*
* DISCLAIMER: The views expressed are purely those of the presenters and may not in
any circumstances be regarded as an official position of the European Commission
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Overview
• State aid presence and beneficiaries
• Compatibility rules:
– Regional Aid Guidelines
– Environmental Aid Guidelines
– Broadband Guidelines
– Risk Capital Guidelines
– SGEI rules
– GBER
• References
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Is State aid present? (1)
• Cumulative Art 107 (1) TFEU conditions to establish State aid presence:
– Support in whatever form provided by the State or through State resources to…
– selected economic activities (offering of goods or services on a specific market) carried
out by any entities (pubic or private) conferring…
– an economic advantage, i. e. investments not in line with the market economy investor
principle (MEIP), which could…
– distort competition and affect trade.
• Verifying MEIP-compliance to establish State aid presence:
– Loans - interest rates in line with the Reference Rate Communication (OJ C 14, 19.1.2008);
– Guarantees - fees and conditions in line with the Guarantee Notice (OJ C 155, 20.6.2008);
– Equity/quasi-equity - public-private investments on a pari passu basis (the Risk Capital
Guidelines, OJ C 194 18.008.2006);
– Services of General Economic Interest (SGEI) - see below.
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Is State aid present? (2)
• De minimis aid (not qualifying as State aid):
– EUR 200,000 over any 3 fiscal year period (Regulation N. 1998/2006)
– Only transparent aid, i. e. a grant or a gross grant equivalent (GGE) of loans
and guarantees (equity only if treated as a grant)
• Calculating a GGE of State aid (for de minimis and compatibility):
– Standard loans - the present value of the difference between the (market)
interest rate (normally based on the Reference Rate Communication) and the
interest rate actually charged;
– Guarantees - the present value of the difference between the (market)
guarantee fee (normally based on the Guarantee Notice) and the guarantee
fee actually charged;
– Equity/quasi-equity – considered not to be transparent aid and, therefore,
normally the total investment amount is treated as a grant.
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Potential State aid beneficiaries
Private investors in
HF/UDFs receiving
preferential treatment
compared to public
investment
Project promoters
(and other project
investors) receiving
sub-commercial equity,
loans and guarantees
HF/UDF managers
receiving higher than
market remuneration
for investment
management services
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Justifying State aid
No prior notification
Prior notification obligation, approval of the Commission
Guidelines
General Block
Exemption
Standard
assessment
Specific policy instruments: pre-defined
market failures and limited distortions
Detailed
assessment
Directly
under TFEU
Art 107.3 (c), (d)
Detailed economic assessment: effectbased balancing test
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Regional Aid Guidelines
• Project types:
– Multi-sectoral investment projects (SMEs and large companies)
• Standard assessment principles (schemes):
– Projects must be undertaken in the assisted areas of Art. 107(3)(a) or(c) TFEU covered by
the regional aid map (if areas below the NUTS III level with min. 20.000 population
covered by the regional map, SMEs may receive investments below EUR 25 million);
– Investment into new assets (initial investment, not replacement investment) and must be
maintained for at least 5 years after completion;
– Aid intensities (a percentage of discounted eligible costs) – up to 50% for large
enterprises, up to 60% for medium-sized and up to 70% for small enterprises;
– The recipient must contribute at least 25 per cent of the total eligible costs that are free
of State aid .
• Individual notification (projects):
– Large investment projects above EUR 50 million or exceeding the RAG thresholds.
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Environmental Aid Guidelines
• Project types:
– Renewable energy, high efficiency cogeneration, energy saving, district heating installations
(not heating infrastructure), waste management (treating waste generated by other
polluters) and the remediation of contaminated sites (where the polluter is not known).
• Standard assessment principles (schemes):
– Eligible costs – only extra investment costs linked to environmental protection (compared
to a reference conventional investment) net of operating costs and benefits (i. e. cost
savings) arising during the first 3 to 5 years of the investment;
– Aid intensities may not exceed 60-80% for renewables, cogeneration and energy savings
and 50-70% for waste management and district heating;
– For the remediation of contaminated sites, 100% aid intensity of the eligible costs (the costs
of remediation, minus the increase value of the site).
• Individual notification (projects):
– Aid to a project exceeding EUR 7.5 million.
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Broadband Guidelines
• Project types:
– Basic broadband and next generation access (NGA) networks.
• Necessity criteria:
– Areas with insufficient broadband coverage: “white” areas (simplified procedure) and
“grey” areas (standard assessment), no credible private investment in the target area
within 3 years.
• Core safeguards:
–
–
–
–
Detailed mapping and coverage analysis, public consultation with existing operators;
Open tender process selecting the most economically advantageous bid;
Technological neutrality not to favour any technology or service provider;
Use of existing infrastructure, wholesale access, benchmarking pricing, monitoring and
claw-back.
• Additional safeguards (core safeguards plus for NGA networks):
– Access to passive (and not only active) infrastructure;
– National Regulatory Authorities shall be consulted;
– Network architecture should support effective and full unbundling and satisfy all
different types of network access.
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Risk Capital Guidelines
• Risk Capital Guidelines (OJ C 194 18.08.2006, p. 2) foresee public/private
investments in the form of equity and quasi-equity combined with loans
and guarantees.
• Preferential (non pari-passu) conditions for private co-investors can be
compatible.
• Standard assessment principles (“Chapter 4”):
– EUR 2,5 million joint public/private investment tranches per target SME per year;
– Minimum private participation of 50/30 percent in non-assisted/assisted areas.
• In-depth assessment principles (“Chapter 5”):
– Higher investment tranches and lower private participation possible when sufficiently
justified by specific proof of market failure.
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General Block Exemption Regulation
• GBER (OJ L 214, 09.08.2008, p. 13): conditions for several aid measures
to be exempt from obligation to notify.
• 26 different settings (e.g. regional aid, investment aid, environmental
aid or risk capital measures) for recipients, aid intensities and eligible
costs.
• Aid has to meet transparency criterion in Article 5 GBER, i.e. primarily
aid has to be comprised in grants, interest rate subsidies, certain kinds
of loans, guarantees and capped fiscal measures.
• Equity/quasi-equity considered non-transparent, possible when total
amount considered as grant.
• Investments into SMEs only when provided by a public/private fund
with minimum 50% private participation (30% in assisted areas).
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SGEI (1): The „Altmark Conditions“
Under the following conditions, set by the Court (Judgment of 24 July 2003
Case C-280/00, European Court reports 2003 p. I-07747) , public
compensation for the provision of SGEIS by an undertaking is free from State
aid:
1.
The undertaking actually has public service obligations to discharge and these
obligations are clearly defined.
2.
The parameters of the compensation are objective and established in advance.
3.
The compensation does not exceed the costs of the SGEI plus a reasonable
profit and may not be used on other markets open to competition.
4.
The SGEI provider has been selected by a tendering procedure
or
Compensation for provision of SGEI has been calculated on the basis of the
costs of a typical undertaking that is well run and adequately equipped
(Efficiency test).
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SGEI II: the 2005 compatible SGEI package
COMMISSION
DECISION
OJ 2005/L 312/67
 “Small” SGEI:
Turnover max. EUR 100 million
and compensation max. EUR 30
million p.a.
 Social housing
 Hospitals
 “Small” public service operators:
air and maritime links
EXEMPT FROM
NOTIFICATION
FRAMEWORK
OJ 2005/C 297/04
“Large” SGEI
TRANSPARENCY
DIRECTIVE OJ
2006/L 318/17
Separate accounts
required for:
 SGEI activities
and

Commercial
activities
NOTIFICATION
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Test Case(s): Refurbishing the EU Quarter in Model Town
In order to demonstrate options for urban development projects in line with State aid rules, we use the
following test case(s) both in assisted and non assisted
areas:
1. Construction of 200 apartments in a privately owned social housing project for
EUR 50 million of which EUR 10 million are public grant funding.
2. Building of 4,000 square meters of privately owned office space for EUR 8 million,
EUR 6 million of which are public subordinated loan to international
development company (no SME).
3. Installation of solar panels on top of office buildings for EUR 800,000 by a private
undertaking with EUR 200,000 grant funding.
4. Building a public park for EUR 3 million public expenditure.
5. Integrating 1-4 in a single development project with EUR 61.8 million volume in a
public private partnership without public grants but with favorable investment
conditions for the private investor.
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References
• State aid Handbook:
– http://ec.europa.eu/competition/state_aid/legislation/compilation/state_aid_11_03_11
_en.pdf
• State aid for urban development – the Urban Vademecum:
– http://ec.europa.eu/competition/state_aid/studies_reports/vademecum.pdf
• Contacts:
– Paolo Cesarini, Head of Unit, H2,
H - State aid: Cohesion, R&D&I and Enforcement, DG Competition,
Tel: +32 2 2951286, email: [email protected]
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