08 May 2012

State Aid: Commission launches major initiative to modernise State Aid control

In the broader context of the EU's agenda to foster growth, state aid policy should focus on facilitating well-designed aid targeted at market failures and objectives of common European interest. The Commission also aims at focusing its enforcement on cases with the biggest impact on the internal market, streamlining rules and taking faster decisions. The Communication identifies a number of actions with a view to implementing these objectives. The main elements of the reform shall be in place by the end of 2013.

Joaquín Almunia, Commission Vice President in charge of competition policy, said: "Economic forecasts currently indicate that growth in the EU will remain low for some time. In this environment, Europe must tap the full potential of a competitive internal market and, in a context of fiscal consolidation, governments must focus their spending on growth-enhancing priorities. I expect our state aid reform to help public authorities make more efficient use of scarce public resources and design public support to firms so that it helps achieve the EU's growth objectives while limiting competition distortions."

The Communication on State Aid Modernisation launches a far-reaching reform process and identifies three main and closely linked objectives.

First, state aid control shall support sustainable growth and contribute to improving the quality of public spending by discouraging aid that does not bring real added-value and distorts competition. For this purpose, experience developed in the context of State aid control could be embedded in the EU Semesterrecommendations to Member States. Aid shall support flagship initiatives of the Europe 2020 strategy for smart, sustainable and inclusive growth in a pro-competitive way, maintaining a level playing field in the internal market. To this end, the Commission will develop common principles for the compatibility assessment of national support projects and revise and streamline some existing texts, such as the Environmental, Regional or Risk Capital Guidelines (see MEMO/08/31, IP/05/1653 and IP/10/1636), as well as the Guidelines for the Rescue & Restructuring of firms.

Second, state aid enforcement shall focus more on cases with the biggest impact on the internal market. This will include stronger scrutiny of large and potentially distortive aid as well as enquiries by sector, across Member States. At the same time the analysis of cases with limited effect on trade can be simplified by reviewing the regime of exemptions, in particular the General Block Exemption Regulation adopted in 2008 (see IP/08/1110 and MEMO/08/482) and, possibly, the Regulation on small amounts of aid adopted in 2006 (see IP/06/1765 and MEMO/06/482). This can only become possible if Member States improve the quality of submissions and comply even more with EU law.

Third, procedures shall be streamlined to deliver decisions within business-relevant timelines. Also, rules and concepts shall be better explained, including a clarification of the notion of state aid and a modernisation of the Procedural Regulation.

The Commission will seek further contributions from Member States, European institutions and stakeholders on all elements of the package in the coming months. The main elements shall enter into force at the same time by the end of 2013.

Background

The SAM initiative is part of the broader goal of a more comprehensive coordination of national economic policies to achieve the common objective of sustained, inclusive and sustainable growth. State aid control also has a strategic role because it helps Member States to improve the quality of their public spending.

Public support for companies must target and fix market failures. This can be done, for example, by facilitating access to capital for creditworthy SMEs, protecting the environment, encouraging the use of renewable energies, investing in research and innovation or attracting investors towards weaker regions. If in such areas private investors provide insufficient finance and consider that risks outweigh possible rewards, state aid may be authorised by the Commission. But public support should only go up to the socially optimal level and should complement, not replace, private spending.

Press release

© European Commission