State aid – Trainee training Sarah Ward 15 September 2015

State aid – Trainee trainingSarah Ward15 September 2015

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

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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

Example types of aid instrument

• Direct grants• Transactions at undervalue / overvalue• Government guarantees• Loans on favourable terms• Tax relief• Equity investments on unequal terms


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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

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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

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Sale of land and buildings

• Commission Communication• Competitive sale process• Independent valuation

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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

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


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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

General Block Exemption Regulation

• Covers:• Aid to SMEs• Training aid• Environmental aid• Regional aid

• Specific conditions• Aid intensity thresholds• Monetary caps


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


Sector-specific rules

• Banks• Audiovisual / Broadcasting• Broadband• Electricity • Postal services• Shipbuilding• Steel• Transport


Other guidelines etc.

• Environmental aid• Regional aid• Research, development & innovation• Restructuring & recovery aid• Risk capital• Training aid


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?


Risks for clients

• Recovery of aid (plus interest)• Damages actions• Public perception• Scrutiny of future projects


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


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


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.

Documents

State aid – Trainee training Sarah Ward 15 September 2015