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State aid and Structural Funds

This resource delves into the complexities and criteria defining State Aid in the EU, with a focus on compatibility and control measures. It outlines the four criteria defining State Aid, compatible aid categories, regional aid considerations, and State Aid control in candidate countries.

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State aid and Structural Funds

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  1. State aid and Structural Funds Carlos Tenreiro DG Competition Brussels 9 April 2003 DG Competition

  2. EC TREATY • EC Treaty provisions (Art. 87, 88, 89) • SA is in principle incompatible with the common market • SA can be accepted only in exceptional cases, specified in the Treaty (exemptions from the ban on State aid) • Commission controls the application of these exemptions • Rationale : • Avoid distortion of competition within the internal market • Contribute to sound public finances • Promote economic and social cohesion DG Competition

  3. FOUR CRITERIA DEFINING STATE AID EU State aid rules apply only to aid that satisfies each of the following conditions: • Granted by a MS or through State resources in any form whatsoever • Advantage that distorts competition • Selectivity: - specific regions, sectors - discretionary power • Effect on trade between Member States

  4. COMPATIBLE STATE AID - 1Aid objectives and instruments • Regional develop. - Aid for initial investment by firms of any size - Operating aid in exceptional circumstances • SME promotion - Aid for initial investment - Aid for advisory services and participation in trade fairs • R&D - Aid for basic and applied research projects • Environment - Aid for environmental investment (incl. energy saving renewables, cleaning-up polluted sites, plant relocat.) - Operating aid for recycling and renewables • Training - Aid for training of employees • Employment - Aid for net job creation - Aid for employment of handicapped people • Risk capital - Aid for risk capital funds • De minimis - Small amounts of aid for anything

  5. COMPATIBLE STATE AID - 2 Regional aid • Regional aid maps • Art. 87(3)(a) regions: GDP/Cap < 75% of EU average • Art. 87(3)(c) regions: Other assisted areas defined on the basis of EU & national criteria • Regional investment aid • Aid for initial investment projects (no replacement investment) • Eligible costs • Value of the investment • Two year labour costs of net job creation

  6. COMPATIBLE STATE AID - 3 Regional aid (continued) • Regional investment aid (continued) • Max. aid intensity • (a)-regions: 40% or 50% of eligible costs (+15% for SME) • (c)-regions: 20% of eligible costs (+10% for SME) • Large projects: lower aid intensities • Operating aid • Aid towards normal running costs of companies • Only in (a)-regions in exceptional circumstances (clearly identified handicap; aid does not overcompensate; temporary and degressive in time)

  7. STATE AID CONTROL IN CCs - 1 • Europe Agreements: State aid will be assessed on the basis of the criteria arising from EU acquis in the State aid field • Effective State aid control was pre-condition for the closure of the Competition Chapter: • Adoption of State aid legislation • Establishment of State aid monitoring authorities • Assessment of “enforcement record”

  8. STATE AID CONTROL IN CCs - 2“Legal” aid after accession • Aid that can be granted from the date of accession • New aid notified and approved by the Commission • “Existing aid” : • Aid that entered into effect before 10/12/1994 • Aid included in a list attached to the Treaty • Aid approved under the “interim procedure” • Interim procedure • entry into effect before accession • approved by the SAA • submitted to the Commission • Commissiondid not raise any objections

  9. STATE AID AND STRUCTURAL FUNDS - 1General regulation • General Regulation • All operations must be compatible with State Aid rules (Art. 12) • Each OP should contain information on State aid (Art. 18(2)) • OPs are approved only if all requirements of the Regulation are fulfilled (Art. 28(1)) • MA is responsible for ensuring compliance with EU policies (Art.34(1)) • Requirements OP • State aid article in Commission decision • State aid table

  10. STATE AID AND STRUCTURAL FUNDS - 2State aid table - Format

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