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Global crisis and State aid in the EU

“EU State Aids Acquis and Turkey” Istanbul, 11 December 2009. Global crisis and State aid in the EU. Dr. Juergen Foecking. This presentation does not necessarily reflect the position of the European Commission. Applicable rules. "normal" state aid rules apply:

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Global crisis and State aid in the EU

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  1. “EU State Aids Acquis and Turkey”Istanbul, 11 December 2009 Global crisis and State aid in the EU Dr. Juergen Foecking This presentation does not necessarily reflect the position of the European Commission.

  2. Applicable rules • "normal" state aid rules apply: • Mainly Articles 87(3)(a) &87(3)(c) EC • Regional Aid Guidelines • Research, Development and Innovation Framework • Risk Capital Guidelines • Environmental Guidelines • Etc…

  3. Applicable rules Architecture of our "normal State aid rules" De minimis Guidelines General Block Exemption Detailed Assessment Standard Assessment No notification Notification

  4. Applicable rules • Additional rules in the context of the crisis: • Art 87.3.b “aid to remedy a serious disturbance in the economy of a Member State” Banking Crisis response Real economy response

  5. Banking crisis response Banking Communication of 13 October 2008 Recapitalization Communication of December 2008 Guidance Document for the treatment of impaired assets of 25 February 2009 Guidelines on restructuring aid to banks of 23 July 2009

  6. Basic principles of the guidance papers Non-discriminatory access in order to protect the functioning of the Single Market by making sure that eligibility for a support scheme is not based on nationality State commitments are limited in time and will be terminated as soon as improved market conditions permit

  7. Basic principles of the guidance papers State support is limited in scope to what is necessary to address the acute crisis while excluding unjustified benefits for shareholders of financial institutions at the taxpayers’ expense. Appropriate contribution of the private sector

  8. Basic principles of the guidance papers Sufficient behavioural rules for beneficiaries that prevent an abuse of state support. Appropriate follow-up by structural adjustment measures.

  9. Real economy crisis response • two key objectives • to alleviate the “credit crunch” • to encourage firms to continue to invest in the future • is intended to complement and not replace the other instruments

  10. Temporary Framework General condition: not in difficulties on 1 July 2008 1. compatible limited amount of aid • 500k • ≠ de minimis 2. Subsidized guarantee premium • Safe-harbour premiums • Reduction: SME - 25%, large undertakings - 15% • Guarantee: max 90% of loan • Max loan: total annual wage bill • Duration: 2y + 8y

  11. Temporary Framework 3. Subsidised interest rate • Based on difference CBOR and reference rate • Underlying loan: any duration 4. Green products • Subsidized interest rate • Early adaptation or going beyond future Community standards • 25/50% reduction 5. Amendment of existing rules • Risk capital • Short-term export credit insurance

  12. Temporary Framework Safe-harbour premiums for subsidized guarantees

  13. Use of the Temporary Framework • The Commission has approved more than 50 State aid measures in 25 Member States aimed at stabilising companies and jobs in the real economy

  14. What next? • Temporary framework applies until 31.12.2010 • 31 October 2009, Member States were report on experience with the Temporary framework; reports are currently being analysed

  15. Useful links “Normal” State aid rules: http://ec.europa.eu/competition/state_aid/legislation/legislation.html Crisis-related rules: http://ec.europa.eu/competition/state_aid/legislation/temporary.html

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