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blplaw.com 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
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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
www.blplaw.com Page 2 © Berwin Leighton Paisner
blplaw.com
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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blplaw.com
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
blplaw.com
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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blplaw.com
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
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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
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Sector-specific rules
• Banks• Audiovisual / Broadcasting• Broadband• Electricity • Postal services• Shipbuilding• Steel• Transport
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Other guidelines etc.
• Environmental aid• Regional aid• Research, development & innovation• Restructuring & recovery aid• Risk capital• Training aid
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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?
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Risks for clients
• Recovery of aid (plus interest)• Damages actions• Public perception• Scrutiny of future projects
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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
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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
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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.