State aid - European Commission explains new block exemption

United Kingdom

The European Commission has published an explanatory memorandum concerning the draft General Block Exemption for state aid (GBER) issued in April 2007. The block exemption is one of the cornerstones of the European Commission’s state aid action plan. The action plan aims to ensure that less, but better targeted, state aid is given in the EU in future.

The draft GBER simplifies and consolidates into one instrument the state aid rules on aid to small and medium sized enterprises (SMEs), R&D aid for SMEs, aid for disadvantaged and disabled workers, training aid and regional aid (currently set out in a number of block exemptions). The scope of the GBER also covers environmental aid and aid in the form of risk capital (which were not previously covered by a block exemption). The R&D section of the GBER will also apply to large enterprises, which is an important change.

The explanatory memorandum gives an insight into the European Commission’s thinking behind the proposed changes. It deals separately with rules generally applicable, largely procedural in nature, and with detailed provisions on particular types of aid.

The draft GBER is still subject to review and a further public consultation in summer/autumn 2007. It is anticipated to be adopted in spring 2008, as the current block exemptions expire on 30.6.2008.