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EU State Aid: consultation on draft revised General Block Exemption Regulation

Scotland
01/06/2013
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As highlighted in our January alert, the European Commission (the Commission) is prioritising the modernisation of State aid rules. As part of that initiative, the Commission is now consulting on a draft revised General Block Exemption Regulation (GBER) to replace the current Regulation 800/2008 when it expires on 31 December 2013.

The current GBER has been used extensively by EU Member States, but has been criticised for being overly complex and difficult for authorities to apply in practice. The focus of the revised GBER is on simplification of the current rules, with some relaxation for aid that promotes growth and does not have a distortive impact on competition within the EU. With some relaxation, the proposals also include transparency measures in an attempt to assist the monitoring of compliance.

The proposed changes include:

Notification thresholds doubled for R&D projects: for projects consisting predominantly of fundamental or industrial research activities the current notification thresholds are to be doubled to EUR 40m for fundamental research and EUR 20m for industrial research.
New exemption for R&D infrastructure: a new exemption for public investment of up to EUR 15m for the construction or upgrading of research infrastructure, which may include technology and innovation centres and 'incubator' projects, provided access is granted on a transparency and non-discriminatory basis and on market terms.
More flexibility when applying regional investment aid rules: including a new exemption for initial investments by large enterprises in '(c)' regions new activities such as greenfield investments or the diversification of existing establishments into new products; an exemption for regional aid schemes aimed at tourism activities; and a more relaxed approach to the funding of renewables projects.
Better approach to SME and start-up investment: introduction of an overall investment cap of EUR 10m for investment in SMEs, replacing the current annual investment limit of EUR 1.5m; and new simplified thresholds for aid to start-ups (EUR 2m for loans, EUR 3m for guarantees and EUR 0.4m for grants with bonuses for enterprises established in assisted regions), these limits doubled for small and innovative enterprises.
Innovation aid for SMEs: introduction of a new notification threshold is EUR 5m per beneficiary simplifying and streamlining the conditions for innovation aid measures, grouping together all categories of innovation aid for SMEs.
Codification of measures on SMEs: in addition to expanding the scope of the GBER to cover areas pertinent to SMEs, the Commission intends to codify all provisions relating to SMEs into one section of the GBER. Further, the Commission is considering adding a new provision to the effect that whenever relying on an exemption from the notification requirement an SME can only benefit from the exemption or from more favourable conditions under the GBER provided it does not lose its SME status within 'x' years from the grant of the aid due to becoming a partner or linked enterprise with a large enterprise.
Extending environmental aid: facilitating the granting of environmental aid in the areas of resource efficiency (energy saving and efficiency and cogeneration), climate change and energy measures, with a new exemption introduced for district heating; new provisions on aid for land remediation where the polluter cannot be identified; and two alternative models to support renewables.
Aid intensity and eligible costs: the Commission has added new provisions on the approach to calculating aid intensity and eligible costs relating to aid payable in several instalments, aid granted by means of tax advantages and where aid is granted in the form of repayable advances.
Procedural requirements and transparency: introducing a requirement on Governments to publish the details of all aid granted on a single website, including the name of the beneficiaries and the aid amounts (to be made available to the general public without restrictions).
Withdrawal of the benefit of the GBER: introducing the sanction of the withdrawal of the GBER where the conditions for granting aid without notification are not respected.

Comment

While providing some legal certainty for important aid measures, the proposed draft GBER remains overly complicated and difficult to apply in practice; certainly with respect to individual aid measures. A continued overly prescriptive approach to State aid control risks failing to achieve the stated aims of the State Aid Modernisation (SAM) initiative and not being fit for purpose in the current economic climate.



For an interesting critique of the SAM initiative it is worth reading Sir Jeremy Lever QC's lecture delivered at King's College London in November last year.



The Commission invites comments on the draft revised GBER by 28 June 2013 and will consult on a further draft version of the new GBER later this year.



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