State Aid: New General Block exemption Regulation

European Commission adopted Regulation No 800/2008 of 6 August 2008 that consolidates the former block Exemption Regulations (except the de minimis one). Through Block Exemption Regulations the Member States are able to grant whole categories of state aid without first notifying them to the European Commission. The General Block Exemption provides for a simpler and coordinated text that makes state aid control simpler and quicker.

*The Original version of the citizen Summary is published on the EU Commission site.

** The General Block Exemption Regulation has been published on the EU Official Journal

1. WHAT IS THE REASON FOR THE COMMISSION TO SCRUTINISE STATE AID?

State aid can be a real benefit to society, for example by improving the environment, encouraging research and development or allowing for increased training of the employees. However, State support can also have harmful effects: it can help inefficient firms stay on the market, which in the long run will lead to higher prices for consumers. Companies can also play off one government against another, threatening to move its investments to whichever country providing the largest subsidies.
State aid has to be notified to the Commission to ensure that it contributes to commonly agreed objectives. The Commission receives many hundreds of such notifications each year, many of which clearly aim at praiseworthy objectives.

2. HOW DOES THE NEW LAW HELP SOLVING THIS PROBLEM?

The Commission wants to ensure that clearly compatible aid gets approved as quickly as possible. This new law (regulation) will automatically approve whole categories of aid, without the need for notifications. In practice, this implies that Member States can grant aid more quickly.
This reduces red tape for the Member State, the beneficiaries and for the Commission.
The law both simplifies the existing arrangements for automatic approvals(1), consolidating them into a single law. It also exempts new types of aid. The Commission has been allowed by the EU Council of Ministers(2) to adopt such types of regulations.
This provides simple and transparent rules for the beneficiaries and the Member States.

3. WHO IS BENEFITING FROM THIS NEW REGULATION?

Among the different measures included in the regulation intending to ensure growth and jobs for European businesses and consumers, we can find:

• Small and medium-sized enterprises (SME) aid: Small businesses are one of the main driving forces in the economy, but they often face specific problems. The regulation allows different types of aid to SMEs: aid for investments in machines or for hiring additional workers, aid in the form of risk capital, innovation aid, aid contributing to intellectual property rights costs.


• Social aid: Beyond aid allowing subsidising employees working on new investments in SMEs or in assisted regions, the law approves aid that helps disabled or otherwise disadvantaged workers to find mainstream jobs. The regulation also favours aid for training workers, to the benefit of both employers and employees.


• Regional aid: The regulation approves regional investment aid essentially when it allows the creation of new establishments in the most disadvantaged regions. In assisted regions, aid for newly created start-ups is also allowed in order to stimulate further entrepreneurial initiatives.


• Environmental aid: The regulation facilitates authorities granting an important number of aid measures favouring environmental protection or tackling climate change: aid promoting investments in energy savings or investments in renewable energy sources and aid in the form of environmental tax reductions, amongst others.


• Aid for women entrepreneurship: The average rates of business start-ups by women are lower as compared to men. This is getting in the way of the economic development of the Community. The regulation includes therefore, for the first time, measures in favour of child care and parent care costs and allows supporting small enterprises owned and run by women.


• Aid for Research & Development & Innovation (R&D&I): The regulation includes authorisations for a range of measures including amongst others aid for R&D projects and aid measures supporting young innovative companies.

4. WHEN WILL THE NEW LAW ENTER INTO FORCE?

The law has been adopted on 7 July and it will have direct effect. It should be published in the EU Official Journal in the course of July 2008 and enter into force 20 days later.

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1) For a complete list of existing regulations click here
2) Regulation from the Council n. 994/1998.

[07 july 2008]

of DG COMP OFFICIAL SITE

Subjects (TAGS): Small and Medium Size Enterprises (SME) - education and training - Regional Aid - Employment - General Block Exemption Regulation -