Annexes to COM(2007)347 - State Aid Scoreboard - spring 2007 update - - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2007)347 - State Aid Scoreboard - spring 2007 update -. |
|---|---|
| document | COM(2007)347  |
| date | June 28, 2007 |
In the Czech Republic, for instance, the Office for the Protection of Competition (UOHS) cooperates with state aid providers in both notifying the state aid to the Commission and in the process of granting the state aid as such, it keeps a register of state aid provided in the country and submits to the Commission the annual report on state aid.
Another good example can be found at the Cypriot Office of the Commissioner for State aid control whose main role is to monitor its correct implementation by the Republic of Cyprus of the Community state aid law "whose objective is the maintenance and strengthening of competition in the internal market, for the benefit, mainly, of European consumers"[30] . This includes carrying out ex ante and interim evaluations of the effectiveness and impact of the different state aid measures aiming at reducing and re-orientating their State aid expenditure.
Some interesting developments are also taking place in countries such as Spain where a draft of a new law for the protection of competition ( "Ley de defensa de la competencia" ) is currently under study in the National Parliament. The draft foresees the creation of an independent competition authority, “the National Competition Commission (NCC)", which would eventually include a state aid unit with more proactive possibilities to act in the state aid field[31] without interfering with the Commission's exclusive powers concerning the compatibility assessment of state aid measures. The competences of such a unit should focus on the analysis, from a competition point of view, of the criteria for granting aid with the objective of drafting reports and making recommendations to the granting authorities. To this end, the draft law sets up a number of information obligations from the various levels of administration (national, regional, local) to the NCC.
Recently, the ECJ judgement in the "Scott case"[32] has also emphasized the Member States' responsibilities regarding the recovery of unlawfully granted aid. In this case, France was condemned for failure to execute a Commission recovery decision because of its national legal system and not because of its behaviour. The ECJ insists that the repayment of the aid has to take place without delay and that recovery must be immediate. It stresses that the time-frame within which the aid must be recovered is indeed essential in order to ensure the re-establishment of the ex ante situation in the market. National procedures providing for an automatic suspensory effect of actions brought against recovery orders and preventing the immediate restoration of the previously existing situation, thereby prolonging the unfair competitive advantage resulting from unlawful and incompatible aid, are against the principle of effectiveness laid down in Article 14(3) of the Procedural Regulation and should be left unapplied. It is against this double benchmark (concrete and immediate recovery) that the Commission will assess the actions taken by Member States to execute Commission recovery decisions.
1.5.2. The role of competitors and other interested parties and the role of national courts
As the last sentence of Article 88(3) of EC Treaty has direct effect[33], individuals have the possibility to invoke it before national courts which have to draw all the consequences of the illegality of the aid including, eventually, ordering its recovery[34]. It has to be borne in mind that neither the initiation of a procedure by the Commission (be it under Article 88(2) or (3) of the EC Treaty) relieves national courts of their duty to safeguard rights of individuals in case of breach of the notification obligation[35] nor has the final Commission decision the effect of regularising ex post the illegality of the aid[36].
The Commission has repeatedly stressed the importance of making use of this possibility for private enforcement of the state aid rules[37].
The SAAP has also underlined the need to increase transparency and advocacy about state aid policy to allow undertakings, the academic world, competition specialists, consumers and the broader public to get involved and act against unlawful aid, in particular before national judges, as well as the need to raise awareness of company auditors, national market regulators and national Courts of Auditors[38].
A study recently carried out by a group of experts on behalf of the Commission on enforcement of state aid law at national level[39] concluded that: (1) European companies increasingly rely on state aid law to obtain the annulment of a discriminatory imposition of a financial burden from which another company is exempted or where the tax or levy is used to finance unlawful aid, but (2) companies rarely use state aid rules as an instrument to challenge the distortion of competition and trade caused by unlawful subsidies granted to competitors. The conclusions of the study also point to the fact that too often excessively long administrative and judicial procedures at national level result in unacceptable delays in the recovery of unlawful aid.
According to the same study, the main impediments to effective enforcement of state aid law in national courts is not to be found in shortcomings or inefficiencies in the Member States’ legal systems or to a lack of knowledge of EC law by national judges. Instead, the study argues that the diversity of the procedures available in Member States for private parties for the enforcement of state aid law and the legal uncertainties relating to these procedures (in particular locus standi , availability of interim relief, burden of proof, causation and unclear substantive rules) may discourage private parties to enforce state aid law before national courts.
This means that, despite a growing awareness of state aid rules at national level – both within the business community and in the legal professions – this tool is not yet fully effective to properly tackle the unlawful aid problem[40].
1.5.3. The role of the European Commission
The Commission, in its role of guardian of the Treaties[41], can initiate unlawful aid procedures based either on ex officio investigations or on information received from competitors and/or other interested parties who have, according to Article 20(2) of the Procedural Regulation, the right to submit information on the alleged unlawful aid to the Commission.
According to the Procedural Regulation[42], the procedure for the Commission to deal with unlawful aid is similar to the one applicable to notified aid. The main difference concerns the absence of deadlines (both for completing the first-phase investigation and for adopting a final decision after opening of formal investigation proceedings according to Article 88(2) of the EC Treaty) which is explained by the absence of notification. Besides, as further explained below, the Commission has the possibility to adopt interim measures in the form of information, suspension and recovery injunctions.
(a) Fight against the ongoing distortion of competition and trade
The "suspension injunction" foreseen in Article 11(1) of the Procedural Regulation provides for the Commission possibility to require a Member State to suspend unlawful aid until the Commission has taken a decision on the compatibility of aid with the common market. In practice, the suspension injunction is rarely used. The most recent example[43] of the use of this tool dates from 2005 when the Commission required Greece to suspend further granting of unlawful state aid in the form of tax breaks under the Greek Law 3220/2004, which reduced the tax base of many companies in various sectors by 35% of their profits. This law was never notified to the Commission in clear breach of Article 88(3) of the EC Treaty. The Commission requested Greece to immediately suspend the granting of state aid, even before reaching a final decision on the compatibility of the measure in order to prevent the distortion of competition and trade in the internal market from continuing. Greece complied with the Commission's decision by suspending the possibility for companies to derive further benefits from the reserve fund until the Commission has reached a final decision on the case.
The "recovery injunction" foreseen in Article 11(2) of the Procedural Regulation enables the Commission to request a Member State to provisionally recover unlawful aid until the Commission has taken a decision on its compatibility. The adoption of such a decision requires that three cumulative conditions are fulfilled: (1) according to established practice, inexistence of doubts about the aid character of the measure concerned, (2) urgency to act, and (3) serious risk of substantial and irreparable damage to a competitor. The imposition of these conditions makes the application of recovery injunction difficult in practice and, consequently, the Commission has not used this tool yet.
(b) Restoration of the ex ante competitive situation
The "negative decision with recovery" foreseen in Article 14 of the Procedural Regulation provides that, if the unlawful aid is found to be incompatible with the common market, the Commission shall request a Member State to recover the aid from the beneficiary unless that would be contrary to a general principle of law. The recovery shall take place without delay and according to national procedures. Member State concerned must, therefore, take all necessary measures to ensure the effectiveness of the Commission decision to recover the aid. The powers of the Commission to recover aid will be subject to a limitation period of ten years[44].
The SAAP insists on the fact that the effectiveness and credibility of state aid control presupposes a proper enforcement of the Commission’s decisions, especially as regards the recovery of illegal and incompatible state aid. However, experience shows that the implementation of recovery decisions by Member States is still far from being satisfactory and, therefore, the Commission should continue to seek to achieve a more immediate and effective execution of recovery decisions, which will ensure equality of treatment of all beneficiaries. In line with the measures announced in the SAAP[45] the Commission is monitoring more closely the execution, in accordance with national procedures, of recovery decisions by Member States. And, where it appears that recovery is not carried out in an immediate and effective manner, the Commission is more actively pursuing non-compliance under Articles 88(2), 226 and 228 of the EC Treaty[46].
A clear and recent example of this stricter approach can be found in the Olympic Airways case. In December 2002 the Commission found that Greece had misused an aid examined and approved by the Commission in the nineties and that, in addition, Olympic Airways had received new aid which was not duly notified. Consequently, the Commission ordered Greece to recover all the aid granted after 14 August 1998. Since Greece didn’t comply with this order, the Commission decided, in April 2003, to make use of its powers under Article 88(2) of the EC Treaty and bring the matter before the ECJ. On 12 May 2005, the ECJ[47] confirmed that the Greek authorities had failed to recover from the airline a state aid estimated in at least € 161 million. Greece didn't respect this judgement either and in October 2006 the Commission adopted, according to Article 228 of the EC Treaty, a decision requesting the ECJ to impose a lump sum penalty of € 10 512 per day since the 2005 judgement and until the effective implementation by Greece of the 2002 decision. Moreover, in case this decision would still not be fully implemented by the time the ECJ issues its second judgement, the Commission has also requested to the ECJ to impose on Greece a periodic penalty payment of € 53 611 per day from the day of this second judgement and until the effective implementation of the original decision is carried out. The case is still pending.
In the same line, the use of the so-called Deggendorf case-law[48] has also been reinforced. This case law confirmed that, when assessing a new aid measure, the Commission has the power to take into account the fact that the beneficiary of this new aid has not fully repaid earlier unlawful and incompatible aid that was subject of a recovery decision. In such cases the Commission may eventually decide that the, otherwise compatible, aid cannot be paid out as long as the previous aid has not been fully reimbursed. It constitutes, therefore, an additional means to put pressure both on Member States and beneficiaries to comply with recovery decisions.
However, between 1997 and 2005 the Deggendorf case-law was applied only occasionally in relation to individual aid cases. But in 2005, in line with the measures announced in the SAAP, the Commission decided to start applying it in a strict and systematic way and to extend its scope of application by:
7. Applying the Deggendorf principle to legal entities other than the beneficiary of aid in cases where the beneficiary of new aid belongs to the same "economic unit"[49] as the beneficiary of the old aid and there are clear indications of a possible circumvention of the Deggendorf case-law.
8. In March 2005 the Commission authorised an environmental aid to a district heating project in Rome[50]. The beneficiary of this aid was AceaElectrabel Produzione SpA (hereinafter, AEP), a firm jointly controlled by ACEA and Electrabel. ACEA, an energy company controlled by the Municipality of Rome, previously benefited from an aid that the Commission declared to be unlawful and incompatible in 2002 and that, two years later, was not recovered by the Italian authorities. Consequently, the Commission decision established that the new compatible aid could not be paid until the beneficiary, who was part of the ACEA group, had reimbursed the old aid.
9. On 3 August 2005 AEP brought an action for annulment before the CFI[51] against the Commission decision on the grounds that, among other considerations, the beneficiary of the new aid measure is not the same and does not constitute a single economic entity with the beneficiary of the old aid and, therefore, the order to suspend the payment of the new aid appears to be unjustified. The case is still pending.
10. Including in the new notification forms[52] a Deggendorf clause which request Member States to indicate whether, in case of individual aid, "any potential beneficiary of the measure received state aid which is subject of an outstanding recovery order by the Commission".
11. Going from affecting only individual or ad hoc measures to including aid schemes as well, through the insertion in the decisions approving new aid schemes of a commitment by the Member State affected to suspend the payment of aid under the new scheme to any undertaking that has benefited in the past from unlawful and incompatible aid (be it individual aid or aid scheme) and this until the Member State has verified that such enterprise has complied fully with the outstanding recovery decision[53].
12. Incorporating the Deggendorf principle in new legislative texts (i.e., rescue and restructuring guidelines[54], block exemption regulation on regional aid[55], etc.).
Finally, in order to improve and speed-up the execution of its recovery decisions, the Commission is preparing a notice[56] recalling the principles underlying the recovery policy and setting out on the one hand the measures taken by the Commission to facilitate the execution of recovery decisions and, on the other hand, the actions that Member States could take to ensure that they reach full compliance with the rules and principles as established by the body of European law and, in particular, the case law of the Community Courts.
2. PART TWO: LEGISLATIVE DEVELOPMENTS
2.1. State Aid Action Plan
The Commission continues to implement various aspects of the State aid Action Plan (SAAP)[57], which set out in June 2005 the guiding principles for a comprehensive reform of State aid rules and procedures over the next five years. Since the last Scoreboard was published in the autumn, the Commission has adopted the following final or draft legislative texts:
2.2. Prolongation of Shipbuilding Framework
In October 2006, the Commission decided to prolong the Framework on state aid rules for shipbuilding by two years, until 31 December 2008[58]. The prolonged Framework, which came into force at the beginning of 2004 takes into account the characteristics of the shipbuilding industry, including provisions about the use of aid for innovation which are unique in EU state aid law. Given the limited period of application of these rules, the Commission wants to acquire more experience before deciding on the future of these rules. The Framework contains specific provisions on innovation aid regional aid, closure aid, export credits, development aid and employment aid that reflect the specific characteristics of the shipbuilding industry and market.
2.3. New rules on State aid in agricultural sector
The Commission adopted in December 2006 new rules on the granting of State aid in the agricultural sector. These rules are in two parts: an exemption regulation[59] which exempts Member States from the obligation to notify State aid given to small and medium-sized undertakings involved in agricultural production provided that certain requirements are met, and guidelines[60] which complement the regulation and lay down rules applicable to notified aid. The two documents cover the period 2007 to 2013. The new categories of aid included in the new guidelines include aid for compliance with standards, "Natura 2000" aid and aid relating to the payments provided for in Directive 2000/60/EC (water policy), aid relating to exemption from excise duties as provided for in Directive 2003/96/EC (taxation of energy products and electricity) and aid to the forestry sector. As regards the processing and marketing of agricultural products, the granting of State aid will from now on be governed by the provisions applicable to State aid in the industrial sector. The exemption regulation will make it possible for aid to be granted to farmers faster, which is particularly important, for example, where they sustain losses due to bad weather or animal or plant diseases.
2.4. Commission Regulation on de minimis aid
In December 2006, the Commission adopted a new de minimis Regulation[61] exempting small subsidies from the obligation to notify them in advance for clearance by the Commission under EC Treaty state aid rules. Under the new Regulation, aid of up to EUR 200 000 and up to EUR 100 000 for the road transport sector, granted over any period of three fiscal years will not be considered as state aid. Loan guarantees will also be covered to the extent that the guaranteed part of the loan does not exceed EUR 1.5 million. In order to avoid abuses, forms of aid for which the inherent aid amount cannot be calculated precisely in advance (so-called 'non-transparent' aids) and aid to firms in difficulty have been excluded from the Regulation. The Regulation took account of comments received from a series of public consultations in the course of 2006. The Regulation entered into force on 1 January 2007.
2.5. Prolongation of block exemption regulation
The Commission adopted in December 2006 a Regulation[62] to extend until 30 June 2008, the period of application of Regulations (EC) No 2204/2002 on State aid for employment, (EC) No 70/2001 on State aid for small and medium sized enterprises and (EC) No 68/2001 on training aid. The prolongation of the validity of these regulations is sought to allow for the necessary period of preparation of a future single block exemption Regulation, which will regroup the current regulations and possibly add other areas, as announced in the State Aid Action Plan.
2.6. Prolongation of Cinema Communication
The Commission adopted in June 2007 a Communication[63] extending until 31st December 2009 at the latest the application of the current rules on state aid to cinematographic and other audiovisual works. This Communication extends the rules laid down Cinema Communications of 2001 and 2004. As announced in 2004, when the Communication was renewed, a study on the economic and cultural impact of territorialisation clauses, obliging producers to spend a certain proportion of the film budget (currently up to 80%) in the Member State granting the aid, was launched. The final study results are expected at the end of 2007, and will be used as an input for the future revision of the rules.
2.7. Commission Draft Regulation on de minimis aid in the fisheries sector
In June 2006, the European Commission has adopted a draft Regulation on de minimis aid in the fisheries sector. Under the new Regulation, which would apply only to the fisheries sector, the ceiling would be set at € 30 000 per three-year period, per beneficiary, on condition that the total amount of such aid represents less than 2.5% of the annual national fisheries output. None of this aid may be used to purchase or construct new vessels or to enhance existing fleet capacity. Member States have to record all relevant information to show that these conditions have been respected. The draft Regulation has been discussed with Member States and then published in the Official Journal C 276 dated 14.11.2006, to invite stakeholders to submit comments. The regulation is due to be adopted by the Commission in July 2007.
2.8. Commission draft Regulation on raising the ceiling for de minimis aid in the agriculture sector
In April 2007 the Commission adopted a draft Regulation raising the ceiling for small amounts of aid ( “de minimis” aid) in the agriculture sector to €6 000 per beneficiary over any period of three years and the maximum total per Member State to 0.6% of the value of agricultural output. It also sets out a clearer definition of the scope of such aid. The draft Regulation gives the Member States greater room for manoeuvre in granting aid without distorting competition. At present, under the Regulation[64] adopted in October 2004, aid in the agriculture sector not exceeding €3 000 per beneficiary over any period of three years or 0.3% of the value of agricultural output for each Member State is deemed not to distort or threaten to distort competition. The draft regulation will first be discussed with the Member States then published in the Official Journal to invite stakeholders to make their comments. After that the Member States will again be consulted on the text. Following this wide-ranging consultation exercise and taking account of the comments received, the Commission intends to adopt a definitive regulation towards the end of the year.
2.9. Draft Community guidelines on State aid for environmental protection
The current Community guidelines on State aid for environmental protection[65] expire at the end of 2007. The Commission services have launched the revision of these guidelines, by publishing a first draft of the revised guidelines on DG Competition's web site[66] in May 2007. This draft is available for public consultation and comments from interested stakeholders, and will be the subject of a multilateral discussion with Member States. The final adoption of the revised Environmental guidelines is envisaged by the end of this year.
2.10. Proposal for a Commission Regulation amending Regulation (EC) No 794/2004 implementing Council Regulation (EC) No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty
The Commission approved the proposal for modification of Regulation 794/2004[67] in June 2007. The proposal will be published on DG Competition's web site and will be subject to discussion with the Member States in the Advisory Committee on State aid. The final adoption of a Commission Regulation amending Regulation (EC) 794/2004 is envisaged by the end of 2007. The proposed amendments concern primarily the transmission of State aid notifications, the method of calculation of interest rate for the recovery of unlawful aid and the update of notification forms for R&D&I and risk capital aid measures.
2.11. Commission report on State aid to the coal industry
The Regulation on State aid to the Coal industry[68] requires the European Commission to present a report on its application by the end of December 2006. Based on the conclusions of the Report, the Commission may then propose amendments to the Regulation. As the Regulation expires at the end of 2010, the Report also offers the Commission the opportunity to give first indications as to its view on State aid to the Coal industry after this date.
The Commission has adopted its report[69] on 21 May 2007. The report finds that there are important differences in the competitive situation of coal mines in Europe. Whereas mines in Germany, Spain, and Hungary have production costs of more than twice the world market price for coal, and are therefore dependent on operating aid, mines in the Czech Republic, Poland, Great Britain and Slovakia are more or less competitive on the world market. These mines receive either no subsidies at all or subsidies for new investments and/or mitigating inherited liabilities only. The Report describes the changes to State aid policies which took place in the Member States since the Coal Regulation came into force. It focuses particularly on types of aid which were introduced by the Member States and the results of the restructuring processes conducted in the Coal sector with the use of subsidies. The Report also provides an overview of the impact of State aid to the Coal industry on the internal market, namely on the production of coal, electricity, coke and steel.
In view of the fact that the global coal market appears to function efficiently the Report concludes that it is not necessary to propose amendments to the Coal Regulation for the period 2008 to 2010. The Coal Regulation will expire on 31 December 2010. The Commission Report invites the Parliament, the Council, the Economic and Social Committee, the Committee of the Regions and all stakeholders concerned to provide their input on the Report.
2.12. Regional aid maps 2007-2013 approved for 25 Member States
By the end of March 2007 the Commission had approved under EC Treaty State aid rules the regional aid maps covering the period 2007-2013 for 25 Member States. Two remaining EU Member States (Italy and The Netherlands) are unable to grant any regional aid within their territory until a new map has been approved by the Commission[70]. These decisions form part of a wider exercise to review regional aid systems in all Member States. A regional aid map defines the regions of a Member State eligible for national regional investment aid for large enterprises under EC Treaty state aid rules and establishes the maximum permitted levels of such aid in the eligible regions. The adoption of a regional aid map is a pre-condition to ensure the continuity of the regional policy and Structural Fund programmes as from January 2007, as the validity of all previous maps expired on 31st December 2006.
3. PART THREE: AID AWARDED UNDER THE STATE AID BLOCK EXEMPTION REGULATIONS
With a view to reducing the administrative burden for specific types of aid, block exemptions for aid to SME, training aid, employment aid, certain types of aid in the fisheries sector and aid to SME in the agricultural sector have come into force over the past few years[71]. Initial results are positive: the number of measures being notified for these types of aid has fallen considerably since 2001 as Member States make increasing use of the possibilities offered by the block exemption regulations. By the end of 2006, Member States had informed the Commission that they implemented almost 1700 block exempted measures since the introduction of the regulations for SME and training in 2001 (see Table 6). In 2006 alone, the Commission received more than 400 summary information forms on newly introduced block exempted measures: 183 on aid for SME primarily in the industry and services sectors, a further 119 for SME in the agricultural sector, 57 on training aid, 35 on aid to employment, and 24 for exempted aid in fisheries. While the number of forms submitted by the Member State in 2006 remained stable, the use of employment and agriculture block exemption regulations has increased.
Four Member States, Italy (25% of the total number of measures), the United Kingdom (21%), Germany (13%) and Spain (10%) accounted almost for 70% of all the information forms submitted 2001-2006. The number of measures submitted by some of the EU-15 Member States is rather low: less then 20 in total in Denmark, Finland, Ireland, Luxembourg, Portugal and Sweden. The EU-10 Member States accounted for more than 24% of the measures submitted in 2006. In the agricultural sector, the possibility to exempt aid, introduced in 2004, has been taken up by 17 of the 25 Member States, in the fisheries sector this possibility, introduced end of 2004, was used by 11 Member States.
Table 6: Trend in the number of measures for which information forms were submitted under the State aid block exemption regulations, 2001-2006, EU-25
[pic]
Note: The table excludes cases withdrawn. Figures for the EU-10 are included as of 1 May 2004. Source: DG Competition
Table 7: Number of measures by Member State for which information sheets were submitted under the State aid block exemption regulations, 2001-2006
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Note: The table excludes cases withdrawn. Figures for the ten new Member States are included as of 1 May 2004. Source: DG Competition
As regards expenditure under the block exempted measures, new data for 2006 will be published in the autumn 2007 Scoreboard. Data for 2005 were included in the autumn 2006 Scoreboard[72].
4. PART FOUR: STATE AID CONTROL PROCEDURES
4.1. Registered Aid Cases
The Commission controls the Member States’ granting of State aid by means of a formal and transparent procedure. According to the Procedural Regulation, "any plans to grant new aid shall be notified to the Commission in sufficient time by the Member State concerned" . In around 8% of registered aid cases, it was not the Member State but the Commission who had to initiate the control procedure after finding out about the existence aid following, for example, a complaint[73].
In 2006, there were 1009 cases[74] registered by the Commission: 921 cases were notified by Member States, 84 were non-notified cases initiated by the Commission and 4 were cases examining existing aid. In addition, information forms for more than 400 measures were submitted under the block exemption regulations. Excluding the information forms, 34% of all registered cases in 2006 concerned the agricultural sector and 53% the industry and service sectors. Of the remaining cases, 9% involved transport and energy and 3% the fisheries sector (see, Table 8).
Of the 921 notifications, just over half were received from five of the largest Member States: Italy accounted for 18% of the total, Germany for 11%, France for 9%, Spain for 9% and the United Kingdom for 6%. In addition, also the Czech Republic had in 2006 a relatively high number of registered notifications (8.5%). Of the 84 non-notified cases, 14 concerned Germany, 13 Italy, 10 the United Kingdom and 8 France.
Table 8: Number of registered aid cases in 2006
Sector | Notified aid cases | Non-notified aid cases | Existing aid cases | Total |
Agriculture | 316 | 27 | 1 | 344 |
Manufacturing and services | 495 | 41 | 3 | 539 |
Fisheries | 28 | 6 | 34 |
Transport and coal | 82 | 10 | 92 |
Total | 921 | 84 | 4 | 1009 |
Source: DG Competition, DG Fisheries, DG Agriculture, DG Transport.
4.2. Commission Decisions
In 2006, the Commission took 710 final decisions[75], a 12 % increase compared with the previous year. In the vast majority of cases, the Commission approved the measures, concluding that the examined aid was compatible (91 % of all decisions in 2006) with the State aid rules or did not constitute State aid (4 % of all decisions). Where the Commission has doubts whether certain aid measures comply with the rules, it carries out a formal investigation during which third parties and all Member States are invited to provide observations. At the end of this investigation procedure, the Commission either takes a positive, conditional or no aid decision (making up 3 % of all decisions) or that it does not comply with State aid rules and hence is not compatible with the Common Market and takes a negative decision (2 % of all decisions).
Table 9 shows the share of incompatible and compatible aid cases on which the Commission reached a decision between 2004 and 2006. Over this three-year period, five Member States accounted for more than 60% of all final decisions: Italy (23% of the total), Germany (13%), France (9%), the United Kingdom (9%) and Spain (8%). Following accession in May 2004, just over 280 final decisions on new aid measures had been taken in the EU-10 Member States by the end of 2006.
Around half (50%) of all final decisions over the period 2004-2006 were in the industry and services sectors, followed by agriculture (41%) transport and coal (6%) and fisheries (3%). It is important to bear in mind that these figures do not distinguish between large and complex cases involving billions of euro and requiring a lengthy investigation and relatively minor measures for which the aid amount may be less than one million euro.
Of the 79 negative decisions over this three-year period, more than half concerned Italy (22) and Germany (19). They were followed by France (10), the Netherlands (6), Belgium (4), Spain (3), and United Kingdom (3). No other Member State exceeded 2 negative decisions in the last three years.
Table 9: Number of negative and positive decisions, 2004-2006
Negative decisions |
Total | Approved without objections | Other positive decisions | All negative decisions | of which recovery ordered |
EU-25 | 1941 | 1698 | 155 | 79 | 42 |
Belgium | 55 | 37 | 14 | 4 |
Czech Republic | 63 | 55 | 8 | 0 |
Denmark | 55 | 45 | 9 | 1 | 1 |
Germany | 258 | 210 | 25 | 19 | 11 |
Estonia | 12 | 12 | 0 | 0 |
Greece | 30 | 26 | 2 | 2 | 2 |
Spain | 157 | 147 | 6 | 3 | 3 |
France | 168 | 140 | 17 | 10 | 6 |
Ireland | 42 | 37 | 4 | 1 | 1 |
Italy | 456 | 407 | 26 | 22 | 10 |
Cyprus | 9 | 9 | 0 | 0 |
Latvia | 23 | 23 | 0 | 0 |
Lithuania | 20 | 19 | 1 | 0 |
Luxembourg | 6 | 5 | 0 | 1 |
Hungary | 18 | 17 | 1 | 0 |
Malta | 3 | 3 | 0 | 0 |
Netherlands | 120 | 100 | 12 | 6 | 3 |
Austria | 48 | 45 | 2 | 1 |
Poland | 79 | 72 | 6 | 1 | 1 |
Portugal | 23 | 20 | 2 | 1 | 1 |
Slovenia | 10 | 8 | 2 | 0 |
Slovakia | 49 | 47 | 1 | 1 | 1 |
Finland | 25 | 23 | 1 | 1 | 1 |
Sweden | 44 | 38 | 4 | 2 | 1 |
United Kingdom | 168 | 153 | 12 | 3 |
Note: Some double-counting exists in those cases for which there is both a negative and positive decision. The category ‘other positive decisions’ is made up of positive and conditional decisions following a formal investigation procedure as well as all ‘no aid’ decisions. Source: DG Competition, DG Fisheries, DG Agriculture, DG Transport.
Further information on methodological issues may be found on the online Scoreboard:
http://europa.eu.int/comm/competition/state_aid/scoreboard/conceptual_remarks.html
[1] Competition is vital for the economy to be efficient. In this context, “efficiency” refers to the extent to which welfare is optimized in a particular market or in the economy at large. A “market failure” is consequently a situation where the market does not lead to an economically efficient outcome.
[2] Article 1(f) of Council Regulation (EC) No 659/1999, of 22 March 1999, laying down detailed rules for the application of Article 93 (now Article 88) of the EC Treaty (hereinafter, Procedural Regulation) precisely defines unlawful aid as new aid put into effect in contravention of Article 88(3) of the EC Treaty. OJ L 83 of 27 March 1999, p. 1.
[3] ECJ judgement of 14 February 1990 in case C-301/87, France v. Commission ("Boussac"), Rec. 1990, p. I-307. Emphasis added.
[4] See European Council Conclusions of November 2004 and March 2005.
[5] "A Single Market for Citizens – Interim Report to the 2007 Spring European Council". COM(2007)60 final of 21 February 2007.
[6] See points 8 and 23 of the SAAP. COM(2005)107 final of 7 June 2005.
[7] For further details, see section 1.2 below.
[8] COM(2006)761 final of 11 December 2006.
[9] The term "ex officio case" is used for a state aid case which is not brought to the Commission attention through a notification or a complaint but which is started at the Commission's own initiative and on the basis of its own investigation.
[10] In the period 2000-2006 the Commission has not taken any decisions on unlawful aid concerning six Member States: Estonia, Cyprus, Latvia, Lithuania, Malta and Slovenia. Note that EU-10 Member States joined the Union on 1st May 2004 and therefore they are not fully comparable with EU-15 Member States. As Bulgaria and Romania joined the Union on 1st January 2007, they are not included in this Scoreboard update.
[11] Decision "not to raise objection" according to Article 4(3) of the Procedural Regulation.
[12] Decision "does not constitute aid" according to Article 4(2) of the Procedural Regulation.
[13] Decision "to initiate the formal investigation procedure" according to Article 4(4) of the Procedural Regulation.
[14] "Positive decision" according to Article 7(3) of the Procedural Regulation.
[15] "Conditional decision" according to Article 7(4) of the Procedural Regulation.
[16] "Negative decision" according to Article 7(5) of the Procedural Regulation.
[17] Excluding recovery cases in the agriculture sector.
[18] On 31 December 2006, there were still a further 8 recovery decisions pending that were adopted before 1 January 2000.
[19] The autumat were adopted before 1 January 2000.
[20] The autumn 2005 State aid Scoreboard (COM(2005)624 final of 9 December 2005) reported a total of € 9.4 billion. This discrepancy is due to the fact that some Member States submitted a revised estimate of the amounts to be recovered under some schemes.
[21] Total amount recovered (including interest and aid lost in bankruptcy reported in December 2004 was € 3.1 billion, and € 8.2 billion in December 2005).
[22] In insolvency cases, the recovery claim is normally only partially satisfied. The remainder is “lost”. From a competition perspective, however, we consider that the distortion of competition is removed with the liquidation of the beneficiary (provided that its assets are transferred on market terms).
[23] C 45/2001, C 46/2001, C 47/2001, C 48/ 2001, C 49/2001, C 50/2001, C 51/2001, C 54/2001 and C 30/2002.
[24] SG(84) D/6421 of 16 May 1984.
[25] See ECOFIN conclusions of 1 December 1997 including a package of three initiatives aimed at tackling harmful tax competition.
[26] Case C15/2002 - OJ L282 of 30 October 2003
[27] C 13a/2003 (ex NN 779/2002) – Financial measures put in place by the State in support to France Télécom. Final negative decision published in OJ l 257 of 20 September 2006, p. 11.
[28] ERAP is a state-owned industrial and commercial establishment. Its mission is to acquire, at the request of the French government, equity interests in companies in the energy, pharmaceutical and telecommunications sectors.
[29] State aid case C 66/2001 (ex NN 2/2000). Final negative decision published in OJ L 314 of 18 November 2002, p. 72.
[30] See point 17 of the SAAP.
[31] See the webpage of the Office of the Cypriot Commissioner for State aid control (http://www.publicaid.gov.cy/publicaid/publicaid.nsf/dmlindex_en/dmlindex_en?opendocument).
[32] See Article 11 of the draft Spanish law for the protection of competition ( "Proyecto de Ley de defensa de la competencia" ).
[33] See ECJ judgement of 5 October 2006 in case C-232/05, Commission v. France.
[34] See ECJ judgement of 15 July 1964 in case 6/64, Flaminio Costa v. ENEL, Rec. 1964, p. 585.
[35] See ECJ judgement of 11 December 1973 in case 120/73, Gebrüder Lorenz GmbH v. Germany, Rec. 1973, p. 1471.
[36] See ECJ judgement of 11 July 1996 in case C-39/94, Syndicat Français de l'Express International (hereinafter, SFEI) v. La Poste, Rec. 1996, p. I-3547.
[37] See ECJ judgement of 29 November 1991 in case C-354/90, Fédération Nationale du Commerce Extérieur des Produits Alimentaires et Syndicat National des Négociants et Transformateurs du Saumon v. France, Rec. 1991, p. I-5505.
[38] See Notice on cooperation between national courts and the Commission in the State aid field. OJ C 312 of 23 November 1995, p.8.Point 56 of the SAAP announces a possible revision of this Notice, which would focus particularly on the need to extend it to other national bodies.
[39] See points 17 and 55 of the SAAP.
[40] JESTAEDT, T., DERENNE, J. and OTTERVANGER, T. (Coord.). Study on the enforcement of state aid law at national level. Competition studies 6, OPOCE. Luxembourg, March 2006. Please note that this study covers only EU-15.
[41] Even though the number of cases increased substantially (from 116 to 386) only in very few cases the action brought by a competitor before a national court resulted in the actual suspension or recovery of an unlawful aid.
[42] See Article 211, first indent, of the EC Treaty.
[43] See Recitals 11 to 14 and Chapter III (Articles 10 to 15) of the Procedural Regulation.
[44] See state aid case C 37/2005 (ex NN 11/2004) – Tax exempt reserve fund. Decision to open formal investigation proceedings published in OJ C 20 of 27 January 2006, p. 16. No final decision has been adopted yet.
[45] See Article 15 of the Procedural Regulation.
[46] See point 53, first indent, of the SAAP.
[47] For further details, see Table 5 of this report.
[48] ECJ judgement of 12 May 2005 in case C-415/03, Commission v. Greece.
[49] CFI judgement of 13 September 1996 in joined cases T-244/93 and T-486/93, Textilwerke Deggendorf GmbH (hereinafter, TWD) versus Commission, Rec. 1995, p. I-2265; ECJ judgement of 15 May 1997 in case C-355/95 P, TWD versus Commission, Rec. 1997, p. I-2549.In 1995, the Commission adopted a decision in which it ordered the German authorities to suspend the payment of new compatible aid to TWD until they had completed the recovery of an old unlawful and incompatible aid from that company. This decision was upheld by the CFI and the ECJ. In its judgement the CFI confirmed that "When the Commission considers the compatibility of a State aid with the common market, it must take all the relevant factors into account including, where relevant, the circumstances already considered in a prior decision and the obligations which that previous decision may have imposed on a Member State. It follows that the Commission had the power to take into consideration, first, any accumulated effect of the old[…] aid and the new […] aid and, secondly, the fact that the (old) aid declared unlawful […] had not been repaid" (see point 56 of the above mentioned CFI judgement).
[50] Cases where for instance the beneficiary of the new aid is a newly created legal entity controlled by the beneficiary of the old unlawful aid.
[51] See state aid case C 35/2003 (ex N 90/2002) – Reduction of greenhouse gas emissions (Lazio). Final conditional decision published in OJ L 244 of 7 September 2006, p. 8.
[52] Case T-303/05.
[53] See point 11 of Part I – General Information of Annex I to Commission Regulation (EC) No 794/2004 of 21 April 2004 implementing Council Regulation (EC)No 659/1999 laying down detailed rules for the application of Article 93 of the EC Treaty (hereinafter, the Implementing Regulation). OJ L 140 of 30 April 2004, p. 14.
[54] See, as a matter of example, state aid cases N 410/2005, N 610/2005, N 620/2005, N 9/2006, N 264/2006, N 291/2006 and N 390/2006.
[55] See point 2.5 of the Community guidelines on State aid for rescuing and restructuring firms in difficulty. OJ C 244 of 1 October 2004, p. 5.
[56] See Recital 13 and Article 7(g) of Commission Regulation (EC) No 1628/2006 of 24 October 2006 on the application of Articles 87 and 88 of the Treaty to national regional investment aid. OJ L 302 of 1 November 2006, pp. 31 and 36.
[57] The adoption of this notice is foreseen for the end of 2007.
[58] COM(2005) 107 final of 7 June 2005, http://europa.eu.int/comm/competition/state_aid/others/action_plan/
[59] Commission communication concerning the prolongation of the Framework on State aid to shipbuilding - adopted by the Commission on 24 October 2006. OJ C 260 of 28 October 2006, p. 7.
[60] Commission Regulation (EC) No 1857/2006, of 15 December 2006, on the application of Articles 87 and 88 of the Treaty to State aid to small and medium-sized enterprises active in the production of agricultural products and amending Regulation (EC) No 70/2001. OJ L 358 of 16 December 2006, p. 3.
[61] Community guidelines for State aid in the agriculture and forestry sector 2007 to 2013. OJ C 319 of 27 December 2006, p. 1.
[62] Commission Regulation (EC) No 1998/2006 of the 15th December 2006 on the application of Articles 87 and 88 of the Treaty to de minimis aid. OJ L 379, 28.12.2006.
[63] Commission Regulation (EC) No 1976/2006, of 20 December 2006, amending Regulations (EC) No 2204/2002, (EC) No 70/2001 and (EC) No 68/2001 as regards the extension of the periods of application (Prolongation of existing State aid block exemptions). OJ L 368 of 23 December 2006, p. 85.
[64] Prolongation of the Cinema Communication, adopted by the European Commission on 13 June 2007, Press release IP/07/820
[65] Regulation (EC) No 1860/2004, of 6 October 2004. OJ L 325 of 28 October 2004, p. 4.
[66] Community guidelines on State aid for environmental protection , Official Journal C 37, 03.02.2001, pages 3-15
[67] Draft Community guidelines on environmental protection, published on 10 May 2007, http://ec.europa.eu/comm/competition/state_aid/reform/guidelines_environment_en.pdf
[68] OJ L 140, 30.4. 2004, p.1. Regulation as last amended by Regulation No 1935/2006, OJ L 407, 30.12. 2006, p.1.
[69] Council Regulation (EC) No 1407/2002 of 23 July 2002 on State aid to the coal industry, OJ L 205, 02/08/2002 P. 0001 – 0008,http://eurlex.europa.eu/smartapi/cgi/sga_doc?smartapi!celexplus!prod!CELEXnumdoc&lg=en&numdoc=302R1407
[70] Commission Report on the Application of Council Regulation (EC) No 1407/2002 on State Aid to the Coal Industry, COM2007(253), 21.05.2007,http://ec.europa.eu/dgs/energy_transport/state_aid/doc/com_2007_0253_en.pdf
[71] The Netherlands notified their regional aid map in May 2007. Italy has not yet notified its map.
[72] Commission Regulation (EC) No 70/2001, of 12 January 2001, on State aid to SME – OJ L 10 of 13 January 2001, p. 33. Commission Regulation No 364/2004, of 25 February 2004, amending Regulation (EC) No 70/2001 as regards the extension of its scope to include aid for research and development – OJ L 63 of 28 February 2004, p. 22. Commission Regulation (EC) No 68/2001, of 12 January 2001, on training aid – OJ L 10 of 13 January 2001, p. 20). Commission Regulation No 363/2004, of 25 February 2004, amending Regulation (EC) No 68/2001 – OJ L 63 of 28 February 2004, p. 20. Commission Regulation (EC) No 2204/2002, of 5 December 2002, on State aid for employment – OJ L 337 of 13 December 2002, p. 3. Commission Regulation (EC) No 1/2004, of 23 December 2003, on State aid to SME in the agricultural sector – OJ L 1 of 03 January 2004, p. 1. Commission Regulation (EC) No 1595/2004, of 8 September 2004, on State aid to SME active in the production, processing and marketing of fisheries products – OJ L 291 of 14 September 2004, p. 3.
[73] COM (2006) 761 final, 11.12.2006
[74] In 2006 there were more than 200 registered complaints, some of which may have led (or may lead) to new registered cases.
[75] This figure excludes measures submitted under the block exemption regulations.
[76] Excluding decisions to open the formal investigation procedure, corrigenda, injunctions, proposals for appropriate measures.