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State aid: Commission adopts Best Practices Code and Simplified Procedure to accelerate state aid decisions – frequently asked questions
Commission Européenne - MEMO/09/208 29/04/2009
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Brussels, 29th April 2009
State aid: Commission adopts Best Practices Code and Simplified Procedure to accelerate state aid decisions – frequently asked questions
(See also IP/09/659)
Why streamlining state aid procedures?
State aid procedures often suffer from long duration and lack predictability. Currently, 6 months are needed on average for the Commission to adopt decisions based on a preliminary investigation of notified measures, and 20 months if the Commission opens a formal investigation. Such time-frames and the lack of predictability regarding the likely timing of decisions are unsatisfactory for the needs of modern businesses. This is why the Commission is committed to simplifying, streamlining and thereby accelerating the conduct of state aid procedures.
Decisive simplification has already been achieved with the entry into force of the General Block Exemption Regulation (GBER - see IP/08/1110 and MEMO/08/482), which now exempts a wide range of aid measures from the notification obligation.
Straightforward aid measures which have not been included in the GBER because some Commission control was still considered necessary will be dealt with under the Notice on the Simplified Procedure within an accelerated timeframe of 1 month after notification.
The Best Practices Code will apply to all other notified state aid cases, including the most complex ones. It shall contribute to speedier, more transparent and more predictable state aid procedures within the framework of the unchanged legislative framework set out in the so-called Procedural Regulation (Council Regulation 659/1999).
What are the Best Practices Code and the Simplified Procedure for?
The Commission's main objective with both these initiatives is to cut red-tape and to fasten state aid control procedures within the existing procedural legal framework. The de minimis Regulation (Regulation n° 1998/2006 - see IP/06/1765) as well as the General Block Exemption Regulation (GBER: Regulation n° 800/2008) constituted first steps towards this objective, exempting a wide range of measures from the notification obligation. The Best Practices Code and the Simplified Procedure will help to streamlining state aid case procedures between the Commission and Member States, for faster, more transparent and more predictable treatment of cases.
What is the main content of the Best Practices Code?
The Best Practices Code is based on a joint commitment of the Commission and the Member States to increase the quality of notifications and mutual discipline.
For its part, the Commission will offer pre-notification contacts on a more regular basis, to enhance the quality and completeness of notifications. A mutually agreed planning will frame the conduct of particularly novel, complex or urgent cases. The Commission will also endeavour to group its requests for information.
For their part, Member States are invited to answer more swiftly and completely to case-related requests made by the Commission. To that effect, the Code proposes to rigorously enforce existing procedural means to encourage Member States to react promptly and keep the procedures moving. For example, should the Member State fail to provide the requested information within the set deadline, the notification will in principle be deemed withdrawn after one reminder.
The Best Practices Code also seeks to improve the procedure for dealing with complaints by including indicative deadlines and better information of complainants on the treatment of their complaints.
What is the main content of the Simplified Procedure?
The Simplified Procedure provides for a cooperative framework in order to allow the Commission to tackle straightforward cases within a timeframe of one month after notification. Its structure and operational arrangements are largely inspired by the Commission Notice on a simplified procedure for treatment of certain merger cases under Council Regulation (EC) No 139/2004. It thus aims at improving the effectiveness, transparency and predictability of the Commission's treatment of more straightforward cases, like those clearly in line with existing horizontal instruments and established Commission decision-making practice.
The Simplified Procedure is based on a joint commitment of the Commission and the Member States. On one hand, pre-notification contacts would be an essential requirement to ensure the quality and completeness of notifications. On the other hand, the Commission would endeavour to adopt decisions on straightforward cases within a timeframe of one month upon receipt of a complete notification.
The Notice will also improve the position of other interested parties by making the procedures more transparent: a summary of notifications will be published on the Commission's website before the adoption of the final decision in order to allow stakeholders to provide their comments. In other procedural settings, Member States are normally not obliged to accept the publication of summaries of notified measures. In the particular context of the Simplified Procedure, however, the Commission considers that this increased transparency constitutes a necessary and appropriate guarantee to counterbalance the shortened investigation period.
What is the difference between the two initiatives?
Although they largely pursue overlapping objectives of increasing predictability and efficiency of state aid procedures, the Best Practices Code and the Simplified Procedure are two different but complementary instruments. The reason for this is that the Best Practices Code pursues improvements in a wide area of different situations: pre-notifications, mutually agreed planning, treatment of notifications, formal investigation procedures, and treatment of complaints... The Simplified Procedure applies only to one very specific sub-scenario of the notification of straightforward cases. For such cases, the Commission specifically endeavours to treat the case within the accelerated timeframe of one month. Since such tight deadlines imply detailed arrangements and intense cooperation between the concerned Member State and the Commission, the conditions for applying this procedure have been laid down in a separate Notice. The Simplified Procedure also foresees specific transparency requirements.
What will it change for Member States?
Once the two initiatives are implemented, Member States will benefit from more efficient and predictable procedures. Improvements will however require efforts both from the Commission and Member States themselves. It would appear advisable for the Member States to integrate state aid aspects in their measures at the earliest possible design stage. Most notably, in order to benefit from the improvements to the system, Member States will have to streamline the way in which they handle notifications, respond to information requests or complaints. More generally, cooperation between the Commission and Member States will need to improve. In order to smooth out remaining state aid issues in notification cases, the Commission considers that the most efficient tool is to systematically use pre-notification contacts. With such a joint commitment of all stakeholders involved, the situation should improve significantly even without amending the Procedural Regulation n° 659/1999. In particular, decision-making times should be reduced and the duration of procedures should become predictable for all involved.
What will be the concrete impact of these initiatives in terms of duration of the investigations?
The duration of state aid investigations will be significantly reduced and streamlined if these Best Practices are adhered to in practice.
The average duration of the preliminary investigation phase currently amounts to six months. The Commission expects that this phase could be reduced to one month under the Simplified Procedure, and to between two and four months for the remaining cases, if the Code is actually applied. The entire investigation of a case, including both its preliminary and formal investigation, could be completed within eighteen months, i.e. the indicative timeframe foreseen in the Procedural Regulation for the formal investigation only.
Similarly, the treatment of complaints will be significantly improved by a staged and more predictable procedure. Complainants will normally be informed of the priority status of their complaint within two months from its receipt; and an assessment of the case within an indicative deadline of twelve months.
Both initiatives should thus considerably improve the transparency, effectiveness and predictability of the conduct of state aid control proceedings.
Do the Best Practices Code and the Simplified Procedure bind the Commission and the Member States?
The answer is no. "Best Practices" are by definition non-binding working arrangements. The time-frames indicated in the Code are thus purely indicative, and the arrangements foreseen for pre-notifications and the mutually agreed planning will apply on a voluntary basis.
The different steps of the standard procedure for the control of state aid measures are set out in the 1999 Procedural Regulation EC 659/1999. The Best Practices Code details how this procedure should be carried out in practice, to reduce the duration of state aid investigations, while enhancing their transparency and predictability.
The same is true as regards the Simplified Procedure. Member States are not obliged to apply for an accelerated treatment under the Simplified Procedure. But they may decide to do so, knowing that swift Commission assessment within shortened time-frames depends on optimal cooperation in the pre-notification stage and on increased transparency towards third parties.
Will the Commission oblige Member State to receive third parties' comments or complaints in their original language?
The answer is no. The Commission cannot and will not impose on a Member State an obligation to accept comments in their original language. Nevertheless, in order to ensure transmission of eventual third party comments to the Member State concerned in the most expedient manner, Member States will, as far as possible, be invited to accept transmission of third parties' comments in their original language. Should a Member State not be in a position to accept this transmission, the Commission services will of course translate the comments before transmitting them, but this will have implications on the duration of proceedings.
If someone lodges a complaint with the Commission in the state aid field, what will the Best Practices change in practice?
Under the Best Practices Code, the Commission will quickly inform the complainant about the status of his complaint – priority or not, and once received, take a view on the complaint and issue an assessment - be it preliminary or not - of the case within a reasonable deadline. Thereby, the transparency, predictability and efficiency of complaints-handling will be considerably improved, and both complainants and Member States better informed of the state of play of pending complaints and the Commission's likely course of action in their respect.
Will the Commission systematically offer pre-notification contacts?
The Commission's experience demonstrates the added value of pre-notification contacts with Member States, even in seemingly standard cases. Under the Best Practices Code, pre-notification contacts are strongly recommended for cases where there are particular novelties or specific features which would justify informal prior discussions with the Commission services. But informal guidance will be provided whenever a Member State asks for it.
In the context of the Simplified Procedure, pre-notification contacts are part of the procedure. This is essential because it is only with optimal upstream cooperation and agreement between the Member State and the Commission as regards the fact that a given measure fits with existing guidelines or established precedents that the Commission can manage to adopt decisions within such shortened timeframes.
Will pre-notifications increase the workload of the Member States?
On the contrary. No substantive additional workload will derive from a more regular use of pre-notification contacts. They will provide the notifying Member State with the possibility to discuss the legal and economic aspects of a proposed project informally and in confidence with the Commission prior to notification, and thereby enhance the quality and completeness of notifications. In this context, the Member State and the Commission can also jointly develop constructive proposals for amending problematic aspects of a planned measure. This phase thus paves the way for a more speedy treatment of notifications, once they are formally submitted to the Commission. Under the Best Practices Code, successful pre-notifications should effectively allow the Commission to adopt decisions within two months from the date of notification, because the enhanced quality of notifications after the pre-notification phase will diminish, and possibly eliminate, the need for later information requests. No request for information should be necessary for cases subject to Simplified Procedure and the Commission should thus be able to process decisions within one month.
Are these initiatives going to apply to measures adopted in the context of the current crisis?
None of both initiatives is intended to apply to the measures notified by Member States in the context of the current financial crisis, for which specific ad hoc internal procedures have been established in order to allow the Commission to treat notified measures with extreme urgency. Alongside these initiatives, the Commission has set up a series of internal working arrangements – including an Economic Crisis Team - in order to react swiftly as regards those state aid measures which Member States notify in order to tackle the effects of the current crisis in the real economy.
What is the sectoral scope of application of these two initiatives?
The Best Practices Code applies in principle to all sectors of industry and services. However, the specificities of state aid in the fishery and aquaculture sectors and in the primary production, marketing or processing of agricultural products may justify a deviation from this Code. Moreover, due to these same specificities, the simplified procedure will not apply to aid favouring activities in the fishery and aquaculture sectors, activities in the primary production of agricultural products or activities in the processing or marketing of agricultural products.
Does this initiative fit into the State Aid Action Plan (SAAP)?
The SAAP (IP/05/680) indicated that there were certain shortcomings in the practices and procedures of state aid policy, which can be observed in the long time frame for the treatment of cases. This report stated that longer time frames are clearly an unacceptable outcome, bearing in mind that a trade off might exist between the duration of the procedure and ensuring an effective control while safeguarding the rights of third parties. Therefore it suggested, where possible within the scope of the current procedural regulations, for the Commission to improve its internal practice and administration, and increase efficiency, enforcement and monitoring in close cooperation with Member States.
With the adoption of the Best Practices Code and the Simplified Procedure, the Commission has delivered on its promises to revise not only the substantive rules in the area of state aid policy, but also to optimise procedural arrangements with the Member States within the framework of the existing procedural architecture.
 Official Journal C 56, 05.03.2005, p. 32.
 See, for instance, the so-called "safe harbour" provisions of the R&D&I, risk capital and environmental guidelines adopted in the context of the State aid Action Plan: http://ec.europa.eu/competition/state_aid/legislation/horizontal.html
 http://ec.europa.eu/competition/state_aid/reform/reform.html. see in particular points 48 and following.