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European Commission

MEMO

Brussels, 18 December 2013

State aid: Transparency and Evaluation in the draft General Block-Exemption Regulation

(see IP/13/1281 on the public consultation launched by the Commission on the draft General Block-Exemption Regulation)

I. Transparency in the draft General Block-Exemption Regulation

Why is transparency needed?

One of the main objectives of the State aid modernisation is to enable the Commission to focus on the most distortive cases while leaving more flexibility to Member States to put in place less distortive aid. In this context, the draft General Block-Exemption Regulation (GBER) makes it possible to grant aid on the basis of pre-defined criteria with no need to notify to the Commission, thereby saving time, reducing the administrative burden and promoting models of good aid. To achieve these objectives, the Commission is further enlarging the scope of the GBER, after the adoption of the Enabling Regulation (see IP/13/728), by means of higher thresholds and new exemptions (e.g. for innovation, infrastructures, broadband, culture, sports, renewables or outermost regions).

In order to ensure that the rules are properly complied with and that distortions of competition remain limited, such an enlargement and simplification for Member States has to be balanced by greater transparency and more ex-post controls. In particular, the Commission considers it crucial that Member States, economic operators, and the public shall have easy access to all pertinent information about aid awarded under the GBER. The proposal especially aims at companies, by giving them the possibility to check whether aid awards granted to their competitors are legal, and by improving incentives for compliant behaviour by aid recipients. It shall also provide for better accountability of public spending in times of scarce resources, facilitate enforcement for national and regional authorities by increasing awareness on aid granted at various levels, hence ensuring better control and follow-up also at home.

This proposal comes at a point where developments in information technology make transparency possible, following the successful experience of transparency in other policy fields (structural funds, Common Agricultural Policy), in several Member States and in other jurisdictions (e.g. USA for federal grants and in a majority of federal states).

What is going to change?

Under the new GBER proposal (Article 9 on "Publication and information"), Member States are required to publish on a comprehensive State aid website, at national or regional level, the following information:

Summary information on the aid measure;

The full text of the aid measure or a link providing access to it;

Information on each individual aid award exceeding EUR 200.000.

While the first two items were already required under the GBER currently in force, the third one is new and is also introduced in the State aid guidelines. The information at individual level is limited to the following items under the GBER (Annex III):

  1. name of the beneficiary,

  2. type of beneficiary (SME/large enterprise),

  3. region,

  4. economic sector,

  5. aid element,

  6. aid instrument and

  7. date of granting.

In order to ensure the proportionality of the requirement, publication is not mandatory if the aid element is below EUR 200.000.

In addition, and given the fact that information on aid granted under fiscal schemes or under risk finance schemes may in some situations enable to trace back other business information not directly linked to the aid, it is proposed to limit the information under those schemes to wide ranges rather than exact amounts.

By proposing this exception, the Commission recognises the importance of tax confidentiality: the Commission does not require disclosure of the companies' tax base or their total amount of taxes, but focusses on public resources foregone, in the form of tax exemptions or derogations from tax measures. Since such derogations are selective, confer an advantage to undertakings and thus constitute State aid, accountability on the use of public resources and State aid control also have to be preserved. A minimum level of transparency is therefore proposed: while the names of the undertakings must be published for the purpose of transparency, Member States will be required to provide only an order of magnitude for the aid amount, i.e. information in ranges of EUR 2 million.

Finally, the draft GBER foresees a transitional period of two years in order to ensure that those Member States which do not have equivalent transparency mechanisms have sufficient time to put them in place.

How to implement it?

Under the current reporting obligations, granting authorities are already required to inform the Commission about aggregated yearly expenditures under each scheme. This applies to all types of schemes. An integrated reporting system has been rolled out in Member States in recent years down to local granting authorities.

The main new features of the transparency requirement, by comparison to the existing reporting obligations, are the following:

Information should not only be aggregated at schemes' level, but presented beneficiary by beneficiary. This will add a layer of information (name of beneficiary, individual aid amount, etc.). This information already has to be collected and recorded for monitoring purposes, and some Member States already created databases which provide information at the level of the beneficiary.

Information should become public, as already done for EU funds and in some Member States (often, in the form of a general right of the public to information about public spending). The draft GBER (Annex IV) provides guidance on how the State aid websites shall be organised in a way to allow easy access to the information. In particular, the information should be searchable and retrievable (available for download). No prior user registration shall be required.

The provision of information at individual level is not submitted to the deadline of 20 working days applicable to information on the legal basis. However, the draft GBER requires the information to be up-to-date (a reasonable updating period could be for instance six months, as proposed in the Regional Aid Guidelines). The information has to be available for at least ten years from the date on which the aid was granted.

Action

Description

Step 1: Data Collection

Proper collection of data: the full text of the notified aid scheme, its implementing provisions, granting authority, name of the individual beneficiaries, aid amount per beneficiary and aid intensity.

Step 2: Data Processing

Creation of a uniform and consistent dataset across granting authorities (at national or regional level).

Step 3: Data Publication

Accessibility of data on a central public website (national or regional). The data should be searchable and retrievable.

What about the other reporting obligations?

Transparency constitutes an important step in terms of level of information available on State aid expenditures. As a result, the Commission proposes to drop most of the current reporting obligations imposed on Member States. This covers, in particular, the current obligation to report to the Commission on all R&D aid above EUR 3 million and on all large regional investment projects within 20 working days.

The Commission is also reviewing the current reporting obligations under the Guidelines (additional reports for RDI measures, RDI fiscal aid, clusters, annual reports containing information for large companies benefitting from environmental aid measures, annual reports under R&R schemes, detailed reports on risk capital measures and activities of investment funds, etc.).

II. Evaluation in the draft General Block-Exemption Regulation

What does the Commission expect from evaluation?

One of the main objectives of the State aid modernisation is to enable the Commission to focus on the most distortive cases while leaving more flexibility to Member States to put in place less distortive aid. In this context, the draft General Block-Exemption Regulation (GBER) makes it possible to grant aid on the basis of pre-defined criteria with no need to notify to the Commission, thereby saving time, reducing the administrative burden and promoting models of good aid. To achieve these objectives, the Commission is further enlarging the scope of the GBER, after the adoption of the Enabling Regulation (see IP/13/728), by means of higher thresholds and new exemptions (e.g. for innovation, infrastructures, broadband, culture, sports, renewables or outermost regions).

In order to ensure that the rules are properly complied with and that distortions of competition remain limited, such an enlargement and simplification for Member States has to be balanced by greater transparency and more ex-post controls for significant measures.

The Commission will therefore expect Member States to evaluate to what extent public support schemes have achieved their purpose and what was their impact on markets and competition. The results of the evaluation will be taken into account when designing new State aid schemes or when prolonging existing schemes. It will contribute to better policy-making for both the Commission and the Member States.

In particular, the evaluation shall focus on:

  1. assessing whether the scheme is effective in achieving the direct objective for which it was introduced (for instance, regional development, environmental protection, etc.)

  2. assessing whether the scheme provides for indirect effects on the objective of interest (e.g. the positive spill-overs of R&D expenditures);

  3. detecting negative indirect effects, in particular the potential aggregated effect of large schemes on competition and trade (for instance, foreclosure of markets or relocation out of poorer regions).

Why evaluating block-exempted schemes?

The GBER normally caters for schemes which are considered compatible with the internal market by respecting a number of standard conditions. In devising such rules a balance has to be struck between simplification and ensuring that only "good" aid measures are authorised. Moreover, large schemes are likely to have a significant impact on the internal market that standard rules set out ex-ante are not capable of apprehend. Such schemes should therefore be subject to ex-post evaluation and for it Member States will be required to notify to the Commission an evaluation plan before the scheme is put into effect.

The notification will allow setting out the features of the evaluation and its timeline. Otherwise the scheme will be considered compatible where it meets the relevant conditions of the GBER.

In order to keep the requirement proportionate, only a limited number of schemes will be considered for evaluation (as defined in Article 1(2)(a)):

  1. schemes considered large, i.e. when the annual State aid expenditure exceeds EUR 100 million and represent at least of 0.01% of GDP of the Member States concerned; this will ensure that larger Member State will on average be subject to a requirement proportionate to other Member States1;

  2. the large schemes (as defined above) only in sectors with the most potential impact on competition, i.e. regional investment aid, R&D&I, environment, SMEs, access to finance and broadband infrastructures (see list in Annex).

How is it going to work?

Member States will be required to provide, together with the notification of their scheme, an evaluation plan which could provide details on the following elements:

  1. Objective of the scheme, key assumptions, objective of evaluation, identifying the relevant result indicators

  2. Methodology

  3. Monitoring, data gathering and availability

  4. Timeline

  5. The body conducting the evaluation (or the selection principles)

  6. Peer review, at the beginning and at the end of the evaluation

  7. Use of the results, in particular for subsequent or similar schemes

On all those elements, and especially on the evaluation methodologies, DG Competition is currently consulting Member States and stakeholders (see IP/13/1146). The Guidance document will then be published and can be used as a basis for Member States to design meaningful evaluation in the State aid field.

Once completed, the evaluation should be made public. In case the Member State wants to prolong the scheme or notify a similar scheme, the evaluation report should be attached to the notification, and the results of the evaluation will be taken into account in the assessment of the scheme. The evaluation shall be made public.

Annex

Sectors subject to evaluation

If the scheme is to be considered as "large" and falls under one of those categories, it should be evaluated.

Category

GBER

Article

Section 1 - Regional aid

Regional investment aid

14

Regional urban development aid schemes

16

Section 2 - SME aid

SME investment aid

17

Aid for SME participation for fairs

18

Aid for SME's cooperation costs linked to ETC projects

19

Section 3 – Aid for access to finance for SMEs

Risk finance aid

20

Aid for start-ups

21

Aid for alternative platforms

22

Aid for scouting costs

23

Section 4 – Aid for R&D&I

Aid for research and development projects

24

Investment aid for research infrastructures

25

Aid for innovation clusters

26

Innovation aid for SMEs

27

Aid for process and organisational innovation

28

Aid for R&D in the aquaculture and fishery sector

29

Section 7 – Aid for environmental protection

Investment aid enabling undertakings to go beyond Union standards for environmental protection or increase the level of environmental protection in the absence of Union standards

34

Investment aid for early adaptation to future Union standards for SMEs

35

Investment aid for energy saving measures

36

Aid for energy efficiency projects

37

Investment aid for high-efficiency cogeneration

38

Investment aid for the promotion of energy from renewable sources

39a

Operating aid for the promotion of electricity from renewable sources

39b

Operating aid for the promotion of energy from renewable sources in small scale installations

Investment aid for remediation of contaminated sites

41

Investment aid for energy efficient district heating and cooling

42

Aid for environmental studies

43

Section 10 - Aid for broadband infrastructures

Aid for broadband infrastructures

46

Sectors not subject to evaluation

If the scheme falls under one of those categories, it should not be evaluated even if the scheme is to be considered as "large".

Category

GBER

Article

Section 1 - Regional aid

Regional operating aid (outermost and sparsely populated regions)

15

Section 5 – Training aid

Training aid

30

Section 6 - Aid for disadvantaged and disabled workers

Aid for the recruitment of disadvantaged workers in the form of wage subsidies

31

Aid for the employment of workers with disabilities in the form of wage subsidies

32

Aid for compensating the additional costs of employing workers with disabilities

33

Section 7 – Aid for environmental protection

Aid in the form of reductions in environmental taxes under Directive 2003/96/EC

40

Section 8 - Aid to make good the damage caused by certain natural disasters

Aid to make good the damage caused by certain natural disasters

44

Section 9 - Social aid for transport for residents of remote regions

Social aid for transport for residents of remote regions

45

Section 11 – Culture

Aid for culture and heritage conservation

47

Aid to audiovisual works

48

Section 12 - Aid for sport and multifunctional recreational infrastructures

Aid for sport and multifunctional recreational infrastructures

49

1 :

For example on the basis of 2012 data, the threshold for Germany would be € 257 M.


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