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European Commission

Joaquín Almunia

Vice President of the European Commission responsible for Competition Policy

Presenting the State aid modernisation initiative

EP workshop: State Aid Modernisation

Brussels

25 September 2012

Mr Chairman,
Honourable Members,
Ladies and Gentlemen,

I want to thank Antolín Sánchez Presedo for his words of introduction and for his kind invitation to open this workshop on the modernisation of our State aid control policy.

The reform of State aid I am proposing has three overall goals:

  • to ensure that robust State aid rules fully support growth and the Europe 2020 objectives;

  • to prioritise our enforcement on cases that have a significant impact on the internal market; and

  • to streamline our decision-making process.

The initiative comes at a time when the top priorities for Europe are re-launching a sluggish economy and, at the same time, setting public budgets on a sustainable path.

Our package of reform addresses these twin challenges.

The reform will encourage ‘good aid’, such as support for the environment, Research & Development, and the Digital Agenda.

Conversely, it will discourage the wasteful and counter-productive subsidies that our depleted budgets can no longer afford.

At the same time, in a period when the spending capacity of EU countries is so uneven, State aid control must focus more than ever on its primary role of ensuring a level playing field in the Single Market.

And last but not least, our package is designed to turn State aid policy into a simpler, stronger and smarter instrument.

So let's take stock of where we are at this moment on each of these three objectives, starting with the measures designed to support growth.

We are conducting a policy review to translate the spirit of the initiative into revised sectoral guidelines and to align these with the Europe 2020 strategy and the future Multiannual Financial Framework that will come into force in 2014.

At the same time, I want all these guidelines to follow a common methodology for our assessment, one that can encourage good aid and reinforce the internal market.

This means that aid can only be approved if it targets a proven market failure and has real incentive effect. Let me give you a couple of examples of the kind of issues we are looking at as we carry out our review.

The first comes from the telecoms sector. This industry – closely linked to the Digital Agenda and the Europe 2020 Strategy – is making significant investments in ultra-fast networks.

Competitive markets are key to delivering the optimal roll-out of these networks, even where public funds are used to speed up and complement the process.

Therefore, my reform of the Broadband Guidelines pushes for the use of competitive tenders and for a thorough analysis to verify in all cases the existence of market failures and assess how the benefits of the public intervention will be shared among consumers.

Following a public consultation which brought us some one hundred replies, my services discussed those proposals with Member States earlier this month.

The meeting was constructive and the guidelines generally well received. Work will now continue and I am sure we will be able to present a well-balanced proposal.

My second example is about regional-investment aid. I want to ensure that public money is not wasted on the support of investments in assisted regions that would have been made anyway – even without the aid.

We cannot afford the distortions that such aid produces on the internal market, hampering growth, and we cannot afford subsidies that are not needed.

These are some of the issues I'm looking at as we are drafting the revised Regional Aid guidelines which will be presented to Member States for discussion at the end of the year.

The second overall objective of the reform is to focus our enforcement on cases that can really distort the internal market.

By the same token, we want to cut as much red tape as possible when it comes to small, local and routine cases. If we want to add value, we need to be able to prioritise our control better.

One way to achieve this goal is by extending the material scope of the Enabling Regulation and the General Block Exemption Regulation to cut red tape for small and routine cases.

For example, one could think of extending it to cover aid for innovation, culture and heritage conservation, to compensate damages caused by natural disasters, and aid to forestry. This would free resources to handle more distortive cases.

Naturally, less ex-ante control by the Commission means more responsibility for the Member States in the design of the aid measures.

Let me be very clear on this point. The Treaty gives to the Commission – and to the Commission alone – the task to enforce State aid law in the internal market.

The State aid modernisation initiative will not change this provision. The Commission will not give up any of its exclusive competences in the enforcement of State aid law.

What the initiative does do is require a new level of commitment from the Member States for responsibilities they already have. Currently, the degree of compliance with our rules leaves room for improvement.

Let us not forget that we are in this together. I count on national governments to do their bit as well.

Turning to the third overall objective of the reform, I want the State aid regime to become simpler and more effective.

Our system of guidelines and notices has grown in complexity through the years and now counts over 40 different texts. Updating the Procedural Regulation is one way to simplify our regime.

I also believe that it must be possible to explain more clearly when a payment should be considered to be a State aid that falls under our rules.

How will State aid control change in practice with the reform?

We are in the middle of the modernisation process so I won’t give you a detailed picture, but some points are already quite clear.

To start with, the shift in the focus of our control will allow us to set our own priorities, launch more ex-officio investigations, and look more systematically into those sectors that our practice indicates could raise competition concerns.

To this end, we are looking for the best tools we can use to gather the necessary market information before we decide on individual cases. We are also thinking about sectoral enquiries.

The move towards a more structured policy and procedural approach will also mean that we can put our experience at the service of national authorities to help them design more effective aid measures.

Before I close, let me tell you that work is proceeding at a good pace and we will be able to present our proposals to the Council to change the Procedural and Enabling regulations before the end of the year.

The main elements of the package, including the revised guidelines, should be in place at the end of 2013 or – at any rate – within the term of this Parliament.

Thank you.


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