Changes to EU state aid scrutiny rules now in force

Out-Law News | 01 Jul 2014 | 5:30 pm | 1 min. read

Changes to the rules governing which state aid cases must be notified to the European Commission for further scrutiny have come in to force, meaning that EU countries will be able to grant more aid to national firms without pre-approval.

The new General Block Exemption Regulation (GBER) and a number of related instruments came into force on 1 July, and expand the previous exemptions from Commission scrutiny to a broader range of activities and higher amounts. The UK's Department for Business, Innovation and Skills (BIS) has published its own initial guidance covering some of the most commonly-used sections of the GBER and changes to the Commission's framework for aid for regional Research, Development and Innovation projects (RDI).

Approximately 75% of today's state aid measures and approximately 66% of aid amounts will now be exempt from Commission notification under the revised GEBR, according to the Commission. State aid expert Caroline Ramsay of Pinsent Masons, the law firm behind, said that the new rules were good news for businesses and public authorities.

"The new rules will be welcomed by those businesses that benefit from state aid; especially those working in more innovative industries with a substantial research element which often carry higher risks," she said. "They will also reduce administrative burdens for public authorities and increase the speed at which new policy initiatives can be implemented."

State aid is an advantage or incentive granted by a national government to a particular company. It can take on a variety of forms including grants, tax reliefs, guarantees, government holdings of all or part of a company or the provision of goods and services on preferential terms. To ensure fair competition inside the EU, state aid is prohibited unless it can be justified for general economic development reasons. Member states must apply to the Commission for clearance on a case by case basis before they can offer funding or incentives which amount to state aid, unless the aid is automatically exempted under the GBER.

The new GBER exempts a broader range of activities from prior scrutiny by the Commission, including new categories of block-exemptable aid in the areas of RDI, regional urban development funds, culture and heritage conservation and infrastructures for broadband, energy and sports and recreational projects. Revisions to the Commission's framework for RDI aid, which are also now in force, will also provide significantly more flexibility and make it easier to demonstrate that criteria for approval are met.

New transparency requirements are also now in force, under which EU member states will have to set up a dedicated website on which to publicise details of any state aid award above €500,000. This should include the identity of the beneficiary, the amount and objective of the aid, and the legal basis of the aid. Member states will have two years to set up these websites and appropriate systems to collect this information.