On 30 October 2020, the European Commission ("Commission") published a Staff Working Document summarising the results of the evaluation of EU State aid rules. While State aid rules are broadly fit for purpose, some individual rules will need to be adapted or updated, notably to reflect the recent European Green Deal and the EU's Industrial and Digital Strategies.
| what you need to know - key takeaways |
- Overall, the Commission has found that the EU State aid control system is fit for purpose.
- However, individual rules will need to be revised and updated. In particular, important changes to the Energy and Environmental Aid Guidelines are to be expected in order to reflect the ambitious objectives laid down in the European Green Deal.
- The impact of the COVID-19 crisis on existing State aid rules has not been assessed. Some specific rules (e.g. the Aviation Guidelines) may need to be reshaped once the long-term impact of the crisis is known.
|
Background
In January 2019, the Commission launched a fitness check of the EU State aid rules. The assessment covered all rules adopted as part of the State Aid Modernisation ("SAM") started in 2012, namely the General Block Exemption Regulation ("GBER"), the De Minimis Regulation and the Commission's various guidance documents on horizontal and sector-specific aid.1
The fitness check involved internal analyses by the Commission, public consultations and for some specific rules, studies prepared by external consultants or targeted consultations of specific stakeholders.
Results and next steps
The Staff Working document concludes that the current State aid architecture and rules are broadly fit for purposes. Hence, there is no need to reform the system as such. The SAM seems to be largely effective in reaching its triple objective, namely:
- foster "good aid";
- focus Commission's ex ante scrutiny on cases with the biggest impact on competition; and
- faster access to aid.
However, the individual rules need revisions and/ or updates. This includes clarifying and simplifying certain concepts (such as "relocation" under the Regional Guidelines) or the practical application of certain provisions (such as how to calculate in a simplified manner indirect eligible costs for R&D projects). This also involves adjusting existing rules to reflect recent legislative, market and technology developments.
The Staff Working document highlights that rules should be aligned to future challenges, so that State aid could further contribute to the European Green Deal, as well as to the EU's Digital and Industrial Strategies. This echoes recent statements from Commissioner Vestager stressing that State aid rules "play a vital part in helping to make sure the green transition is affordable" and that the Commission will ensure that "Europe’s governments have all the scope they need to make those green investments – without wasting taxpayers’ money".
Given the "vital" role of State aid rules in the green transition, the Commission plans to revise the relevant guidelines (in particular the Energy and Environmental Aid Guidelines, RDI Framework, Risk Finance Guidelines and relevant GBER provisions) at the end of 2021. The revised rules are expected to cover new technologies (such as hydrogen, synthetic fuel) but also to include "green bonuses" for projects that make a genuine contribution to the EU green goals.
On 12 November 2020, the Commission launched a public consultation on the revision of the Energy and Environmental Aid Guidelines and will accept views until 7 January 2021. Similar public consultations on other guidelines should follow up shortly.
Finally, it is worth noting that the fitness check did not evte the effects of the COVID-19 crisis on the existing State aid rules. While the overall conclusions should remain valid, it cannot be excluded that some specific rules (concerning the aviation industry for example) will need to be reshaped.
With thanks to Jessica Bracker of Ashurst for her contribution.
- Regional Aid Guidelines, Research, Development and Innovation (RDI) Framework, Important Projects of Common European Interest Communication, Risk Finance Guidelines, Aviation Guidelines, Energy and Environmental Aid Guidelines and Rescue and Restructuring Guidelines. In addition, the Short-term export-credit insurance Communication and the Railway Guidelines also form part of the current evaluation exercise.
