EEA – EFTA Forum
State aid rules - modernisation
Advokat Hanne S. Torkelsen
E-post hanne.torkelsen@wla.no
www.wla.no
The objective of state aid
legislation
• To ensure that government
interventions do not distort
competition and trade inside the
EU/EEA.
State aid is accepted to achieve
certain objectives, i.a.:
•
•
•
•
Research and development
Environment
Risk capital
Infrastructure (i.e. broadband)
State aid legislation
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•
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•
•
EEA agreement - Article 61 (TFEU Art 107)
Secondary legislation (directives and regulations)
Commission Decisions (i.e.re public service
compensation granted to undertakings entrusted with
operation of services of general economic interest)
Commission Guidelines
ESA and the EEA Joint committee adopt legislative
measures for State aid rules which are identical to that
of the European Commission
Enforcement in the EEA
EFTA Surveillance Authority (ESA):
• investigates allegations re illegal State Aid
• approves new aid schemes and individual aid
• decide that the State concerned shall abolish or
alter such aid within a period of time to be
determined by ESA
If a member state does not comply with the decision
within the prescribed time, ESA or any other
interested State may refer the matter to the Court of
Justice direct.
Enforcement in the EEA, cont
Decisions by EFTA Court and the European
Court of Justice are very important – ESA
decisions may be reversed by the EFTA Court
ODA protocol 3 – On application by an EFTA
state , The EFTA States can unanimously decide
that aid given or planned aid is compatible with
EEA article 61 if justified by exceptional
circumstances (before the Authority has made
its decision).
State aid - EEA Art 61(1)
«[s]ave as otherwise provided in this
Agreement, any aid granted by EC Member
States, EFTA States or through State resources in
any form whatsoever which distorts or
threatens to distort competition by favouring
certain undertakings or the production of
certain goods shall, in so far as it affects trade
between Contrating parties, be incompatible
with the functioning of this Agreement»
State aid – EEA Art 61(1)
1.
2.
3.
4.
5.
The measure involves an economic advantage
Granted by State resources: public funds
To «undertakings» - (not individuals or
households) engaged in economic activity,
irrespective of its legal status and the way in
which it is financed
Aid is selective – it favours only certain
undertakings or production of certain goods
The aid affects competition and trade within the
EEA
Cumulative criteria
Art 61(2) and (3): Exception
Art. 61 (2) Shall be compatible with EEA Agreement:
•
•
Aid to individuals
Natural disasters; exceptional occurrences
Art 61 (3). May be compatible with the EEA agreement:
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Underdevelopment
European projects, serious disturbance
Certain economic activities or areas
Culture & heritage
other
Exemption from state aid
•
EC Court decision: «Altmark criteria» and EC Regulation for
compensation for services of general economic interest
•
Regulation regarding «De Minimis aid» (200 000 Euro over 3
years) may be granted without notification
•
Aid covered by group excemptions and guidelines (horizontal
or sectoral) and hence is considered legal (for instance
regional investment aid)
EEA art 59. no 2 - SGEI
Undertakings entrusted with the operation of services
of general economic interest or having the character
of a revenue-producing monopoly shall be subject to
the rules contained in the Treaties, in particular to the
rules on competition, in so far as the application of
such rules does not obstruct the performance, in law
or in fact, of the particular tasks assigned to them.
The development of trade must not be affected to
such an extent as would be contrary to the interests of
the Union.
Existing or new aid - recovery
Illegal state aid must be recovered with
interest (up to 10 years!)
Existing Aid = aid existing before the entry in
force of the EEA agreement – must not be
recovered – only aid granted after the
decision regarding illegal aid is made by ESA
System of state aid control
No
State Aid Art. 61(1)
Case closed
Yes
Exceptions
applicable?
- De minimis aid
- Block
Excemptions
- Guidelines
- Art 59.2
No
Existing
Aid?
No
Recovery
Ongoing modernisation
Aim to reduce overall state aid and to increase «horizontal
objectives» such as research and development,
environment, risk capital
Commission proposal – «de minimis» aid:
To keep the current treshold value at 200 000 Euro
Establish a national registry for de minimis aid – within
1.1.2016 - to increase surveillance and control
Establish yearly reporting system (register) to monitor aid
Ongoing modernisation
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New «de minimis aid» in force:
Aid granted to undertakings providing a
service of general economic interest
provided that the total amount of aid
does not exceed EUR 500 000 over any
period of three fiscal years.
This also apply to the «road passenger
transport sector»
Ongoing modernisation
The general block exemption regulation, inter alia:
•
SME aid: risk finance measures will be revised and
a broad category of start-up aid established
•
Research and Development: definitions are
improved, reasearch infrastructures are
introduced and broader innovation aid for SME
•
Category of Training Aid is established
Ongoing modernisation
• Definition of disadvantaged workers
enlarged to include young people
• Aid for environmental protection New block exemption for district
heating
ESA case 69911 – financing of
municipal waste collectors
Measure assessed in the decision:
• The waste collection fee charged by municipality to its
inhabitants to finance costs (household waste) – to
avoid possible cross-subsidies
• The income tax exemption for municipal waste
collectors that are part of the legal person of the
municipality
The Authority has proposed to the Norwegian Government
as an appropriate measure:
Financing of municipal waste
collectors, cont.
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To organise internal accounts in the way that they
show separately the costs and revenues
associated with the non-economic activities and
those of economic activities
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The Norwegian authorities should ensure that the
waste collection fee will be calculated on the basis
of the costs directly related to non-economic
activity as well as a proportionate share of fixed
common cost
Financing of municipal waste
collectors, cont.
-
What is «a proportionate share of fixed commn cost» ?
- the principle of «full cost» (incl. capital cost) or principle of «incremental
cost/marginal cost»?
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Regulation will affect the municipal waste incinerators ability
to offer services in a market, and utilize the free capacity
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In the case of municipal waste incinerators, capital costs are
high, and the price including full capital cost might be higher
then the market price for industrial waste
Financing of municipal waste
collectors, cont
- To abolish the tax excemption, in
so far as it applied to the
economic activities of the
municipal waste collectors
Case regarding laboratories
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The municipalities of Trondheim has
been operating a laboratory for more
than 100 years in order to carry out the
task for verifying the quality of drinking
water and foodstuffs
In 2004 the Norwegian Food Safety
Authority was established, which
immediately delegated some of its
repsonsibilities back to the Municipality
of Trondheim (Analysis Center)
Case regarding laboratories
- There is a market for laboratory
services, and it is a sector subject to
competition between commercial
providers
- The Analysis Center provides inhouse
services to the municipality, but also
provides laboratory services to third
parties.
Case regarding laboratories
ESA considered the following as an
advantage:
- The municipality of Trondheim provides a
number of collective services for free or
at least at a price below market price
- Budget transfer to be used for upgrading
the building and equipment
- Tax excemption for municipalities
Case regarding laboratories
- Proposed measure:
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To keep separate accounts for noneconomic and economic activites
To ensure that accounts contain the
direct cost of the economic activities
and a contribution to the indirect
costs common to both economic and
non-economic activities
Case regarding laboratories
- Proposed measure:
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To demonstrate that the distribution of
common costs allocated to
economic/non-economic activites is
appropriate (i.e. use of premises,
collective services etc at market prices)
To ensure that the Analysis Center are
subjected to business taxes
Thank you for your attention!
E-mail: hanne.torkelsen@wla.no
www.wla.no