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INTRODUCTION TO STATE AID

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Presentation on theme: "INTRODUCTION TO STATE AID"— Presentation transcript:

1 INTRODUCTION TO STATE AID
Stephen Moore European Support Unit

2 Objectives Key State aid concepts and terms
How to undertake a State aid assessment Outline options if State aid is present Explain roles and responsibilities Think State aid first

3 What is State aid? Treaty on the Functioning of the European Union
Article 107(1) “Save as otherwise provided in this Treaty, any aid granted by a Member State, or through State resources in any form whatsoever, which distorts, or threatens to distort competition, by favouring certain undertakings or production of certain goods, shall, in so far as it affects trade between Member States, be incompatible with the common market.”

4 Obvious State aid Grants Loans below market rate of interest
Interest rate subsidies Loan guarantees Tax exemptions

5 Less Obvious State aid Sale of land below market prices
Subsidised rents Investments on terms private sector would not replicate Secondment of Civil Servants Services provided by the State at a reduced or zero cost

6 Structural Funds and State aid
Northern Ireland EU Structural Funds – Guidance note 7 (http://www.eucompni.gov.uk/uploads/resource_guidance/guidance_note_7_-_state_aid.pdf) “Council Regulation (EC) 1083/2006 stipulates that projects must be fully compliant with State aid rules. It is therefore important that all projects are initially screened and regularly reviewed to ensure they comply with State aid rules.”

7 Is the recipient an undertaking?
State aid is only present when it is provided to undertakings. The Court of Justice has defined undertakings as entities that are engaged in an economic activity, regardless of their legal status and the way in which they are financed.

8 Is the recipient an undertaking?
The status of an entity under national law is not material. Entities do not have to be set up to generate profits. The classification of an entity as an undertaking is always relative to a specific activity. 1. The status of an entity under national law is not material. An entity that is classified as an association or a sports club under national law may nevertheless have to be regarded as an undertaking within the meaning of Article 107(1) TFEU. The same applies to an entity that is formally part of the public administration. 2. Entities do not have to be set up to generate profits. Based on the case-law of the Court of Justice and the General Court, non-profit entities can offer goods and services on a market too. Where this is not the case, non-profit providers remain outside of State aid control. 3. The classification of an entity as an undertaking is always relative to a specific activity. An entity that carries out both economic and non-economic activities is to be regarded as an undertaking only with regard to the former.

9 Is State aid present? Is there an intervention by the State or through State resources? Does the intervention give the recipient an advantage on a selective basis? Is competition distorted or potentially distorted? Is there any potential to affect trade between Member States? Think State aid first

10 If State aid is present – Next steps
Redesign scheme or project so State aid isn’t present Would the aid scheme or project fit into one of the GBER exemptions? i.e. Try to avoid a full notification Is the amount of State aid small enough that the de minimis regulation is an option? If a full notification has to be submitted – don’t waste time Seek advice from DETI or DSO or your legal advisors Don’t ignore it

11 What is the GBER? GBER – General Block Exemption Regulation
GBER exempts State aid from the full notification procedure GBER aid still has to be notified, but the process is straightforward and quick The GBER is the main exemption regulation 2013, 60% of NI State aid falls under the GBER 2015, est. 80% of NI State aid will fall under the GBER

12 What is the de minimis regulation?
Very small amounts of aid have only negligible effects on competition and trade between Member States. EC has decided such very small amounts of aid to a single undertaking (below a specified cumulative ceiling) do not have to be notified for approval. Current ‘industrial’ de minimis regulation - Commission Regulation (EC) No 1407/2013 of 18 December 2013 Ceiling €200k, per single undertaking, over any period of 3 years

13 What if I have to fully notify?
Start as soon as you can and don’t waste time. SA – NI gas pipeline extension (DETI) pre-notified 6 March 2013, EC decision 10 July 2014 SA – Regional Stadia - Windsor, Casement and Ravenhill (DCAL) pre-notified 5 September 2013, EC decision 9 April 2014 SA – NI Renewable Heat Initiative (DETI) pre-notified 10 May 2012, EC decision 12 June 2012

14 Notification processes
Procedural Regulation SANI – State Aid Notification Interactive Pre-notification Formal notification Standstill Commission decision Simplified procedure (time extensions, budget increases)

15 Roles and Responsibilities
DETI Advice & awareness to NI Depts, NDPBs etc Monitor & report on NI State aid to EC via DBIS DSO Advice to Depts DBIS Advice & awareness to UK Bodies Check & sign up notifications UKRep Official point of contact with EC Liaise with UK bodies NI Public Sector Bodies Assess & manage compliance risks Prepare notification documentation Maintain records

16 State aid training European Institute of Public Administration (Maastricht) Lexxion Training (Brussels) European Academy (Berlin)

17 Further Information DETI European Support Unit Stephen Moore
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