State Aid Modernisation Review of the Block Exempted aid

1. State Aid ModernisationReview of the Block Exempted aid Carles Esteva Mosso / Nicola Pesaresi DG Competition

2. AGENDA Role and scope for block-exemptions in the State aid Modernisation Strengthened cooperation with Member States for a better ex-ante control First proposal for revision of the block exempted aid

3. The GBER today • More than 2000 measures, sincemid 2008. • 66% of all aidmeasures = 21% of total aidin 2011 • SME, training, employment, R&D, risk capital, environment, regionalaid.

4. Role and scope of the GBER within SAM simplify the administrative treatment of well-designed measures of relatively low amounts of aid and limited competition distortions facilitate granting of "good aid" in line with EU 2020, contributing to growth and jobs focus state aid enforcement on the most distortive cases

5. How to achieve the SAM objectives with the GBER? Extension of the scope of the GBER towards more " good aid". This can be done in 2 steps: 1° Step: review the GBER greater simplification and more proportionate enforcement better design the aid measures to ensure that State aid is effective and efficient introduce new measures under the existing categories But the scope of the extension of the GBER is rather limited (all categories already used) Objective: End 2013

6. How to achieve the SAM objectives with the GBER? 2° Step: Extend the scope of the Enabling Regulation Introduction into the GBER of new categories of aid, not yet covered by the Enabling Regulation (ER) Commission proposal to the Council to revise the ER The enlarged scope would include categories that could be quickly included into the GBER, as well as other categories that would be integrated gradually, when sufficient experience is acquired Objective: New Council Regulation by End 2013

7. 2. Strengthened cooperation with Member States for a better compliance

8. Co-operation today: lessons from COMP monitoring 89% of aid is granted through approved aid schemes or block-exempted measures Monitoring shows difficulties in a large set of cases : issues prima facie raised in 23 out of 50 cases and 7 out of 14 GBER schemes Wrong interpretation of certain rules Some compatibility conditions not complied with Existing aid schemes not adapted to new rules Difficulties due to several reasons: Unclear provisions, imprecise guidance Lack of experience, dispersion of competences Lack of incentives, conflicts of interest

9. Way forward for a better system better co-operate with MS to establish a framework that allows further extensions of the GBER ensure better ex-ante compliance & ex-post evaluation at national level design a win-win proposal

10. Extension of GBER requires increased responsibility of MS Premise: No change in the Treaty competences Commission remains the exclusive guardian of aid compatibility Possible principles for a new system: No harmonisation of national rules: respect of national institutional prerogatives Building on best practices at national level National authorities with sufficient capacity and independence could carry out additional tasks to improve compliance (GBER checks)

11. Member States best practices Other national bodies National Competition Authorities Hungary: the State Aid Monitoring Office is also empowered to assess State aid measures falling under de minimis and GBER Denmark: the NCA can take decisions, issue injunctions and order recovery of domestic State aid based on rules very similar to the EU ones Poland: the NCA issues formal opinions on draft legislation, upon request from national Parliament Slovenia: the State Aid Monitoring Department is (i) coordinating the notification procedure and guaranteeing the compliance of draft state aid notifications with the applicable rules, (ii) drafting binding opinions concerning the compliance of block exempted and de minimis measures Italy: the NCA bears the obligation to issue an opinion concerning the existence of appropriate and sufficient reasons to attribute exclusive rights and the accuracy of the procedure chosen as to the organisation of in-house public services; the NCA can also appeal any act of a public administration which is contrary to national or EU competition law Cyprus: the Office of the Commissioner for State aid control issues legally binding decisions on the compatibility with EU State aid rules of draft measures adopted on the basis of GBER. Spain: the NCA issues opinions on the impact on competition of (draft) State aid measures

12. Design a win-win proposal Efficiency at MS level granting authorities to take greater responsibility in shaping good state aid policy upfront, in their own interest MS to pursue better quality public finance faster case handling and decisions Reduces ex-post problems with monitoring and recovery Efficiency at Commission level better State aid control better quality notifications safely consider widening the scope of the GBER greater priority setting and focus on what matters most at the EU level

13. 3. Initial proposals for revision

14. Orientations for a revised GBER • greater simplification and more proportionate enforcement • Better promotion of Europe 2020 objectives • Promote effective public spending • better quality of public finance and better focus on the measures that are more likely to impact onthe internal market • Promote efficient public spending

15. Orientations for a revised GBER • greater simplification and more proportionate enforcement • consistency with guidelines/Key assessment criteria • well-designed measures: scope, incentive effect, eligible costs, aid intensities, limited negative effects • Better promotion of Europe 2020 objectives • enlarge scope to new measures pro-growth and jobs within existing categories (regional, SMEs, environmental, R&D, employment, training)

16. Orientations for a revised GBER • better quality of public finance and better focus on most distortive measures • Schemes may be limited in budget, duration, types of beneficiaries • MS to carry out independent ex-post evaluation of schemes • credible sanctioning system in case of non-compliance

17. Initial proposals for enlargement of the ER Enlarged list of aid categories which will be further specified and actually block-exempted in future GBER revisions (after 2013) Enlargement of the scope would: Increase efficiency by allowing to focus more on the most distortive cases Increase simplification by enlarging the possibilities to extend the scope of the GBER to cases with limited distortive effect and a positive contribution to EU 2020

18. Initial proposals for enlargement of the ER Communication May 8th : "Those new types of aid which could be covered by the Enabling Regulation could include for instance: aid granted to culture; aid to make good the damage caused by natural disasters: aid to (partly) EU-funded projects such as JESSICA; and others". For discussion

19. Further modifications of the ER Some minor transparency and procedural simplifications could be envisaged: Transparency simplifications Publication of the GBER information sheets in the Official Journal replaced by publication on the Commission's website Procedural simplifications to align with the current practice Publication of a draft Regulation on the Commission's website instead of the Official Journal, at the same time as the consultation of the Advisory Committee (not after)