EEA – EFTA Forum State aid rules - modernisation. Advokat Hanne S. Torkelsen E-post [email protected] www.wla.no. The objective of state aid legislation. To ensure that government interventions do not distort competition and trade inside the EU/EEA.
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To ensure that government interventions do not distort competition and trade inside the EU/EEA.
Research and development
Infrastructure (i.e. broadband)
EEA agreement - Article 61 (TFEU Art 107)
Secondarylegislation(directives and regulations)
Commission Decisions(i.e.re public service compensationgranted to undertakings entrustedwithoperationof services of general economic interest)
ESA and the EEA Joint committeeadopt legislative measures for State aidruleswhichareidentical to thatofthe European Commission
EFTA SurveillanceAuthority (ESA):
investigatesallegations re illegal State Aid
approvesnewaidschemes and individualaid
decidethatthe State concerned shall abolish or alter such aid within a period of time to be determined by ESA
If a memberstate doesnot comply with the decision within the prescribed time, ESA or any other interested State may refer the matter to the Court of Justice direct.
Decisions by EFTA Court and the European Court ofJusticeareveryimportant – ESA decisionsmay be reversed by the EFTA Court
ODA protocol 3 – On application by an EFTA state , The EFTA States canunanimouslydecidethataid given or plannedaid is compatiblewith EEA article 61 ifjustified by exceptionalcircumstances(beforetheAuthority has madeitsdecision).
«[s]ave as otherwiseprovided in this Agreement, anyaidgranted by EC Member States, EFTA States or through State resources in any form whatsoeverwhichdistorts or threatens to distortcompetition by favouringcertain undertakings or theproductionofcertaingoodsshall, in so far as it affects trade betweenContratingparties, be incompatiblewiththefunctioningofthis Agreement»
The measureinvolves an economicadvantage
Granted by State resources: publicfunds
To «undertakings» - (not individuals or households) engaged in economicactivity, irrespectiveofits legal status and theway in which it is financed
Aid is selective – it favoursonlycertain undertakings or productionofcertaingoods
The aidaffectscompetitionand trade withinthe EEA
Art. 61 (2) Shall be compatiblewith EEA Agreement:
Aid to individuals
Natural disasters; exceptionaloccurrences
Art 61 (3). May be compatiblewiththe EEA agreement:
European projects, seriousdisturbance
Certaineconomicactivities or areas
Culture & heritage
EC Court decision: «Altmarkcriteria» and EC Regulation for compensation for services of general economicinterest
Regulationregarding «De Minimisaid» (200 000 Euro over 3 years) may be grantedwithoutnotification
Aid covered by groupexcemptionsand guidelines (horizontal or sectoral) and hence is considered legal (for instance regional investmentaid)
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.
Illegal state aid must be recoveredwithinterest (up to 10 years!)
Existing Aid = aidexistingbeforetheentry in force ofthe EEA agreement – must not be recovered – onlyaidgrantedafterthedecisionregarding illegal aid is made by ESA
State Aid Art. 61(1)
Aim to reduce overall stateaid and to increase «horizontalobjectives» such as research and development, environment, risk capital
Commission proposal – «de minimis» aid:
To keepthecurrenttresholdvalue at 200 000 Euro
Establish a nationalregistry for de minimisaid– within 1.1.2016- to increasesurveillance and control
Establishyearlyreporting system (register) to monitor aid
New «de minimis aid» in force:
Aid granted to undertakings providing a service of general economicinterestprovided thatthe total amountofaid does not exceed EUR 500 000 over anyperiodofthreefiscalyears.
This alsoapply to the «road passenger transport sector»
The general blockexemptionregulation, interalia:
SME aid: risk financemeasureswill be revised and a broadcategoryof start-up aid established
Research and Development: definitionsareimproved, reasearchinfrastructuresareintroduced and broaderinnovationaid for SME
Categoryof Training Aid is established
Definition ofdisadvantagedworkersenlarged to includeyoung people
Aid for environmental protection - New blockexemption for district heating
Measureassessed in thedecision:
The wastecollectionfeecharged by municipality to itsinhabitants to financecosts (household waste) – to avoidpossible cross-subsidies
The incometaxexemptionfor municipalwastecollectorsthatare part ofthe legal person ofthemunicipality
The Authority has proposed to the Norwegian Government as an appropriatemeasure:
To organiseinternalaccountsin thewaythatthey show separatelythecosts and revenuesassociatedwiththe non-economicactivities and thoseofeconomicactivities
The Norwegian authoritiesshouldensurethatthewastecollectionfeewill be calculatedonthe basis ofthecostsdirectlyrelated to non-economicactivityas well as a proportionateshareoffixedcommoncost
What is «a proportionateshareoffixed commn cost» ?
- the principle of «full cost» (incl. capital cost) or principle of «incremental cost/marginal cost»?
Regulation will affect the municipal waste incinerators ability to offer services in a market, and utilize the free capacity
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
To abolishthetaxexcemption, in so far as it applied to theeconomicactivitiesofthemunicipalwastecollectors
The municipalitiesof Trondheim has been operating a laboratory for more than 100 years in order to carryoutthetask for verifyingthequalityofdrinking water and foodstuffs
In 2004 theNorwegian Food SafetyAuthoritywasestablished, whichimmediatelydelegatedsomeofitsrepsonsibilities back to theMunicipalityof Trondheim (Analysis Center)
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.
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
To keep separate accounts for non-economic 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
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