Eea efta forum state aid rules modernisation
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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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EEA – EFTA Forum State aid rules - modernisation

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Eea efta forum state aid rules modernisation

EEA – EFTA ForumState aidrules - modernisation

Advokat Hanne S. Torkelsen

E-post [email protected]

www.wla.no


The objective of state aid legislation

The objectiveofstateaidlegislation

To ensure that government interventions do not distort competition and trade inside the EU/EEA.


Research and development environment risk capital infrastructure i e broadband

State aid is accepted to achieve certain objectives, i.a.:

Research and development

Environment

Risk capital

Infrastructure (i.e. broadband)


Eea efta forum state aid rules modernisation

State aid legislation

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)

Commission Guidelines

ESA and the EEA Joint committeeadopt legislative measures for State aidruleswhichareidentical to thatofthe European Commission


Eea efta forum state aid rules modernisation

Enforcement in the EEA

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.


Eea efta forum state aid rules modernisation

Enforcement in the EEA, cont

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).


Eea efta forum state aid rules modernisation

State aid - EEA Art 61(1)

«[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»


Eea efta forum state aid rules modernisation

State aid – EEA Art 61(1)

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

Cumulativecriteria


Eea efta forum state aid rules modernisation

Art 61(2) and (3): Exception

Art. 61 (2) Shall be compatiblewith EEA Agreement:

Aid to individuals

Natural disasters; exceptionaloccurrences

Art 61 (3). May be compatiblewiththe EEA agreement:

Underdevelopment

European projects, seriousdisturbance

Certaineconomicactivities or areas

Culture & heritage

other


Eea efta forum state aid rules modernisation

Exemption from state aid

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)


Eea efta forum state aid rules modernisation

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.


Eea efta forum state aid rules modernisation

Existing or new aid - recovery

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


Eea efta forum state aid rules modernisation

System of state aid control

State Aid Art. 61(1)

No

Case closed

Yes

  • Exceptionsapplicable?

  • De minimisaid

  • Block Excemptions

  • Guidelines

  • Art 59.2

Existing

Aid?

Recovery

No

No


Eea efta forum state aid rules modernisation

Ongoing modernisation

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


Eea efta forum state aid rules modernisation

Ongoing modernisation

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»


Eea efta forum state aid rules modernisation

Ongoing modernisation

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


Eea efta forum state aid rules modernisation

Ongoing modernisation

Definition ofdisadvantagedworkersenlarged to includeyoung people

Aid for environmental protection - New blockexemption for district heating


Eea efta forum state aid rules modernisation

ESA case 69911 – financing of municipal waste collectors

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:


Eea efta forum state aid rules modernisation

Financing of municipal waste collectors, cont.

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


Eea efta forum state aid rules modernisation

Financing of municipal waste collectors, cont.

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


Eea efta forum state aid rules modernisation

Financing of municipal waste collectors, cont

To abolishthetaxexcemption, in so far as it applied to theeconomicactivitiesofthemunicipalwastecollectors


Eea efta forum state aid rules modernisation

Case regarding laboratories

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)


Eea efta forum state aid rules modernisation

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.


Eea efta forum state aid rules modernisation

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


Eea efta forum state aid rules modernisation

Case regarding laboratories

Proposed measure:

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


Eea efta forum state aid rules modernisation

Case regarding laboratories

Proposed measure:

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

Thank you for your attention!

E-mail: [email protected]

www.wla.no


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