STATE AID and BROADBAND. European Commission, DG Competition, State aid Unit - C4

Transcription

1 STATE AID and BROADBAND 1

2 CONTENTS 1. Introduction: Role of State aid control 2. Notion of aid 3. Assessment of aid 4. Good Practices 2

3 Network design 3

4 Context Role of State aid control Importance of broadband infrastructures for economy and society Digital Agenda for Europe: 30 Mbps for everybody and 50% households subscribing to 100 Mbps by 2020 Gigabit Society complement DAE, by 2025: schools, transport hubs, public service providers, digitally intensive enterprises: 1 Gbp upload/download households, rural or urban: 100 Mbps download upgradable to 1 Gbps urban areas, major roads & railways: uninterrupted 5G coverage, starting with 1 major city in each MS by 2020 Commercial investments not sufficient to achieve DAE & Gigabit society objectives Market forces do not always lead to a socially desirable outcome ( equity or cohesion considerations ) Importance of public intervention National strategies 4

5 Role of State aid control Why Do We Control State Aid? State aid control = part of competition policy Plays role in liberalisation Ensures competitive European industry Ensures a level playing field for all operators and prevents favouring certain technology platforms Prevents crowding-out of existing investment Prevents the creation of local monopolies with the help of public funds Prevents subsidy race Foster competition 5

6 Notion of State aid State Aid Rules in the EU Treaty Art. 107(1) TFEU: notion of aid 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 the production of certain goods shall, insofar as it affects trade between Member States, be incompatible with the internal market Arts. 107(2-3), 106(2), 93 TFEU: derogations 6

7 Notion of State aid Cumulative criteria (Art. 107(1) TFEU) Aid granted by a Member State (central, regional or local authorities other public or private bodies designated or established by the State) or through State resources (funds under control and at disposal of State, including EU structural funds) transferred in any form whatsoever: positive transfer (direct grants, loans, capital participation), foregone revenues (tax waivers or deferrals, sale of assets below market price, omission to collect or enforce debt), exposure of State funds (guarantees) Selective economic advantage => State intervention improves financial situation of a company or prevents it from getting worse outside of normal operation of market Besides the direct beneficiary of the aid (IO), third-party operators receiving wholesale access to the subsidised infrastructure may be indirect beneficiaries Tender is presumed to minimise the selective advantage only! Specific situation of end-users Effect on trade between Member States Distortion or risk of distortion of competition See: Commission Notice on the notion of State aid as referred to in Article 107(1) of the Treaty on the Functioning of the European Union (2016/C 262/01) 7

8 Notion of State aid When to notify? Existence of State aid excluded Market economy investor principle (C53/06 Citynet Amsterdam) Non-economic use of the infrastructure (NN24/2007 Public sector network Prague, N46/2007 Welsh Public Sector Network, N407/2009 Xarxa Oberta) Administrative and regulatory measures Altmark SGEI (NGA: N331/2008 Hauts de Seine, basic: N381/2004 Pyrénées-Atlaniques) State aid but no need to notify if conditions fulfilled De minimis General block exemption regulation (GBER) Existing aid scheme Need to notify for State aid clearance Broadband Guidelines (compatibility:107(3)(c)tfeu) Services of General Economic Interest (SGEI) (compatibility: 106(2)TFEU) 8

9 Notion of State aid Market economy investor principle Assesses whether in investing in Broadband public bodies have acted as a market economy operator => no advantage if state behaves like "normal" player on market Key question: what would commercial operator do? Pari passu private involvement The State has to share the same risks and opportunities as a private investor Beneficiary has not received an economic advantage which it would not have obtained under normal market conditions Need for an extensive demonstration: significant participation of private investors sound ex-ante business plan ex-ante study from external expert profitability analysis (NPV or IRR) with an appropriate risk factor MEIP only applies to well substantiated cases (C53/06 - Citynet Amsterdam) 9

10 Notion of State aid Non-economic use of the infrastructure Public funding of infrastructure that is not meant to be commercially exploited excluded from application of the State aid rules Building of its own public-sector network to satisfy needs for internet connectivity (the infrastructure cannot be commercially used; beneficiaries do not exercise an economic activity) = no aid BUT network opened for the use of broadband operators = aid Mixed use of infrastructure (NN24/2007 Public sector network Prague, N46/2007 Welsh Public Sector Network, N407/2009 Xarxa Oberta) 10

11 Notion of State aid Administrative and regulatory measures Facilitating rights of way, coordination of civil engineering works or sharing of the infrastructure Transparency and non-discrimination for all interested operators Open to all potential users Centralized inventory of the existing infrastructure including planned works Chapter 2.4 of BBGL and Annex I BBGL Broadband Investment Guidelines Saxony (N 383/09)- Amendment of N 150/08 Broadband in the rural areas of Saxony Demand-side measures: e.g. vouchers, demand aggregation: consider also potential indirect aid to suppliers 11

12 Notion of State aid SGEI Art. 106(2) TFEU: Undertakings entrusted with the operation of SGEI or having the character of a revenue-producing monopoly shall be subject to the rules contained in the Treaties, in particular 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. NO AID - SGEI - Altmark cumulative criteria 1. public service obligations to discharge by beneficiary must be clearly defined by an entrustment act 2. parameters for compensation: established in advance in objective and transparent manner 3. no overcompensation (all or part of costs + reasonable profit) 4. tender or comparison with costs of typical well run undertaking, with adequate means AID - SGEI package, in force since 1 February 2012 Communication: on the notion of aid in SGEI cases Decision: exempts specific SGEI cases from notification Framework: large compensation amounts granted to operators outside the scope of the Decision De minimis Regulation (April 2012): 500,000 over 3 years + BBGL, Section

13 SGEI in the broadband sector Notion of State aid SGEI Market failure Universal connectivity (residential and businesses) Open wholesale access to the infrastructure on a non-discriminatory basis Only passive, neutral and open infrastructure offering all possible forms of network access and allowing effective competition at retail level, ensuring the provision of competitive and affordable services to end-users Only wholesale services (retail services excluded) No exclusive or special right awarded to the SGEI provider Compensation calculation => principle of the SGEI package Pyrénées-Atlantiques (N381/2004) and Limousin (N382/2004); Réseauà très haut débit en Hauts-de- Seine (N331/2008); France Très Haut Débit (SA.37183) 13

14 Notion of State aid DE MINIMIS Regulation No 1407/2013: de minimis aid not aid within meaning of Article 107(1) TFEU Assumption: amount so low that it cannot affect crossborder competition 200,000 over 3 years 500,000 for SGEI (Regulation No 360/2012) Transparent aid only 14

15 GBER = 43 exemptions used to provide effective and compliant State aid one of the new aid categories: aid for broadband infrastructures (art.52) Under GBER aid can be provided without prior approval from the Commission only if all compatibility conditions are met (all common and relevant specific provisions) Transparency: each scheme as well as individual aid awards over 500,000 - publication within 6 months from the date the aid was granted on a central/ regional website Online form to be completed Monitoring Evaluation Aid schemes in some aid categories (including broadband) with an average annual budget over 150 million These schemes are covered by the GBER for an initial period of 6 months (can be extended by the Commission upon approval on an evaluation plan describing e.g. scope of evaluation, result indicators, methods and timeline) The Commission may suspend or withdraw the GBER where non-compliance is identified Notion of State aid GBER 15

16 GBER Aid for broadband infrastructures (Article 52) Compliance with Chapter I and Art. 52 GBER Eligible areas: "white basic" and white NGA (no infrastructure or likely in 3 years) identified in public consultations Open, transparent & non-discriminatory competitive selection (with technological neutrality) Chosen operator grants widest possible wholesale access for minimum of 7 years and passive wholesale access under fair and non-discriminatory conditions, including physical unbundling in the case of NGA networks Wholesale access price as determined by the NRA Monitoring and claw-back procedures if aid > EUR 10 million Notification threshold: 70 million total costs per project; 150 million per scheme per year Q&A: 16

17 Common Principles Assessment Compatibility Broadband contribution to well-defined objective of common interest need for state intervention appropriate policy instrument existence of incentive effect proportionality of the aid amount (aid limited to minimum necessary) avoidance of undue negative effects on competition and trade transparency monitoring and claw-back reporting mapping public consultation competitive selection process technological neutrality use of existing infrastructure wholesale access and pricing 17

18 Article 108 TFEU PROCEDURE Procedural Regulation (Council Regulation (EU) 2015/1589) Implementing Regulation (Commission Regulation 794/2004; amended by Regulation 2015/2282) Notice on Simplified Procedure (possibly repealed/replaced soon) Jurisprudence Best Practices Code 18

19 Procedure Standstill obligation (Art. 108(3)) Unless one of exemptions apply, State aid must be notified to and approved by the Commission before implementation Non-notified state aid = illegal aid => actionable before national courts or subject of complaint Non-compatible aid = to be recovered 19

20 Procedure Member State De minimis GBER BBGL or SGEI No aid Pre-notification Notification Complaint No notification Ex-officio No notification Assessment Authorisation Formal investigation Prohibition / Recovery No aid Correct implementation No aid Ex-post monitoring 20

21 GOOD PRACTICES BCO network & increased dialogue Upfront contact DG COMP: GBER, pre-notifications, informal guidance Early involvement of stakeholders: informal checks / open debate/etc. & involvement of consumers (demand mapping, information campaigns) 21

22 Thank you for your attention 22