Comments. on the draft revised General Block Exemption Regulation

Transcription

1 Comments on the draft revised General Block Exemption Regulation Register of Interest Representatives Identification number in the register: Contact: Maren Wollbrügge Telephone: Telefax: Berlin, The German Banking Industry Committee is the joint committee operated by the central associations of the German banking industry. These associations are the Bundesverband der Deutschen Volksbanken und Raiffeisenbanken (BVR), for the cooperative banks, the Bundesverband deutscher Banken (BdB), for the private commercial banks, the Bundesverband Öffentlicher Banken Deutschlands (VÖB), for the public-sector banks, the Deutscher Sparkassen- und Giroverband (DSGV), for the savings banks finance group, and the Verband deutscher Pfandbriefbanken (vdp), for the Pfandbrief banks. Collectively, they represent more than 2,000 banks. Coordinator: German Savings Banks Association Charlottenstrasse Berlin Germany Telephone: Telefax:

2 Page 2 of 8 I. Preliminary comments As part of its initiative to modernise State aid legislation, the European Commission intends to review Commission Regulation (EC) No 800/2008 of 6 August 2008 declaring certain categories of aid compatible with the common market in application of Articles 87 and 88 of the Treaty (General Block Exemption Regulation). In this context, on 20 June 2012, the European Commission launched its review of the General Block Exemption Regulation with a public consultation on experience with the current Regulation, for which it published a questionnaire. On 8 May 2013, on this basis, the European Commission issued the first draft revised General Block Exemption Regulation for consultation. The German Banking Industry Committee express their thanks and have pleasure in availing themselves of this opportunity to submit comments, to express their views on the planned amendments and to make further suggestions for amendment of the proposed Regulation. II. Summary The German Banking Industry Committee welcomes the aim of the Commission, through the review of the General Block Exemption Regulation, to create a clear set of rules to facilitate application and promote better compliance with the legislation. However, the draft Regulation only ensures the achievement of this aim in part. Contrary to the main aim of the modernisation of State aid legislation, the new GBER, in our opinion, does not facilitate the application of the rules. The scope of the draft new GBER has increased compared to the current Regulation, which complicates verification of compliance with the conditions of exemption and therefore the legal risk too on account of the more complex rules and regulations. For the banks, the processing costs when handling assistance loans would increase substantially. The fact that the review raises individual thresholds and the marginal extension of the scope go hand in hand with heavy restrictions. In particular, the proposed extension of the examination of the incentive effect and the legal consequences in the case of infringements of provisions of this Regulation are viewed with considerable concern. III. In detail 1. Exclusion of large-scale aid programmes (Article 1) According to Article 1(2)(a), with regard to the effective annual budget for exempted aid schemes, a new upper limit of EUR 100 million or 0.01% of GDP is to be introduced (it is unclear at this point whether this condition is a matter of and or or ). Aid schemes above this threshold would have to be notified to the European Commission. In addition, all aid schemes in a Member State with identical or very similar characteristics are to be considered as a joint scheme. Combining programmes with identical or similar objectives at Member State level would result in de facto, merely as a precaution and for reasons of legal certainty, all programmes having to be notified, since it would have to be assumed that, on account of the Federal structure in Germany (central government and 16 Länder) and the resulting myriad of programmes, a large number of programmes exist with identical

3 Page 3 of 8 or similar objectives and an effective annual budget exceeding the total of EUR 100 million per year. This would in fact negate the Exemption Regulation for larger Member States such as Germany. This would frustrate the welcome intention pursued in the European Commission s Communication on State Aid Modernisation in future to confine itself to aid which has a significant impact on competition. Effective, prompt introduction of assistance programmes as a result would in fact be impossible. If the European Commission were to keep to its opinion set out in the draft, it is to be assumed that it would have to deal with a surge of notifications from the Member States, even if all conditions for the compatibility of the measures with the GBER at individual project level were met. If an aid measure meets all the conditions of the GBER, this ensures to a sufficient extent that there are no inadmissible distortions of competition. In addition, it would have to be defined in more detail precisely what is meant by similar objective (assisted projects, group of applicants, same GBER article, etc.). Too broad an interpretation of the cumulation requirement would lead to considerable legal uncertainty concerning the programmes to be aggregated and entail the risk of the European Commission establishing that the budget is exceeded only ex post. This legal uncertainty should not be expected of either the Member States or the assisted undertakings. As a result, the planned budgeting is ill-suited to achieving the aims strived for by the European Commission and is therefore disproportionate. Against this background, the German Banking Industry Committee advocates not including this passage in the new GBER. Irrespective of this, the introduction of a lump-sum exemption of EUR 100 million for all Member States takes no account at all of the size differences between the individual countries. In addition, this is a breach of the principle of equality. If the European Commission, contrary to the reasoning set out above, nevertheless wishes to introduce absolute budget limits for exempted programmes, at least the different sizes of the Member States must be taken into account. Furthermore, the effective annual budget should also be defined in more detail or clarified. In this respect, it can only be a matter of the aid content of a scheme and not the programme volume/budget, since otherwise flagrant unequal treatment of the various financial instruments subsidy, loan, guarantee, participating interest, etc. occurs. Only in the case of pure subsidy programmes (nonrepayable subsidies) does the programme volume/budget correspond to the aid content. For all other forms of finance loans, guarantees, participating interests, etc. the aid content is distinctly smaller. Therefore the volumes/budgets of programmes with different financing forms are not at all comparable with one another. 2. Scope (Article 4) The extension of the scope of the General Block Exemption Regulation announced by the Commission unfortunately turns out to be far smaller than expected. Only a few new aid measures are included in the General Block Exemption Regulation. 3. Examination of the incentive effect (Article 6) The new rules on the incentive effect represent a considerable tightening-up compared to the present rules.

4 Page 4 of 8 The German Banking Industry Committee rejects the option proposed in Article 6 to introduce a standard notification form for all undertakings. This applies in particular as the information to be communicated is very extensive and entails a considerable amount of work for the undertakings. The proposal is particularly disadvantageous for SMEs, for which hitherto the incentive effect was already assumed if, before work on the project has started, an application for the aid has been submitted. Henceforth, they have to examine before each project which article of the General Block Exemption Regulation they wish to refer to. If the aid comes under the general SME provisions (Articles 17 and 18), they would be exempt from the application form; if however the aid for an SME comes under the regional aid provisions for example, an SME too must complete and submit the application form. The presentation of the planned investment with an alternative investment (point 4 of the form) is possible only on the basis of a complex analysis and assessment of the corresponding project, which at the stage when overall financing has not yet been ensured would represent a considerable additional expense for the undertaking. The vast majority of undertakings do not carry out such analyses (point 2, second bullet point, and point 4) and would therefore have to do so solely for the purpose of making the application. The costs arising from this would in many cases far exceed the benefit of the granting of aid for the beneficiary, with the likelihood that many undertakings would refrain from an application and the corresponding objectives therefore could not be achieved. This is in contradiction with the welcome intention of the European Commission to facilitate procedures under State aid law and not to introduce any additional administrative hurdles. In particular, this would largely jeopardise the success of the various Community policies on environmental protection, but also the efforts to improve the technological efficiency of Europe by improving the financing of innovative projects, as SMEs in particular would no longer be able to afford the formalisation of the application process required by State aid law in these fields. This tightening up is also incomprehensible in terms of (regional) development policy. In several documents, the European Commission has described disadvantages of SMEs especially regarding access to capital in abstract terms and emphasised their particular eligibility (see in particular Communication from the European Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - An action plan to improve access to finance for SMEs). Against this background, the German Banking Industry Committee expressly advocates maintaining the present rules from the GBER for all SMEs, i.e. the incentive effect is always met for SMEs if, before work on the project or activity has started, the beneficiary has submitted an application for the aid to the Member State concerned. 4. Proportionality (Article 7) The interactions between the proportionality of aid and the evidence of the incentive effect must be clarified by the European Commission. Article 7 of the new GBER offers no explanation on the relationship between incentive effect and proportionality of aid. The overall context of this regulation is unclear. Therefore the corresponding Article 7 should be redrafted or deleted.

5 Page 5 of 8 5. SME status (Article X) Under EU State aid law, the amount of aid is to be calculated at the time when it is granted. This means that the circumstances existing at that time are also relevant. Now the European Commission is proposing a paradigm shift with regard to the assessment of the SME status of an undertaking. We reject a provision whereby an undertaking is to lose its SME status if, AFTER the aid has been granted, within a number of years yet to be stipulated, it becomes a partner or a linked enterprise and thereby exceeds the SME threshold. Such a provision is in flagrant contradiction with the current SME definition. In addition, the question arises as to how to proceed in practice if it has been established subsequently that the current SME thresholds have been exceeded: would this aid then have to be recovered subsequently even though when it was originally granted it was allocated in full compliance with the law (!)? Such a procedure would be contrary to the principle of non-retro-activity, which the ECJ derives in consistent case-law from the principles valid in the Member States of legal certainty and legitimate expectations. Moreover, a procedure organised in this way would be difficult to reconcile with the basic right of entrepreneurial freedom. For the reasons set out above, the proposal in Article X is unacceptable and should definitely be deleted. 6. Cumulation of de minimis aid (Article 9) The German Banking Industry Committee considers it to be indispensable for the ban on cumulation of de minimis aid with aid exempted under this Regulation to be lifted where the maximum aid intensities are exceeded. Ultimately, the de minimis aid does not count as aid within the meaning of Article 107(1) TFEU, since on account of its low level it cannot distort competition. This should consequently also apply in the cumulation provisions. These should therefore in no way require a ban on cumulation of aid and non-aid in the case of overlapping expenditure. In addition, through the lifting of this cumulation obligation, the procedure would be considerably streamlined and the transparency and predictability of the aid policy increased. The current cumulation provisions lead in practice to complicated calculations for which a great deal of information has to be collected from the beneficiary undertaking. This is the case especially in the case of projects with several support measures from different funding bodies. Furthermore, difficulties arise where eligible costs overlap only in part. Especially in the case of projects with a low to medium capital requirement, disproportionately high administrative expenditure arises as a result. In this way, overlaps have to be determined at expense (or single projects divided up artificially) and reduced aid rates calculated for these parts. In addition, it is difficult to convey the high degree of complexity of the aid calculation to the beneficiary undertaking. 7. Sanction (Article 11) For non-compliance with the provisions of the General Block Exemption Regulation, a sanction is to be introduced through Article 11 whereby the legal advantage of the block exemption may be withdrawn so notification of future aid measures has to occur. This sanction must be considered as too extensive. The seriousness of the infringement is also not specified. A possible consequence already of a first infringement could accordingly be that a Member

6 Page 6 of 8 State would be entirely denied the application of the General Block Exemption Regulation and any aid would have to be notified. Such a far-reaching legal consequence already on a first or minor infringement cannot be intended by the Commission. It appears preferable to establish such far-reaching consequences only in the event of an accumulation of infringements or in the case of infringements of a fraudulent nature. 8. Regional aid (Articles 15 16) Regarding the special provisions for regional aid, a restriction is to be made for large enterprises to the effect that, according to Article 15(7), only aid for first investments in new activities in the area concerned are covered. So far, all investments of large enterprises have been covered, provided that they are maintained in the recipient region for at least five years after the whole investment has been completed. The planned amendment is to be rejected as a massive restriction on the scope of the provisions for regional aid for large enterprises. Large enterprises, similarly to small and medium-sized enterprises already resident, can be of particular importance especially for structurally weak regions. On the one hand, they secure and create a large number of jobs, which in turn increases the purchasing power in the region. On the other hand, it is to be assumed that their existence has a positive impact on the predominantly characteristic SME (supplier) industry in the region. Furthermore, in the case of these enterprises, fundamentally problem-free access to financial resources cannot be assumed as a matter of course. The positive effects of aid to large enterprises should therefore not be underestimated. 9. Aid for SMEs (Articles 17 22) The amendments to the provisions on aid for SMEs are to be welcomed. We welcome the fact that the provisions hitherto scattered in the General Block Exemption Regulation for aid to SMEs are grouped together in Articles 17 ff. Also the provisions for new enterprises are brought together in a group for start-up aid in Article 20. However, the maximum duration of loans and guarantees should be raised to 10 years, since durations of a maximum of 5 years tend to be atypical for start-ups too. In addition, the condition in the current proposal that the enterprises in the start-up phase have so far made no profits is counterproductive. We recommend deletion of this additional condition. Otherwise, we see little scope for the exemption possibilities. Another positive factor is that in Article 19 the limit of EUR 1.5 million per twelve-month period and target undertaking is to be replaced by a limit valid for the total investment cost. Practical experience has shown, however, that for certain sectors (e.g. life sciences, bio-tech), EUR 10 million is not sufficient. In this respect, a higher upper limit should be set at least for selected branches which are particularly capital or research-intensive. In this respect, we would propose at least doubling in order to cover the increased capital requirement in these sectors. The present GBER refers in general to seed, start-up and expansion phases. In the draft, on the other hand, various criteria are now listed for the target undertakings (Article 19(4)(a) to (c)). The examination of these criteria in funding practice can be undertaken only at high cost. A proposal for simplification would be to take the age of the undertaking as a basis. Experience shows that even technology undertakings of an age of about 10 years (measured from incorporation) may have difficulties in

7 Page 7 of 8 attracting investors. Focusing on the date of incorporation should be easier than focusing on first commercial sales or discontinuing previous commercial activities. 10. Investment aid for energy-saving measures (Article 32) Under point 4 of the draft, the maximum aid intensities are not yet specified precisely. The German Banking Industry Committee proposes setting them, for the calculation methods under points 3a and 3b, for large enterprises at 20% and for the calculation methods under point 3c for large enterprises at 15%. The aid intensities for medium-sized (small) enterprises should be raised by 10 (20) percentage points in the case of points 3a and 3b and by 5 (10) percentage points in the case of point 3c. These percentages correspond to those of Article 21 of the currently still valid GBER and should therefore in our view not give rise to problems. 11. Investment aid for high-efficiency energy production (Article 33) Point 3 provides for a maximum amount which has not yet been specified in detail for installed capacity. It is not described whether this maximum amount is to apply per programme or per individual project. We propose deleting the corresponding passage, especially since a limitation hampers the objective of environmental support. For the maximum intensities not yet specified precisely in point 5, we propose 45% for large enterprises. The aid intensities for medium-sized (small) enterprises should be raised by 10 (20) percentage points. The amount of the aid intensities corresponds to the maximum intensities of Article 22 of the currently still valid GBER. Point 5 states, with regard to determining the eligible costs, that only incremental investment costs are to be taken into consideration and not the investment costs too as presented in Articles 30 and 32. We propose that the calculation methods as in Article 30(5)(a) to (c) can also be applied for investment aid for energy efficiency measures. 12. Investment aid for energy from renewable sources (Article 34) Point 5 states, with regard to determining the eligible costs, that only extra investment costs are to be taken into consideration and not the total investment costs as presented in Articles 30 and 32. We propose that for investment aid, the calculation methods set out in Article 30(5)(a) to (c) can also be applied for energy from renewable sources. The corresponding aid intensity for the calculation method as in Article 30(5)(c) should be 20% for large enterprises. The aid intensities for medium-sized (small) enterprises should be increased by 5 (10) percentage points. For the maximum intensities not yet specified precisely in the draft under point 7, we propose 45% for large enterprises. The aid intensities for medium-sized (small) enterprises should be increased by 10 (20) percentage points. These correspond to the maximum intensities in Article 23 of the currently still valid GBER and should therefore not give rise to problems. 13. Definitions (Annexes I and II) Against the background that the Commission wished to streamline and simplify the rules, it is totally incomprehensible that a large number of new definitions are included and these have all been shifted into

8 Page 8 of 8 the Annexes to the Regulation instead of being left with the respective specific regulations for individual aid groups. This makes application of this Regulation considerably more difficult. Annex I, point 53, contains a definition of the concept of debt instruments. Accordingly, debt instruments may take the form of loans and other funding instruments which provide the lender/investor with a predominant component of fixed remuneration and are at least partly secured. Such a definition does not correspond to the common funding practice of banks. Rather, a product is also a debt instrument if there is no security and/or a variable interest rate has been agreed. We also consider the definition for guarantees for aid to SMEs in Annex I, point 60, to be too narrow. We reject a restriction to risk finance loan transactions. Rather, the focus should be on loan transactions in general. In addition, leasing transactions should also be taken into consideration.