Revision. Regulation (EC) No 800/2008 of 6 August 2008

Transcription

1 Department for European Policies Revision of 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) Position of the Italian authorities Rome, 20 September 2012

2 We submit hereunder the response from the Italian government to the public consultation launched by the European Commission on Regulation (EC) No 800/2008 of the Commission 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). General questions (Sections A, B and C) The questions posed in Sections A, B and C of the GBER questionnaire are addressed together in this paragraph on general policy questions, for two reasons: because many aspects are common to the three sections and because Italy s remarks on the General Block Exemption Regulation (GBER) also take into account the broader theme of State aid modernisation. In particular, the objectives of achieving simpler and quicker decision-making, focusing on the most relevant cases, and assessing aid efficiency and its impact on competition, set out in the Commission s Communication on State Aid Modernisation COM(2012) 209 final, adopted on 8 May 2012 (hereinafter the Communication), are the mainstays of the State aid review process and require some remarks as to methodology. Setting the criteria Italy stresses the need to start by defining the guiding principles and criteria for choosing the categories of aid exempted under the Regulation, by establishing ex ante a methodological approach placing greater emphasis on economic analysis. As mentioned in the Communication (point 18(a)) this involves identification and definition of common principles applicable to the assessment of genuine market failures. This requires the identification of harmonised revision criteria having a coherent economic rationale. Raising of the thresholds As to the possible raising of the thresholds, Italy wishes to confirm its position 1 on the possible raising of the threshold for de minimis aid. We also feel that the main purpose of the GBER should be not so much to raise exemption ceilings but as stated in the Communication (point 20(c)) to better channel public resources towards certain pre-established objectives while simplifying the administrative treatment of well designed measures with relatively low amounts of aid. Raising the exemption threshold might impair the important role of State aid in promoting macroeconomic stabilisation and cohesion between Member States within the EU, with the result of widening the existing gaps between Member States. Accordingly, we re-propose the solution of adding - as a further element for determining the eligibility of the aid - volume limits that are inversely proportional to each country s macroeconomic performance. 1 During the Competitiveness Council of 30 May 2012, we stated that in principle we would not oppose raising of the de minimis threshold, provided that this was preceded by thorough impact assessment to ensure that it would not benefit just some Member States to the detriment of others. 2

3 The Commission may for instance apply a mechanism similar to the maximum ceiling per Member State currently in use in the Regulation on de minimis aid in the agricultural and fishery sector. Establishing a quantitative limit for each Member State (which must obviously take into account the structure of each State s economy) would, inter alia, reduce the overall distortive effect on competition and trade caused by the different financial capacities of Member States. Definition of SME While appreciating the results of the simplification effort made by adopting the GBER, Italy feels that further procedural simplification is needed, in particular in the area of measures targeting SMEs, which remain the main beneficiaries of the exemptions. Definition of sectors and notion of aid As concerns the possible extension of the scope of the general block exemption regulation to cover new sectors, Italy considers that this aspect should be examined under the broader issue of the clarification and better explanation of the notion of State aid, as indicated in the Commission s Communication (point 23(d)). In particular, on the one hand the scope of the exclusion of certain sectors from the GBER should be specified (see Article 1(2) and (3)). On the other, we would ask the Commission to clarify how it interprets and applies the provisions of the Treaty, as defined by the Court of Justice, to certain sectors such as culture and sport where public support is often an essential element to guarantee the viability of activities whose cultural and social aspects prevail over economic ones. Except for well-defined cases of actual economic activities (e.g. publishing or professional sport), there is as a rule no presumption of State aid in these cases. The European Commission could provide Member States with interpretative support in these sectors, in the initial assessment phase, preferably by means of a set of guidelines accompanied by practical examples. It must be remembered that the exclusion/inclusion of specific sectors in the scope of the GBER faithfully reflects corresponding exclusions/inclusions in the related sectoral legislation. Territorial cooperation The current EU legislation on State aid is not applicable to EU territorial cooperation programmes, in view of their characteristics. This legislative gap has however given rise to uncertainties and ambiguities in the management of interventions qualifying as State aid under Objective 3 Programmes. To fill this regulatory gap, the Commission should provide specific guidelines on compliance with State aid rules for projects that are co-funded by cooperation programmes. The revision of the GBER could be an opportunity to reflect and offer clear guidance on the application of State aid rules to territorial cooperation programmes and on whether such programmes may be included among exempted categories or should be considered separately. Agricultural sector As concerns the revision of the notion of State aid in the agricultural sector, Italy suggests that the interventions currently covered by point 175 of the Community guidelines for State aid in the agriculture and forestry sectors be classified as measures not constituting aid when granted to public entities, when the forests are public and accessible to all, and when the entity derives no income from their management. Likewise, we would suggest that prevention measures and measures geared to environmental objectives or other non-economic objectives (for instance, 3

4 measures 226 and 227 of the rural development programmes) be considered non-aid measures, whether they be granted to public or private beneficiaries. This would meet the requirement of cutting down red tape in the notification of non-agricultural measures under rural development programmes. 2 Broadening of sectors Natural disasters As to the broadening of the scope of aid for natural disasters, under Article 107(2)(b) TFEU, aid to make good the damage caused by natural disaster is compatible de iure. Therefore the Commission is not required to assess its compatibility but only to verify that the Member State meets the requirements set out in the Treaty, as interpreted by EUCJ case-law and defined by the Commission s decision-making practice. At the present time, any aid relating to natural disasters must be notified to the European Commission, which issues its decision based on a set of settled criteria developed through practice. In particular, as upheld by the EU Court of Justice, aid granted to the territories and populations affected by natural disasters is compatible with the common market to the extent that it does not exceed the net value of the damage actually suffered by the beneficiaries. Thus, the Court confirmed eligibility of the aid when granted up to the amount of the investment made to make good the losses borne, net of any other amounts received. However, this EU-imposed limit makes it difficult to factor in indirect economic damage: consider for instance the fall in production or sales incurred respectively by manufacturing and commercial undertakings and the ensuing GDP contraction in the affected areas. Despite the lack of a direct causal link between such losses and the aid granted, rules for lawful compensation should be introduced, obviously ensuring it does not affect competition or intra-eu trade. This could be done for instance by considering compatible with the internal market also the aid for natural disasters intended, pursuant to Article 107(3)(c) TFEU, to facilitate the development of certain economic activities or of certain economic areas. After thus extending the scope of damage due to natural disasters, in order to ensure the effectiveness of the aid in furthering the economic recovery of the affected territories, as to the part of the scheme intended to make good the macroeconomic GDP contraction effects, appropriate calculation parameters should be defined in agreement with the European Commission (e.g. intensity ceilings, basis of calculation, etc.) to ensure that the measure is proportionate to its purpose and does not exceed what is needed to achieve it. In summary, in the case of natural disasters, State aid considered to be compatible with the internal market and exempted from notification could be: 2 Indeed, rural development measures not covered by Article 42 TFEU, after being notified under rural development programmes must be authorised by the Commission or by the Member States under an exemption Regulation or the de minimis rule. Based on experience, we can state that these provisions make for more burdensome procedures and require longer implementation time. 4

5 - the aid referred to in Article 107(2)(b) TFEU, granted to make good the loss suffered; - the aid under Article 107(3)(c) TFEU, whose calculation basis and aid intensity ceilings must be established by the Commission. Based on the same reasoning, as concerns aid to the agricultural sector, the scope of inclusion of aid for natural disasters in the GBER could be more significant and effective if the Commission agrees on the need to add an article concerning undertakings engaged in the processing and marketing of quality agricultural produce. This is because undertakings that produce PDO, DOC and other quality-labelled food products cannot source their raw materials outside the designated production areas for those products. Therefore, when such ingredients are damaged by a natural disaster or similar event, food processing undertakings suffer a particular kind of damage, quite distinct from that incurred by other manufacturing undertakings. Thus, in addition to normal business risk they incur an additional risk, which is specific to their sector 3. On this point, the Commission has built up sufficient experience for defining general compatibility criteria: indeed, the Commission routinely accepts that adverse weather events such as frost, hail, ice, rain or drought, and likewise crop and livestock diseases, which are not in themselves natural disasters within the meaning of Article 107(2)(b) TFEU, can be ranked as their equivalent, if the damage reaches a certain threshold of normal production; consequently, compensation for the resulting damage must be authorised under the same Article 107. It should therefore be concluded that introduction in the GBER of aid intended to make good the damage caused by adverse events, besides meeting requirements of timeliness, simplification and effectiveness generates no inconsistencies with the legal basis provided by Article 107(2)(b) TFEU. Forestry aid Without prejudice to the need to ensure full alignment with the future rural development regulation, we feel that exemption from notification should apply to aid to the forestry sector, and in general to all rural development measures not covered by Article 42 TFEU. This can be done by including specific provisions in the future GBER or, alternatively, by issuing an additional exemption regulation, possibly an ad hoc one. Clarifications and definitions - For the agricultural sector it would be useful to expressly state which articles apply to it, possibly specifying which ones also apply to primary production. - We would ask the Commission to clarify whether the scope of Article 4 of Regulation (EC) 794/2004, where it states that however, an increase in the original budget 3 To give some examples: if the buffalo of the PDO mozzarella production area should be hit by a brucellosis outbreak, mozzarella producers would be unable to procure the milk they require outside the PDO production area, and would consequently incur loss of income due to lack of production. On the other hand, buffalo milk producers would be eligible for compensation for the damage suffered and loss of income under the Community guidelines and Exemption Regulation No 1857/2006. Likewise, if an area producing DOC grapes is struck by drought or torrential rains which ruin the harvest, winemakers producing under the DOC scheme would be affected. 5

6 of an existing aid scheme by up to 20% shall not be considered an alteration to existing aid, may be extended from aid notifications to also include exempt cases. At the present time it is not clear whether an increase in the budget with respect to the ceiling notified under the exemption rule is subject to the same 20% threshold in order to avoid the requirement of re-notification of exempt aid. Section D Common provisions Scope of block exempted aid (D.1.) With reference to Article 1(2)(a) and (b) we would ask the Commission to provide a clearer definition of export-related activities: in particular, in the case of schemes providing funding for SME internationalisation, the boundary between the latter and the establishment of a distribution network or other current costs linked to the export activity is often difficult to define, in particular in the area of e-commerce funding. As to Article 1(3)(d), (e), (f) and (g), we would ask the European Commission to set up a system ensuring greater simplification and consistency of treatment for the excluded sectors. For the exclusions set out in Article 1(3)(d), (e), (f) and (g), and Article 1(4), greater simplification and consistency would be achieved by a statement of principle clarifying the meaning of the phrase specific sectors of economic activity within manufacturing or services, as the only example appearing in the current Regulation is that of tourism activities. In particular, public authorities should be allowed to adopt specific strategies in favour of economic sectors acting as drivers or whose crisis could have severe local impacts (for instance by promoting innovation in the undertakings of those sectors). This possibility would be especially welcome in regions qualifying for the derogation under Article 107(3)(c) TFEU. Cumulation (D.4.) We would ask the European Commission to define the cases of cumulation of aid measures with identifiable eligible costs and aid measures without identifiable eligible costs more precisely than is currently the case under Article 7(5)(a), which refers only to risk capital measures. As things stand there are for instance no provisions concerning cumulation of an aid measure exempted by the GBER and a State aid measure in the form of a guarantee or a low-interest loan, as in this case it is not always immediately clear whether the eligible cost is the amount of the guaranteed/low-interest loan or, instead, the investment for which such loan was requested. This is especially relevant in the case of cumulation of exempted aid and aid under the de minimis rule, where the latter is not investment aid but operating aid. Italy also wishes to highlight difficulties in implementing Article 7(3): on the one hand, under the cumulation principle several aid measures may be cumulated with respect to the same eligible costs within the ceiling of the highest applicable aid intensity/amount. On the other, under the principle of necessity and effectiveness no additional aid may be granted to an investment project which has already received funding 4. 4 This regulatory asymmetry has often been noted in cases of rotating funding, for instance when a company s investment project is funded with a gross grant equivalent below the maximum ceiling. Consider for instance a small 6

7 We also find overly penalising the prohibition in Article 7(5)(a), under which an enterprise which has received capital under a risk capital measure is subject in the three subsequent years to a reduction of 50% or 20% in the aid which may be granted under other provisions of the GBER. We find this limitation unjustified, especially given that the measures set out in Article 29 concern as a rule spin-offs or start-ups, or at all events enterprises in the initial development stage, which are not granted aid in the traditional sense but rather the possibility of securing development capital which it would be hard to find on the market and which comes mostly from private sources that are prepared to invest only where they see a high likelihood of making a return. Moreover, the experience of a number of Funds set up with public capital has shown that the main function of this capital was to dilute risk for the private Fund managing the measure, but never to favour operations which would be unattractive for the private Fund/investor: where present, the aid as a rule benefited the Fund, not the enterprise it invested in. Incentive effect (D.5.) We would ask the European Commission to define clearly the meaning of the expressions incentive effect of aid and necessity of aid. These two concepts are usually applied to two different cases: the first refers to the ability of the aid to modify the behaviour of its recipient, the second to the fact that work on the subsidised project or activity must not have started before the application for aid was submitted. At times, these two cases are lumped together and are both referred to the incentive effects. This occurs, for instance in Article 8 GBER and in Point 6 of the Community Framework for State aid for Research and Development and Innovation (2006/C 323/01). At yet other times, they are kept separate, for instance at point 24 of the recent Guidelines on certain State aid measures in the context of the greenhouse gas emission allowance trading scheme post-2012 (2012/C 158/04). Formal requirements (D.6.) As to Article 9 of Regulation No 800/2008, on transparency, we suggest that the Commission amend and clarify the forwarding procedure set out in paragraph 1. Under the current Article 9, within 20 working days following the entry into force of an aid scheme Member States must forward to the Commission a summary of the information regarding such aid measure (the required information is listed in Annex III to the Regulation). The Commission shall then acknowledge receipt of such summary. Article 9 then goes on to provide that the summaries shall be published by the Commission in the Official Journal of the European Union and on the Commission s website. However it is not enterprise, which on day x files an application under a subsidised funding call, and which receives a contribution for a GGE of 10% of the investment although it would be eligible for 20%. If the small enterprise decides to file a second application for the same project, for instance under a call for non-returnable grants, because under the cumulation principle set out in Article 7(3) it is eligible for a further 10% on the same costs, under the principle of necessity it would not be granted this funding. Furthermore, the prohibition would apply irrespective of whether or not the enterprise has already started work on the project, because its first application would have demonstrated that the undertaking was able to bear the private co-funding share associated with the first 10% GGE. Therefore, these principles should be revised to set out clearer and easier to implement rules. 7

8 specified whether the Member State must wait for publication of the scheme on the internet or even on the Official Journal before implementing the aid. Therefore, it would be useful to specify exactly at which point in time the scheme may be implemented, for instance by specifying in the Regulation that the scheme shall enter into force on the day the Commission sends acknowledgement of receipt thereof or, on another date, such as the date of publication on the OJ. Specific conditions applicable to investment aid (D.7.) We refer to Article 12 and to the associated notification threshold set out in Article 6. On this point, while we agree with the Commission that the processing and marketing of agricultural products is similar to that of non-agricultural products, we should like to stress that much of this activity displays distinctive features. That is why we feel that it would be appropriate to reinstate aid for the processing and marketing of agricultural products under the heading of agricultural aid, hence under the responsibility of the DG Agriculture and Rural Development, when the finished product belongs to those listed in Annex I to the TFEU. Alternatively, we recommend shifting to agricultural aid at least those activities carried out at the holding (short production chain). The reason for this request is the need to ensure consistency between the legal treatment given to the agricultural holding when engaged in primary production and that given to the same holding when engaged in the processing and marketing of agricultural products. It often happens that the two activities are performed by the same entity (integrated production chain). Moreover, the raw material being processed is the agricultural produce which, by its very nature is subject to risks far different from those threatening the inputs of any other manufacturing activity. Ensuring consistency will be even more essential in the next programming period, when all the rural development measures not covered by Article 42 of the Treaty will need to be notified. For this reason, we also ask that the measures provided for by the future General Block Exemption Regulation be harmonised with the Regulation on rural development currently being adopted also with respect to aid intensity and eligible areas, besides procedural aspects. In the current programming period a number of procedural problems have arisen and at times individual aid in the processing and marketing sector has been assessed by DG Agriculture instead of DG Competition. Specific provisions (Section E) Aid for consultancy in favour of SMEs and SME participation in fairs (E.3.) As concerns the agricultural sector, Italy calls for inclusion of an article on the advertising of products, in particular for certified quality processed agricultural products. Italy proposes that the scope of Articles 26 and 27 be extended to include technical assistance and support measures for quality products. Consequently, costs eligible for up to 100% of aid could include, purely by way of example: market research, product conception and design, actions supporting quality and other interventions that could be agreed with the European Commission. Furthermore, in view of the current extension of the notion of internationalisation, which can no longer be limited to first participation of an enterprise in a trade fair, as is the case under the current Article 27, Italy would ask the Commission to consider the possibility of allowing aid for the 8

9 internationalisation of European SMEs, including internationalisation projects also implemented via SME networks, and concerning various services. Aid for environmental protection Reference is made to the replies to be provided to the questionnaire on State aid for environmental protection. Aid for research and development and innovation We wish to point out that repeated substantial application difficulties have been encountered with the definition of experimental development given at Article 30(4) of the Regulation, in particular in the second sentence after the first line break: In case of a subsequent commercial use of demonstration or pilot projects, any revenue generated from such use must be deducted from the eligible costs. This provision implies that the beneficiary undertaking should be able to estimate the revenue that might be generated from further use of the pilot project, and would have to deduct such revenue from eligible costs. Furthermore, this provision indicates no timeframe for calculating such revenue. As to Article 30 et seq. it should be specified that innovation aid may also be granted to agricultural enterprises. Training aid (E.4.) As to eligible costs, consistency should be ensured between State aid rules and cohesion policy rules. In particular, it is increasingly possible to recognise eligible costs via a simplified procedure without auditing of accounting documents under structural fund actions. In programming period this procedure will play an increasing role in fund management and control. These simplification options should be considered also for eligible costs in State aid. Specifically, for worker training, while the Italian experience shows successful use of simplification in this type of action, we wish to highlight the difficulties experienced in calculating aid intensities while respecting the conditions of Article 39.4(f) when applying these options. Therefore, we feel that the listing of cost items should be revised, separating trainees personnel costs from general indirect costs, to facilitate application of the simplified options. Aid for disadvantaged and disabled workers Italy calls for the reintroduction of certain general principles, (applying both to training aid and to employment aid) established by the European Commission in the preceding sectoral Regulations (Regulation (EC) No 68/2001 and Regulation (EC) No 2204/2002 recital n. 6) and which regrettably were not subsequently incorporated in the General Block Exemption regulation 5. Based on the experience of past years, we feel a paragraph on measures not constituting State aid should be added, reintroducing the provisions of the old exemption regulations and adding the principles laid down in case law and other EU frameworks. We urge the Commission to restore these principles in its legislation, either in the Exemption Regulation or in the announced interpretative document on the concept of State aid. 5 We refer to measures not constituting State aid, e.g. initial school education and vocational training, aid to individuals, etc. 9

10 In particular, as concerns interventions not constituting State aid, we would argue that compensation for the additional costs of employing disabled workers should not be considered to be State aid, as it generates no kind of economic benefits for the undertaking. As to the definition of disadvantaged, in particular for the category referred to in Article 2.18(a), we suggest specifying the scope of the expression in regular paid employment, and we recommend a non-restrictive approach. It should be clarified whether the adjective regular may be interpreted, for tax purposes, as referring to time, i.e. with the meaning of continuing or ongoing. This would allow inclusion also of those individuals who have been engaged in occasional work during the previous 6 months. More specifically, it must be clarified whether, to be included in the category: the person concerned must be unemployed at the time of the funding application; the person must have been unemployed for at least the past 6 months; unemployment must be proved by uninterrupted registration as a job-seeker with the employment office under the concept of unemployment laid down in Italian law; persons on the mobility lists (worker redeployment schemes) are also ranked as being unemployed, in accordance with current legislation. Lastly, we feel that review of the GBER should take on board the dire employment situation caused by the continuing economic downturn, especially so in view of the increasingly felt need to ensure social cohesion in Europe by supporting access to employment. Accordingly, we suggest freeing aid for the employment of non-disadvantaged persons from the requirement to make investments in tangible or intangible assets. Furthermore, broadening the definition of disadvantaged person to also include schemes combating for instance youth unemployment, would be fully consistent with the focus Europe is placing on this group, which is bearing the brunt of the economic crisis. 10