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EC Adopts New State Aid Rules

by Ulrika Lomas, for, Brussels

13 December 2006

The European Commission on Tuesday announced that it has adopted a Regulation exempting small subsidies from the obligation to notify them in advance for clearance by the Commission under EC Treaty state aid rules.

Under the new Regulation, aid of up to EUR200,000, granted over any period of three years, will not be considered as state aid. Loan guarantees will also be covered to the extent that the guaranteed part of the loan does not exceed EUR1.5 million.

However, in order to avoid abuses, forms of aid for which the inherent aid amount cannot be calculated precisely in advance (so-called 'non-transparent' aids) and aid to firms in difficulty have been excluded from the Regulation.

The new rules constitute one of the cornerstones of the State Aid Action Plan, designed to simplify the state aid rules, to refine the economic analysis of subsidies and to allow the Commission to concentrate its enforcement on the most distortive cases.

The Regulation will be published in the Official Journal before the end of 2006 and will enter into force on 1 January 2007.

Competition Commissioner Neelie Kroes observed that:

“This new Regulation will allow Member States and the Commission to save time and resources by outlining how small support schemes can be designed to avoid the need to be notified for clearance by the Commission and at the same time prevent distortions of competition.”

Under the current de minimis Regulation, state financial support of less than EUR100,000 over a period of 3 years in favour of a given company is deemed to have no substantial effect on competition and trade between Member States, and therefore not to constitute state aid.

Raising the ceiling to EUR200,000 takes into account economic developments since the de minimis ceiling was last increased.

Unlike the current state aid rules, the new Regulation will also apply to the transport sector and to the processing and marketing of agricultural products. However, since many companies in the road transport sector are relatively small, a specific ceiling of EUR100 000 will apply to this sector.

For the same reason, and in view of the overcapacity of the sector, de minimis aid cannot be used to buy road freight vehicles – notwithstanding the Commission's favourable approach with regard to cleaner and more environmentally friendly road transport, which is not the object of this specific legal instrument.

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