Brussels, 30/05/2011 (Agence Europe) - A more integrated approach is required for tackling state aid. This will involve simplifying and clarifying the rules and focusing more on rules that are likely to impede the way in which the single market operates. This message was again driven home by Joaquín Almúnia, the vice president at the Commission responsible for competition policy, on 26 May in a speech at the European State Aid Law Institute's 9th Experts Forum. At the forum, the Commission vice president put forward a number of major ideas governing reform plans for state aid control rules.
This reform is necessary due to the increasing integration and complexity of the different economies, the development of public sector activities and the size of the budget in the different member states. It is also necessary due to the series of different waves of EU enlargement and the rules on state aid in the Union (30 legal instruments). The increasing number of state aid cases subject to Commission control every year (more than 1000 new cases every year on average), particularly in periods of crisis, is another factor encouraging the Commission to simplify and clarify rules and ensure that these are strictly applied but also more targeted in an effort to ensure that these controls are more effective and appropriate.
The Commissioner mentioned three key areas in this connection:
- The banks, the main sector affected by the financial crisis and which benefited from massive amounts of state aid. In an effort to control them, the Commission has outlined three principles: return to long-term viability or follow an orderly resolution and adequate burden-sharing by shareholders and subordinated and hybrid capital holders; measures to limit as much as possible the distortion of competition. The Commission also wants to gradually end state aid in this sector and require restructuring plans that are in proportion to the aid received by the beneficiaries. The Commissioner has promised that “if the market conditions allow it” by 1 January 2011, there will be a new state aid framework for rescuing and restructuring banks, which is based on “normal” state aid rules and draws on the lessons learned from the crisis.
- Air transport. This sector has undergone spectacular developments involving low-cost carriers and secondary airports which, in the majority of cases, are not profitable and which survive exclusively because of the subsidies they receive from the local or regional authorities. The Commissioner said that he was aware that in 77% of cases these airports are owned by public undertakings, which are often the key factor in the development of certain regions. Nonetheless, in a sector that has been liberalised, “it is hard to justify spending on duplicate and non-profitable airports, especially in times of austerity and consolidation of public budgets”. By controlling state aid, the Commission will therefore be able to ensure that these publicly owned airports do not have any unfair advantage over other competitors (14% of them are mixed undertakings and 8% are owned by the private sector). 40 cases are pending and the Commissioner announced that in this sector there would be a possible revision of the 1994 and 2005 guidelines, on the basis of a consultation between the different stakeholders up until 7 June.
- Services of general economic interest (SGEI). On this point, the vice president returned to the plan he illustrated at the EPC on 2 May (EUROPE 10370). New rules on controlling this area must be made simpler and clearer (and therefore easier to apply by the authorities), less uniform and more standard to enable the authorities to adapt to different contexts (the concept of “economic activity” is perceived differently in the different member states). This is particularly the case for aid to services of local interest and certain social services. A possible review of current notification thresholds (aid that is above €30 million to providers that have a minimum turnover of €100 million) will be organised or by taking into account the scale of the local authorities (a lot of activities are managed by the local authorities and these have a minimum or zero impact on the internal market). In addition to public hospitals and social housing, another idea would be to extend these simplified rules to other services. On the other hand, in the area of large-scale commercial services provided, the Commission is proposing the fine tuning of instruments for working out what cases could have repercussions on the internal market. The keyword will have to be “efficiency” in the use of public funding. Currently, aid can cover all costs incurred by the provider, in addition to a reasonable profit margin depending on the level of efficiency. The Commissioner advocates greater incentives for providers to be efficient, by way of specific clauses in their contracts with the public authorities or by imposing a call for tenders requirement. The vice president insisted that all of these different suggestions still needed to be clarified. He maintained that although this point might be opposed at the Public Services Inter-Group at the EP, the legal basis of the reform is contained within Article 106 of the TFUE, which guarantees the Commission the exclusive power to define criteria for assessing compensation for the provision of public services. (F.G.trans/fl)