Local Government Briefing Note 4 of 2013 - State Aid: Proposed Reform of State Aid Procedures

• United Kingdom

• Local government - Briefing notes

16-01-2013



The European Commission has announced proposals to amend the Procedural Regulation adopted in 1999. This forms part of the EC’s State Aid Modernisation Initiative and will support quicker decision making and ensure a focus on State aid that has the potential to have the most major impact on competition. There are three main categories of changes proposed:

1. Complaints handling

To ensure complaints are focused, and to reduce the number of complaints that the EC is obliged to investigate, it is proposed that complainants will have to submit a certain amount of compulsory information to be listed in a complaint form and demonstrate how their interests would be affected by the granting of the State aid. If the information is not provided it will not be deemed a complaint.

At the same time the Commission proposes to formalise the right of national courts to obtain information and ask for an opinion from the Commission on questions related to the application of  State aid rules. Along side this the EC  proposes to introduce the right for the Commission to make submissions to national courts in written or oral form where to do so would be in the public EU interest.

2. Adoption of market information tools

The EC proposes to expand the use of Market Information Tools (MIT) from other competition control regimes to State aid. They will only be available when the EC has opened up the formal investigation phase and will involve two types of requests:

• simple requests for information with no obligation to reply but financial sanctions if incorrect or misleading information is given, and
• a request following a  Commission decision which will impose a deadline to reply. Again financial sanctions apply regarding  incorrect, incomplete, misleading or late replies and late replies.

Requests sent to other public bodies and other member state Member States and public authorities would not entail the imposition of fines.

3. Sector inquiries

The EC is also considering rules that will allow it to conduct sector inquiries in two situations:

• to obtain information for assessing cases where the EC has data linking the issue to a specific sector (eg the health sector) or aid instrument in several Member States;  and
• where the EC consider that to obtain information on the application of commercial practices in a given sector will help the EC to  prepare informed guidelines for enforcing State aid in a way that reflects the markets.

Results of sector inquiries will be published and specific investigations may then follow. A sector inquiry will only be used however if other routes are not appropriate as they are time and money intensive.

4. Likely impact of reform

The reforms will enable the EC to be more focused in relation to serious allegations of unlawful State aid and to carry out more in-depth fact finding. It is likely that more proactive investigations will be seen eg following a sector inquiry.  Where public support is wide spread in a sector then recipient entities should be aware of the higher risks of being asked to co-operate with the EC and greater scrutiny of how public support is to be given. Likewise for the public bodies giving support the need to ensure it is compliant is rising with these proposed changes.