# EUR-Lex - 52006IP0054 - EN

Important legal notice

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# 52006IP0054

**European Parliament resolution on State aid reform 2005-2009 (2005/2165(INI)) **

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Official Journal 290 E , 29/11/2006 P. 0097 - 0104 *

P6_TA(2006)0054

State aid reform

European Parliament resolution on State aid reform 2005-2009 (2005/2165(INI))

The European Parliament,

- having regard to the Commission consultation document, "State Aid Action Plan — less and better targeted State aid: a roadmap for State aid reform 2005-2009" (SAAP) (COM(2005)0107),

- having regard to the Commission Communication, "Consultation Document on State aid for Innovation" (COM(2005)0436),

- having regard to Commission Decision 2005/842/EC of 28 November 2005 on the application of Article 86(2) of the Treaty to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest [1],

- having regard to Commission Directive 2005/81/EC of 28 November 2005 amending Directive 80/723/EEC on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings [2],

- having regard to the Commission's working paper on a Community framework for State aid in the form of public service compensation, in the version as forwarded to the Parliament for an opinion on 8 September 2004,

- having regard to the Commission's draft communication of 21 December 2005, "Guidelines on National Regional Aid for 2007-2013",

- having regard to the objectives of the Lisbon Strategy,

- having regard to the Presidency conclusions of the Barcelona European Council of 15 and 16 March 2002 and the Gothenburg European Council of 15 and 16 June 2001, and in particular the provisions under which the Member States agreed to reduce the level of State aid in the EU and to redirect it towards horizontal objectives of common interest,

- having regard to Articles 2, 5, 16, 73, 86, 87 and 88 of the EC Treaty,

- having regard to its previous resolutions on services of general interest, in particular to that of 17 December 1997 on the Commission communication on services of general interest in Europe [3], that of 18 May 2000 on the draft directive amending Commission Directive 80/723/EEC on the transparency of financial relations between Member States and public undertakings [4], that of 13 November 2001 on the Commission communication "Services of General Interest in Europe" [5], that of 14 January 2004 on the Green Paper on services of general interest [6], and that of 22 February 2005 on State aid in the form of public service compensation [7],

- having regard to Commission Regulation (EC) No 69/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid [8],

- having regard to Articles I-3, I-5, II-96, III-122, III-166, III-167 and III-238 of the Treaty establishing a Constitution for Europe, as signed by Member States in Rome on 29 October 2004,

- having regard to the case law of the Court of Justice of the European Communities relating to services of general interest, and in particular to its judgment of 24 July 2003 in Case C-280/00, Altmark Trans GmbH and Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft Altmark GmbH [9],

- having regard to Rule 45 of its Rules of Procedure,

- having regard to the report of the Committee on Economic and Monetary Affairs and the opinion of the Committee on Regional Development (A6-0009/2006),

A. whereas State aid provisions should be simple, transparent and effective,

B. whereas the market economy is the most efficient way of allocating limited resources; whereas State aid should therefore be an instrument of last resort,

C. whereas State aid should always have clearly defined objectives, be proportionate and, in particular, be granted on a temporary basis,

D. whereas State aid can be necessary in pursuing the objectives of European competitiveness or technological independence in the context of projects of common European interest under Article 87(3)(b) of the EC Treaty,

E. whereas the total amount of State aid granted each year in the EU is the equivalent of more than 50 % of the EU's annual budget even by the most conservative estimates; whereas the amount of State aid, as a proportion of GDP, varies substantially between Member States — and ranged from 0,10% to 2,76% in 2003 — potentially causing considerable market distortion,

F. whereas State aid is funded by taxpayers and must therefore be spent responsibly, providing high costeffectiveness,

G. whereas the justification for granting State aid should be reviewed at regular and appropriate intervals; whereas the task of regularly monitoring and auditing the use of State aid should not be delegated to the national audit offices of the Member States,

H. whereas effective and stringent controls over the grant of State aid are required in order to ensure fair competition and transparency and in order to avoid discrimination,

I. whereas, when applying the principles of subsidiarity and proportionality, the Commission should focus on infringements with a significant impact on the internal market, because State aid is incompatible with the common market pursuant to Article 87 of the Treaty only in so far as it affects trade between Member States,

J. whereas State aid which does not distort competition is a permissible means of promoting economic development and can thus be one means to promote the Lisbon agenda for economic growth and jobs, alongside other tools including Community funding such as the Structural Funds,

K. whereas the effectiveness of State aid control policy depends on better information regarding its implications for the parties concerned,

L. whereas the benefits of State aid can considerably exceed its costs when aid is used rationally and when thorough cost-benefit analyses are conducted,

M. whereas no monitoring mechanism comparable to Community-level aid supervision exists within the Member States,

N. whereas the Parliament, in its previous resolutions on State aid and in its regular debates with Commission representatives within the Committee on Economic and Monetary Affairs, has repeatedly insisted on measures to ensure more transparency.

General

1. Welcomes the Commission's intention, outlined in the SAAP, to modernise the practices and procedures regarding State aid, in particular by increasing legal certainty, refining the economic approach, increasing transparency by consulting stakeholders and enhancing the adjudication process;

2. Agrees with the Commission that there is a real need for a comprehensive reform of State aid policy;

3. Notes that State aid policy is an integral part of competition policy and that State aid control reflects the need to maintain a level playing field for all undertakings carrying out activities in the single European market; stresses, however, that, in accordance with Article 87 of the Treaty, State aid can also help to achieve other EU objectives, in particular those referred to in Article 2 of the Treaty;

4. Notes that Articles 86 and 87 of the Treaty expressly authorises certain exceptions to the general prohibition of State aid, when the aid regimes proposed have clearly defined beneficial effects for the population and the environment and the aid does not harm the general activities of the EU; considers it essential, therefore, that when assessing whether State aid is compatible with the Treaty, the right balance is struck between the negative effects of State aid on competition and its positive effects on the common Community interest;

5. Stresses that, in order to remove legal uncertainty, the Commission's decisions should be closely in line with relevant judgments of the Court of Justice; considers that the SAAP should be accompanied, where necessary, by legislative initiatives aiming to reform State aid along the lines called for by the EU and to enhance legal certainty;

6. Suggests that the Commission should publish, as consistently as possible, interpretative guidelines on Court of Justice judgments on State aid rules, whether these are based on Treaty provisions or on provisions contained in secondary legislation;

7. Stresses the need to draw the consequences both of the unsuccessful grant of State aid in the past and of those cases in which this has proved to be an effective instrument for achieving the objectives pursued; stresses that State aid that distorts competition should be abolished;

8. Expresses the wish that the Commission publish an annual report addressed to the Parliament and the Council on State aid granted in the Member States;

9. Asks the Commission, in this context, to apply stringent reporting rules, covering Member State as well as beneficiaries; asks the Commission, furthermore, to modify the State Aid Scoreboard with this in mind;

10. Considers that in today's global economy it is essential that rules laid down at Community level should take into account the conditions of international competition;

11. Calls on the Commission to check whether the maximum aid rates of up to 50 %, which are possible in principle, do not appear too high from the point of view of the market economy, since with such high aid rates a company can be set up without its own capital, which is contrary to the principle of entrepreneurial responsibility in a market economy;

12. Welcomes the Commission's statement in the SAAP that the key objectives of the Community include a high level of employment, sustainable growth and economic and social cohesion;

Stronger economic approach

13. Welcomes the Commission's aim of refining its economic approach to State aid proceedings and focusing its resources on cases that are likely to create the most serious distortions to competition and trade, with regard to the objectives of the Lisbon and Gothenburg strategies;

14. Calls for the Commission's economic approach to be defined strictly, in order to increase legal certainty for the parties involved; considers, therefore, that the Commission's economic analysis should be based on defined criteria derived from the procedures in force in other areas of competition law, while ensuring that the procedures are not too cumbersome;

15. Urges the Commission to subject both criteria for assessing illegal aid, as provided in Article 87(1) of the Treaty — the distortion or threat of distortion of competition on the one hand, and the effects on trade between Member States on the other — to economic analysis in all its decisions; asks the Commission to confirm and specify its approach for both criteria in specific guidelines;

16. Suggests that the Commission provide both a more detailed definition of the concept of "market failure" including an explanation of when the concept is applicable and a coherent methodology; insists that the concept should be workable, allowing Member States and beneficiaries to apply and benefit from it in practice; insists that the new concept must also be subject to shorter procedures; asks the Commission to clarify the limits of the concept of market failure and the interaction of the concept with the constituent elements of the prohibition of State aid in Article 87 of the Treaty;

17. Notes the initiative by Commission Vice-President Siim Kallas to introduce more transparency into the procedure for granting agricultural subsidies, which would require Member States to publish the identity of beneficiaries and the amount of aid granted on the Internet; recommends that that scheme be extended to all State subsidies; also recommends that Member States require companies to publish details of aid received in order to enable shareholders better to evaluate the real performance of the company, in particular in the event that the aid may subsequently be cut;

18. Warns against the potentially harmful role of both national and European State aid in motivating the relocation of potential beneficiary undertakings between Member States, due to "subsidy-shopping" by enterprises, without any real benefit to the common goals of the EU;

Innovation and R&D

19. Stresses the high importance of innovation and R&D to the future competitiveness of the EU in a global economy;

20. Stresses that State aid for R&D should be evaluated in the light of the Lisbon objectives and that such aid can enable Member States both to target market failures and to draw up measures giving industry an incentive to invest more in R&D; underlines, nevertheless, that aid for R&D must not give rise to aid that distorts competition, especially by favouring established market players; stresses in this context the need to overcome regulatory and fiscal barriers in Member States that hamper the development of young and innovative businesses;

21. Notes that the development of environmental technologies in the EU, notably in the energy sector, has been hampered by significant State aids for fossil fuels and nuclear power; strongly believes in the principle that external costs should be included in the price of energy from different sources and that this principle should be a basis for the revision of the EU's State aid guidelines;

22. Is very supportive of State aid flexibility concerning the creation and promotion of innovative ideas in public sector research bodies and universities, as well as clear and simple rules on how to transfer such ideas and expertise to businesses; in this regard, supports the generation of further innovation through public-private collaboration and partnerships;

23. Stresses the principle that aid for R&D should not favour individual undertakings; urges the Commission to aim aid for R&D at innovation clusters;

24. Supports the Commission's intention to make the State aid system more flexible with a view to supporting innovation processes in a way that is proportionate to their remoteness from the market;

Risk capital

25. Considers that, due to regulatory insufficiencies and incentive-poor tax systems in some Member States, the provision of risk capital, in particular to small businesses, is not optimal; welcomes, therefore, the Commission's ongoing revision of its communication on State aid and risk capital [10], which is due to expire in August 2006;

26. Underlines the need to foster the development of start-ups and young, innovative SMEs, inter alia through the use of appropriate tax incentives;

27. Stresses the need for faster and less burdensome approval procedures; favours in this context block exemptions for small-scale aid to SMEs;

Services of General Economic Interest

28. Calls on the Commission finally to ensure legal clarity as regards aid for services of general economic interest;

29. Considers that the element of overcompensation is the most fundamental criterion and that, therefore, the financing of services of general economic interest constitutes State aid only in those cases in which the criterion of justifiable compensation is not and cannot be shown to be fulfilled;

30. Regrets that there are still great differences between how the Commission intends to interpret the test in the Court of Justice's Altmark judgment in practice; calls on the Commission to issue a clear and precise interpretative communication on the fourth criterion set out in the Altmark judgment, which takes account of the specificity of different sectors;

31. Asks the Commission, given the increasing importance of public-private partnerships for building infrastructures in less developed regions, to pay particular attention to the issue of State aid provision for such partnerships and, thereby, to provide legal guidance on all issues regarding the applicability of State aid rules in this context and calls, in particular, for appropriate rules to simplify the use of public-private partnerships; submits that special care should be taken in this connection to ensure that transparency is maintained;

32. Notes the exemption of smaller public service companies from the application of the State aid rules; wonders, however, whether the distinction between smaller and larger undertakings in the assessment of State aid rules is adequate; pleads, therefore, for the Commission's assessment to be based on the effects of State aid measures on the relevant market rather than on the size of the public service company involved;

Block exemptions

33. Supports the adoption of a general block exemption regulation by the Commission in order to simplify and consolidate the existing block exemptions, notably on training, SMEs and employment, and to integrate a broader range of exemptions, notably as regards State aid to support SMEs and R&D, so long as cross-subsidisation from small to large enterprises is monitored and prohibited as appropriate; agrees with the Commission's aim of focusing its resources on tackling the most distortional aids; considers that the notification procedures and delays inherent therein should be proportionate to the risk of distortion of competition arising from the grant of aid in question; opines that a single legal instrument could also facilitate future extensions of the block exemption concept, such that smaller amounts of each type of aid need no longer be notified;

34. Stresses the need to ensure that a general block exemption regulation leads to a true simplification of the procedure, with clear, detailed and unambiguous provisions, which do not compromise the overriding aim of a general reduction in State aid;

35. Welcomes the proposal to raise the de minimis threshold; suggests that the figure be doubled, to EUR 200000; asks the Commission in this context to address the problem of cumulation control;

Regional aid

36. Welcomes the Commission's Guidelines on National Regional Aid for 2007-2013 [11]; stresses that regional aid policy should give greater consideration to territorial criteria so as to distinguish geographical areas of the EU with a strong economy from areas experiencing industrial conversion difficulties and areas with permanent natural handicaps; views cohesion and State aid policies as complementary because State aid policies have proved to be an effective instrument on the road towards the genuine convergence of incomes across the EU;

37. Considers that State aid should be permitted only where the aid both adds value that no other political measure can achieve and is for the benefit of a region; therefore, supports a more efficient approach to the grant of regional aid, with a focus on investments in infrastructure and horizontal aid in disadvantaged or the least developed regions of the EU, including the introduction of advantageous tax conditions for transitional periods not exceeding five years; in this connection, highlights the need to maintain appropriate support measures for "statistical effect" regions;

38. Considers that there should be a review of the reductions in State aid to the "statistical effect" regions, which have benefited from a relative increase in income as a result of enlargement but which have not achieved real growth or convergence and which suffer a high unemployment rate;

39. Calls on the Commission, in view of the EU's objectives as well as its cohesion policy, which is designed to achieve economic and social convergence through measures aimed at redressing imbalances between the EU's regions, to ensure that neither national nor European State aid results in a distortion of competition between Member States' regions and does not finance intra-EU relocation, leading, in particular, to jobs being lost in one region for the benefit of another;

40. Encourages the Commission, in line with the Lisbon and Gothenburg strategies, to assess in greater depth and detail the different types of State aid and their effectiveness so that it can indicate whether certain forms of aid are more advantageous than others as regards any lasting, positive impact they may have on regional development;

41. Asks the Commission to apply the principles outlined in the SAAP also to the specific rules applicable to certain sectors, such as agriculture, fisheries, coal production and transport, which are often concentrated in areas eligible for structural funds, and to make more suggestions focused on reforming these specific rules;

Environmental aid

42. Considers that environmental State aid, where fair and transparent in its application, can play a crucial role in achieving the goal of sustainable development in the EU, particularly by stimulating investment in technology over the long term and by the patenting of such technology in the EU, in line with the objective of stabilising greenhouse gas emissions laid down in the UN Framework Convention on Climate Change;

43. Endorses the Commission's view that the current guidelines on State aid for environmental protection are "not properly adapted to the increasing sophistication of investments in environmental technologies, nor to new forms of public/private partnership" [12];

44. Calls on the Commission and the Member States to speed up the introduction of measures to reduce environmentally damaging State aid and ultimately to eliminate it altogether; notes that the size of this State aid is considerable; and calls on the European Environment Agency to draw up a list of subsidies which directly or indirectly promote polluting production and consumption, thereby creating unfair competition for cleaner technologies;

45. Welcomes, therefore, the start of the stakeholder process with a view to revising these guidelines, which are set to expire by the end of 2007;

Better governance

46. Considers that the current practices and procedures of State aid policy have certain shortcomings and are too bureaucratic;

47. Welcomes, therefore, the introduction of best practice guidelines on State aid procedures for speedier and more efficient notification procedures; questions, in this context, whether a regulation would not be more appropriate than guidelines to achieve this aim;

48. Strongly supports the idea of forming a closer network of supervisory authorities, such as courts of auditors, in the Member States, which could facilitate the objective of consistency in the application of the State aid rules;

49. Stresses that any decentralisation of competence in favour of national authorities requires rigorous monitoring and coordination to ensure that the rules are applied consistently in all Member States; considers that decentralisation could risk resulting in the inconsistent enforcement of State aid rules, in particular given the varying structures and levels of experience and expertise of Member States' competent authorities; underlines the importance of a functioning network between the competent authorities in the Member States;

50. Urges the Commission to set clear time limits for State aid proceedings, including compliance;

51. Expresses its discontent that sanctions for non-notification are currently enforced only against beneficiaries and not against Member States; supports the Commission, therefore, in exploring new deterrent mechanisms with a view to addressing the incorrect implementation of the State aid rules by Member States, and invites the Commission to provide for appropriate sanctions in this regard;

52. Renews its call for the codecision procedure to be introduced for all competition policy matters which the Council decides by qualified majority;

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53. Instructs its President to forward this resolution to the Council and the Commission.

[1] OJ L 312, 29.11.2005, p. 67.

[2] OJ L 312, 29.11.2005, p. 47.

[3] OJ C 14, 19.1.1998, p. 74.

[4] OJ C 59, 23.2.2001, p. 238.

[5] OJ C 140 E, 13.6.2002, p. 153.

[6] OJ C 92 E, 16.4.2004, p. 294.

[7] OJ C 304 E, 1.12.2005, p. 117.

[8] OJ L 10, 13.1.2001, p. 30.

[9] [2003] ECR I-7747.

[10] OJ C 235, 21.8.2001, p. 3.

[11] Not yet published in OJ.

[12] Commission Communication, "Stimulating Technologies for Sustainable Development: An Environmental Technologies Action Plan for the European Union" of 28 January 2004 (COM(2004)0038, at paragraph 4.2.3).

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