State Aid Scoreboard - Spring 2003 update

(presented by the Commission)

Contents

Executive summary

Introduction

Structure

Limitations

State aid Register - a second transparency tool

Part One: Overview of State aid in the European Union

1.1 State aid in absolute and relative terms

1.2 Sectoral distribution of aid

1.3 State aid to the manufacturing sector

Part Two: Adopting an economic approach towards less and better State aid

2.1 Horizontal and sectoral objectives

2.2 Coal and Steel

2.3 State aid supporting regional development and cohesion

2.4 State aid instruments

Part Three: Procedural performance in the European Union

3.1 Registered aid cases

3.2 Commission Decisions

3.3 Recovery of aid

3.4 Modernising State aid control

State aid fora

Technical annex

Annex 1

Graphs and Tables

Table 1: State aid in the Member States, 2001

Graph 1: State aid as a percentage of GDP, 2001

Table 2: State aid per capita, 1997-2001

Graph 2: State aid (less agriculture, fisheries and transport) as a percentage of GDP,

1997-2001

Table 3: Sectoral distribution of aid, 2001

Table 4: State aid by sector in the Community 1997-2001

Table 5: Share of State aid by sector in the Member States 1997-2001

Table 6: State aid to the manufacturing sector, 2001

Graph 3: State aid to the manufacturing sector, 1997-2001

Table 7: State aid for horizontal objectives and particular sectors, 2001

Graph 4: Share of State aid directed to horizontal objectives, 1997-2001

Table 8: State aid to coal mining, 1997-2001

Table 9: State aid specifically earmarked for assisted 'a' regions, 2001

Graph 5: State aid specifically earmarked for assisted 'a' regions, 1991-2001

Graph 6: Share of each aid instrument in total EU aid to manufacturing, 1999-2001

Table 10: State aid to the manufacturing sector by type of aid instrument, 1999-2001

Graph 7: Share of negative decisions by Member State, 2000-2002

Table 11: Recovery orders pending in February 2003

EXECUTIVE SUMMARY

The decision as to whether or not aid granted by Member States is compatible with the Common Market is taken by the Commission, in accordance with the Treaty and other relevant EU legislation. In general terms, State aid is only approved if it serves clearly defined objectives, such as research and development, the environment, regional development, the development of small and medium-sized enterprises, employment creation, the promotion of training, etc and if undue distortions of competition are avoided. This requires a balancing of the objectives and effects of the aid, which is undertaken by the Commission in close co-operation with the Member State concerned. This process works rather well. Of the 759 final State aid decisions taken by the Commission in 2002, only 53 (7%) were negative decisions.

Indeed the system of State aid control has imposed a very healthy discipline on the fifteen Member States, each of whom pledged at the Stockholm European Council to reduce the overall amount of aid granted by 2003 and redirect aid to horizontal objectives of common interest. Most are already on the right track with levels of aid falling steadily and aid being reoriented to objectives such as the environment and research and development. Nevertheless, the cumulative effect of some EUR86 billion of State aid in 2001 still has a considerable distortive effect on competition in the Internal Market.

Apart from the need to minimise distortion to competition, the grant of aid must also be balanced against constraints on national public finances whilst in the European context the grant of aid must be consistent with the framework of economic and monetary union and the Stability and Growth pact. Public resources should be used restrictively and efficiently. In this context, in November 2002 the Council adopted a set of Conclusions on "an economic approach towards less and better State aid" The main aim of the conclusions is to develop a broader economic analysis of the effects of State aid by encouraging greater dialogue and exchange of information between the Member States. It invites Member States to "...consider before granting State aid ... whether an intervention in the form of State aid is the most appropriate and effective way to address these issues (identified market failures)" and to continue to "develop the use of "ex-ante" and "ex-post" evaluations of individual State aid and State aid schemes in order to monitor impact on competition and effectiveness of the aid".

Main findings

Overall levels of State aid in the European Union have continued to fall

The overall level of national State aid in the EU fell from EUR102 billion in 1997 to EUR86 billion in 2001. A significant fall in aid to assisted regions as well as reductions in aid for financial services, coal, agriculture and manufacturing contributed to this EUR16 billion drop. In contrast with the overall downward trend, there was a substantial increase of aid for transport and the environment. The two Member States that have contributed most to the marked decrease are Germany (a fall of EUR6 billion) and Italy (a fall of EUR4 billion) due largely to substantial reductions of aid to assisted regions.

Disparities between Member States in the resources allocated to national State aid remain ...

In relative terms, State aid amounted to 0.99% of EU Gross Domestic Product (GDP) in 2001. This average masks significant disparities between Member States: the share of aid to GDP ranged from 0.66% in the United Kingdom to 1.58% in Finland. The high proportion in Finland can be explained by the relatively large amount of aid to agriculture which represents 65% of total aid in this country. Excluding aid to the agriculture, fisheries and transport sectors produces a markedly different ranking of Member States. Such aid represents only 0.29% of GDP in Finland compared with an EU average of 0.38%.

... but are diminishing as State aid as a percentage of GDP falls in the majority of Member States

The level of State aid as a percentage of GDP decreased in twelve of the fifteen Member States between 1997 and 2001, in line with the undertaking at Stockholm to demonstrate a reduction in State aid by 2003. Greece, Italy, Portugal and Finland experienced the sharpest falls (by 0.3 percentage points or more) between 1997-1999 and 1999-2001. In contrast, aid in relation to GDP actually increased in Denmark, Luxembourg and the Netherlands. This was due largely to a rise in the level of aid granted for railway transport although in the case of Denmark, there was a substantial increase in aid for two horizontal objectives, employment and environment.

If aid for agriculture, fisheries and transport is excluded, total EU aid fell from 0.58% of GDP on average for the period 1997-1999 to 0.43% for the period 1999-2001.

Sectoral distribution of aid varies considerably among Member States and over time

It is not only the volume but also the composition of State aid that influences its impact on competition in the Internal market. In 2001, 46% of State aid in the Union was granted to the transport sector, almost exclusively to the railway network. The share of total aid directed to the manufacturing sector was 25%, agriculture and fisheries 15% coal 7% and other aid 7%. There are significant differences between Member States in the sectors to which they direct aid. Aid to the agricultural and fisheries sectors accounted for only 9% of overall aid in Denmark and Germany while in Finland it was as high as 65%. Aid to the railway sector made up more than 60% of total aid in Belgium, Luxembourg and the Netherlands. Aid to the coal industry accounted for 18% of aid in Germany and 22% in Spain compared with a Community average of 7%.

State aid to manufacturing relative to value added fell in the majority of Member States between 1997 and 2001. EU-wide, aid granted to manufacturing in 2001 amounted to around EUR21 billion or, put another way, 1.4% of value added in this sector.

Member States are redirecting aid to horizontal objectives

Looking at recent trends, the share of EU aid granted for horizontal objectives increased by 10 percentage points from the period 1997-1999 to 1999-2001. This positive trend was observed, to varying degrees, in the majority of Member States. At the same time, most Member States have reduced their aid to specific manufacturing and service sectors.

In 2001, aid earmarked for horizontal objectives, including cohesion objectives, accounted for 71% of total EU aid less agriculture, fisheries and transport. Around 19% was reserved for the coal sector while the remaining 10% was aid for which the primary objective was a specific manufacturing or service sector. The majority of Member States directed between 75% and 100% of their aid to horizontal objectives although the choice of objective varied substantially from one Member State to another.

Reduction in aid to the least developed regions

The Stockholm European Council in 2001 also invited Member States to redirect aid toward cohesion objectives. The Commission will, insofar as is possible under current State aid control rules, continue to favour aid measures that aim to reduce the cohesion gap. Greater cohesion will only be achieved however if aid is concentrated on the least developed regions. Its effectiveness must not be compromised by the granting of disproportionate State aid in non-assisted regions.

For the Union as a whole in 2001, an estimated EUR8 billion of aid was earmarked exclusively for the least developed regions, the so-called assisted 'a' regions. This represented just under one quarter of total aid (less agriculture, fisheries and transport). Aid to the 'a' regions, which are almost identical to the Objective 1 regions under the EU Structural Funds, has fallen dramatically over the last ten years or so, from a peak of EUR27 billion in 1993 to EUR8 billion in 2001. In 1993, Germany (EUR17 billion) and Italy (EUR7 billion) made up almost 90% of the total. By 2001, these two Member States still made up more than half the EU figure but the level of aid had declined rapidly to EUR2.5 billion in Germany and EUR2.1 billion in Italy.

Majority of Member States tend to provide aid to manufacturing in the form of grants

As to the instruments used when aid is granted to the manufacturing sector, grants are by far the most frequently used form making up 63% of the EU total. In addition to aid awarded through the budget, other aid is paid through the tax or social security system. EU-wide, tax exemptions make up 26% of the total. While Denmark, Spain, Luxembourg, Finland and the United Kingdom provide more than 85% of their aid in the form of grants, other Member States make greater use of tax exemptions, particularly Germany (36%), France (39%) and Ireland (77%).

The Commission approves the award of State aid in 93% of cases it examines

In 2002, there were around 1000 cases registered by the Commission. Around 44% were in the manufacturing and service sectors, 38% in agriculture, 10% in fisheries and 8% in transport and energy. According to the Treaty, Member States should notify all State aid to the Commission. However, for around 15% of investigated aid cases, it was not the Member State but the Commission that had to initiate the control procedure after finding out about the aid, for example following a complaint. During the period 1999-2001, 7% of all final decisions taken by the Commission were negative ones.

The Commission continues its work to simplify, modernise and reform State aid control

The Commission will continue with its State aid reform process to accelerate, simplify and modernise procedures, in particular with a view to reducing the resources expended on routine cases and concentrate on more important cases. Significant progress has been achieved in simplifying and clarifying existing legislation by introducing for example the new multi-sectoral framework and three block exemption regulations covering aid for small and medium-sized enterprises, training and, more recently, employment. However, further efforts are needed to review other existing State aid instruments in order to simplify and remove possible conflicts between the different texts.

INTRODUCTION

The decision as to whether or not aid granted by Member States is compatible with the Common Market can be taken only by a supranational and independent authority. The Commission's role, as set out in the Treaty, is to scrutinise proposed and existing state aid measures by Member States to ensure that they are compatible with EU state aid legislation and do not distort intra-community competition. Although each individual grant of aid is awarded under conditions accepted by the Commission and notwithstanding the positive effects that aid may have in other policy areas, the cumulative effect of some EUR86 billion of State aid in 2001 has a considerable distortive effect on competition in the Internal Market.

Over the last ten years or so, the underlying trend in State aid, in terms of percentage of GDP, has been downward for the vast majority of Member States. Nevertheless, the need for further reductions in global aid levels and for the reorientation of aid towards horizontal objectives of Community interest, including cohesion objectives, has been underlined by the Stockholm European Council and given renewed impetus at the Brussels European Council in March 2003 which called for "a further reduction in state aids and the redirection of aid to horizontal objectives" and welcomed "the Commission's intention to continue working to simplify and modernise state aid arrangements, focusing attention on the most distorting aid." In November 2002, the Council adopted a further set of Conclusions on "an economic approach towards less and better State aid" [1]. The Council thus affirms the Commission's view that less and better-targeted State aid is a key part of effective competition. The Broad Economic Policy Guidelines for 2002 also contain specific recommendations to Member States to this effect.

[1] Council document number 13799/02: http://register.consilium.eu.int/pdf/en/ 02/st13/13799en2.pdf

What is a State Aid ?

State aid is a form of state intervention used to promote a certain economic activity. It implies that certain economic sectors or activities are treated more favourably than others and thus distorts competition because it discriminates between companies that receive assistance and others that do not. As a result, it presents a threat to the running of the internal market. The authors of the EC Treaty recognised this risk and set up a system which, while it is centred on the principle that State aid is incompatible with the common market, nevertheless accepts that the granting of such aid can be justified in exceptional circumstances. The basic rules of the system are outlined in Articles 87-88 of the Treaty. These rules have been amplified over the years by secondary legislation and court rulings. For more information on the legal and procedural framework, see http://europa.eu.int/comm/competition/ state_aid/legislation/

The Scoreboard covers State aid as defined under Article 87(1) EC Treaty that is granted by the fifteen Member States and has been examined by the Commission. Accordingly, general measures are not included in the figures. For example, a general tax break for expenditure on research and development is not considered as State aid although it may well appear in Member States national budgets as public support for research and development. Furthermore, Community funds and instruments are also excluded.

Structure

The Scoreboard has been restructured and improved so as to make better use of the possibilities offered by the internet. In addition to this paper edition, a permanent online Scoreboard (http://europa.eu.int/comm/competition/ state_aid/scoreboard/) consisting of a series of key indicators, statistical information and a Member State Forum was launched in 2002.

The Scoreboard will continue to be updated twice a year, in the spring and in the autumn. The main aim of the spring update is to provide an overview of the State aid situation in the Union and to examine the underlying trends based on the latest available data. It is divided into three parts. The first part looks at the extent to which Member States are reducing their State aid relative to GDP. The second part focuses on Member States' relative success in redirecting aid from specific sectors to horizontal objectives and includes a special focus on aid specifically earmarked for assisted regions. Finally, part three looks at State aid control procedures, recovery and ongoing work to modernise State aid control.

Limitations

This edition of the Scoreboard focuses largely on 2001, the year in which the Stockholm European Council took place. The following data restraints have to be considered when the objectives set in Stockholm will be revisited in 2003. A full set of State aid data for the year 2003 will only be available in early 2005 as Member States, together with the Commission, require up to one year to collect and analyse the data.

State aid data collected for the Scoreboard are grouped according to primary objectives. The lack of information on secondary objectives means that aid for some categories of aid may well be underestimated as they are classified elsewhere. For example, some aid classified under 'research and development' may also be aimed at 'small and medium size enterprises' or it may be for a particular sector and so on. Furthermore, it should be noted that the data do not provide an accurate picture of the final beneficiaries. For example, aid granted under a regional development scheme may end up going to a variety of sectors or be destined largely for small and medium-sized enterprises, etc. The Commission is currently working on improving the detail and quality of the data it collects. It is hoped that some information on secondary objectives will be available in time for the spring Scoreboard in 2004. A separate exercise will attempt to provide a more precise measure of aid for rescue and restructuring. At present, a significant proportion of the aid granted for financial services, for example, could equally be classified as rescue and restructuring aid.

State aid Register - a second transparency tool

The Commission's State aid Register has been online since 2001. The Register provides detailed information on all State aid cases for which a decision has been taken by the Commission since 1st January 2000. It is updated daily and thus ensures that the public has timely access to the most recent State aid decisions. It is available on the homepage of the Competition Directorate General's Internet site:

http://europa.eu.int/comm/competition/ state_aid/register/

Part One: Overview of State aid in the European Union

This chapter provides a snapshot of State aid granted in the European Union in 2001 and an overview of the underlying trends.

1.1 State aid in absolute and relative terms

State aid granted by the fifteen Member States was estimated at EUR86 billion in 2001, compared with EUR102 billion in 1997 [2]. The two Member States that have contributed most to the marked decrease are Germany (a fall of EUR6 billion) and Italy (a fall of EUR4 billion) due largely to substantial reductions of aid to assisted regions.

[2] All data are quoted at constant 2000 prices

In absolute terms, Germany granted the most aid (EUR23 billion) in 2001 followed by France (EUR16 billion) and Italy (EUR12 billion).

Table 1: State aid in the Member States, 2001

>REFERENCE TO A GRAPHIC>

Source: DG Competition

Disparities between Member States in the share of State aid as a percentage of GDP

In relative terms, State aid amounted to 0.99% of EU Gross Domestic Product (GDP) in 2001. This average masks significant disparities between Member States: the share of aid to GDP ranges from 0.66% in the United Kingdom to 1.58% in Finland. The high proportion in Finland can be explained by the relatively large amount of aid to agriculture which represents around 65% of total aid in this country. (Table 1). Indeed, due to the particularities associated with aid to agriculture, fisheries and transport, it also makes sense to look at total aid less these three sectors. This new indicator produces a rather different ranking of Member States (Graph 1). For example, such aid in Finland represents only 0.29% of GDP, below the EU average of 0.38%. Belgium and Luxembourg, which have relatively large amounts of aid to the railway sector, also find themselves much lower down the ranking when aid to these three sectors is excluded.

Graph 1: State aid as a percentage of GDP, 2001

>REFERENCE TO A GRAPHIC>

State aid may also be expressed in per capita terms, using purchasing power standards which take account of differences in price levels between countries. Over the period 1999-2001, the annual average volume of aid (less agriculture, fisheries and transport) in the Union was 97 PPS per capita compared with 123 PPS over the period 1997-1999 (Table 2).

Table 2: State aid per capita, 1997-2001

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Data for Ireland cover the period 1998-1999 instead of 1997-1999.

Source: DG Competition

Downward trend in the level of State aid in the majority of Member States

At the Stockholm European Council in 2001, Member States pledged to demonstrate a downward trend in State aid in relation to GDP by 2003. The underlying trend can be observed by comparing the periods 1997-1999 and 1999-2001. EU-wide, aid amounted to 1.01% of GDP on average for the period 1999-2001, a decrease of -0.16 percentage points compared with 1997-1999. The trend is downward in twelve of the fifteen Member States. Greece, Italy, Portugal and Finland experienced the sharpest falls (of 0.3 points or more) between the two periods under review. In contrast, aid in relation to GDP increased in Denmark, Luxembourg and the Netherlands. This was due largely to a rise in the level of aid granted for railway transport although in the case of Denmark, there was a substantial increase in aid for two horizontal objectives, employment and environment.

Again, it is interesting to look at the trend in State aid less agriculture, fisheries and transport. For the Union as a whole, such aid fell from 0.58% of GDP on average for the period 1997-1999 to 0.43% for the period 1999-2001 (Graph 2).

Graph 2: State aid (less agriculture, fisheries and transport) as a percentage of GDP, 1997 - 2001

>REFERENCE TO A GRAPHIC>

Data for Ireland cover the period 1998-1999 instead of 1997-1999.

Source: DG Competition

1.2 Sectoral distribution of aid

Sectoral distribution of aid varies considerably among Member States and over time

As noted under 'Limitations', the available data do not provide an accurate picture of the final beneficiaries of the aid. Nevertheless, they do give some indication as to which sectors are favoured by each Member State. In 2001, 46% of State aid in the Union was specifically earmarked for the transport sector, almost exclusively to the railway network. The share of total aid directed towards the manufacturing sector was 25%, agriculture and fisheries 15%, coal 7% and other aid 7%.

There are significant differences between Member States in the sectors to which they direct aid. Aid to the agricultural and fisheries sectors accounted for only 9% of overall aid in Denmark and Germany while in Finland it was as high as 65%. Aid to the railway sector made up more than 60% of total aid in Belgium, Luxembourg, the Netherlands and the United Kingdom compared with an EU average of 46%. Aid to the coal industry accounted for 18% of aid in Germany and 22% in Spain as against a Community average of 7% (Table 3).

Table 3: Sectoral distribution of aid, 2001

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* This column includes aid to other non-manufacturing sectors and aid for employment and training that can not be classified under a particular sector. Due to the rounding of figures, the percentages of some Member states do not sum up to exactly 100. Source: DG Competition

Between 1997-1999 and 1999-2001, the volume of aid fell in most of the main sectors: manufacturing was down EUR5.7 billion, services EUR2.6 billion, agriculture EUR0.9 billion and coal EUR1.2 billion (Table 4). However, aid for transport increased by some EUR1.7 billion over the same period.

At national level, there have been some significant fluctuations in the share of aid earmarked for each sector (Table 5). The share of aid for transport rose sharply (by at least 10 percentage points) in Italy, Luxembourg, the Netherlands and the United Kingdom. The share of aid to the manufacturing sector fell in the vast majority of Member States, particularly in Ireland and Italy. For the latter, this was due largely to a reduction in aid for assisted regions as well as the increase in aid for transport. For the former, this was primarily the result of a cut in the Irish Corporation Tax [3].

[3] The rate of corporation tax in Ireland has been cut progressively in recent years and is 12.5% from 2003. This has reduced the comparative value of the preferential 10% rate to the manufacturing sector, therefore contributing to the decline, in monetary terms, of aid to this sector.

Table 4: State aid by sector in the Community 1997-2001

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Table 5: Share of State aid by sector in the Member States 1997-2001

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* This column includes aid to other non-manufacturing sectors and aid for employment and training that can not be classified under a particular sector. Due to the rounding of figures, the percentages of some Member states do not sum up to exactly 100. Data for Ireland cover the period 1998-1999 instead of 1997-1999.

Source: DG Competition

1.3 State aid to the manufacturing sector

The following section focuses on aid to the manufacturing sector [4]. This is one sector in which some Member States could potentially look at in order to comply with the Stockholm request to reduce State aid levels. EU-wide, aid granted to manufacturing in 2001 amounted to around EUR21 billion or, put another way, 1.4% of value added in this sector (Table 6).

[4] For the purposes of the Scoreboard, the manufacturing sector includes aid for steel, shipbuilding, other manufacturing sectors, rescue and restructuring, aid for general economic development and aid for most horizontal objectives including research and development, SMEs, environment, commerce and energy saving.

Table 6: State aid to the manufacturing sector, 2001

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Note: Data on manufacturing include aid for general regional development for which the specific sector is not known. For some Member States, particularly Greece with a large share of aid awarded through regional development schemes, the data are likely to overestimate the amount of aid actually going to the manufacturing sector.

Source: DG Competition

State aid to manufacturing relative to value added fell in the majority of Member States between 1997-1999 and 1999-2001 (Graph 3). This was particularly the case in Italy, where the long-term downward trend has continued, but Greece, Germany, Spain and Ireland also saw a significant drop in manufacturing aid.

Graph 3: State aid to the manufacturing sector, 1997-2001

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Source: DG Competition

PART TWO: ADOPTING AN ECONOMIC APPROACH TOWARDS LESS AND BETTER STATE AID

In March 2000, the Lisbon European Council set out to make the EU the most competitive and dynamic knowledge-based economy in the world. The Council, Commission and Member States were requested "to further their efforts to promote competition and reduce the general level of State aids". One year later at the Stockholm European Council, Member States pledged to "demonstrate a downward trend in State aid in relation to GDP by 2003, taking into account the need to redirect aid toward horizontal objectives of common interest, including cohesion objectives." Further impetus was provided at the Barcelona European Council in March 2002 when Member States agreed to step up their efforts to reduce aid levels. In March 2003, the Brussels European Council called for "a further reduction in state aids and the redirection of aid to horizontal objectives and welcomes the Commission's intention to continue working to simplify and modernise state aid arrangements, focusing attention on the most distorting aid".

In addition to the references to State aid at the European Council summits, more specific conclusions on State aid have also been adopted. In December 2001, the Council adopted a set of conclusions in which it invited Member States to continue their efforts to reduce aid levels, reorient aid towards horizontal objectives, further develop the use of "ex ante" and "ex post" evaluations of aid schemes, and improve the transparency and the quality of reporting to the Commission. The Council also asked the Commission to take an active role in following-up the implementation of these conclusions and to present an initial assessment of progress in 2002 [5].

[5] The Commission's progress report to the Council (COM(2002) 555 final) concerning the reduction and reorientation of State aid was adopted on 16th October 2002: http://europa.eu.int/comm/competition/ state_aid/others/

In November 2002, the Council adopted a further set of conclusions on "an economic approach towards less and better State aid" [6] The main aim of the conclusions is to develop a broader economic analysis of the effects of State aid by encouraging greater dialogue and exchange of information between the Member States. It reaffirms the need to "closely evaluate State aid in order to identify and reduce the most distortive types of State aid, underlining that monitoring and follow-up of State aid expenditures are essential components of State aid policies in Member States and Community State aid policy;" In this context, it invites Member States to "consider before granting State aid whether it is targeted on clearly identified market failures or directed at horizontal objectives of common interest, including economic and social cohesion objectives, and whether an intervention in the form of State aid is the most appropriate and effective way to address these issues;" and to continue to "develop the use of "ex-ante" and "ex-post" evaluations of individual State aid and State aid schemes in order to monitor impact on competition and effectiveness of the aid". The Commission should play a facilitating role in this process by, for example, exchanging experiences, notably through meetings and seminars, on their efforts to reduce State aid and by developing a web-based network for the exchange of information and experience between Member States and the Commission, and continue to increase transparency. The Conclusions also call on the Commission, in close co-operation with the Member States, to "continue to modernise, simplify, and clarify the scope and content of EU rules on State aid, including making them more effective in terms of the length of process and the administrative resources involved."

[6] Council document number 13799/02: http://register.consilium.eu.int/pdf/en/ 02/st13/13799en2.pdf

2.1 Horizontal and sectoral objectives

Member States are redirecting aid to horizontal objectives

State aid for horizontal objectives, i.e. aid that is not granted to specific sectors, is usually considered as being targeted to market failures and as being less distortive than sectoral and ad hoc aid. Research and development, safeguarding the environment, energy saving, support to small and medium-sized enterprises, employment creation, the promotion of training and aid for regional development are the most prominent horizontal objectives pursued with State aid. Due to data constraints, this section looks at horizontal objectives in the context of total aid less agriculture, fisheries and transport.

In contrast, aid to support specific sectors is likely to distort competition more than aid for horizontal objectives and also tends to favour other objectives than identified market failures. Moreover, a significant part of such aid is granted to rescue or restructure companies in difficulty. This particular type of aid will be examined in greater detail in the next edition of the Scoreboard.

In 2001, aid earmarked for horizontal objectives, including cohesion objectives, accounted for 71% of total EU aid less agriculture, fisheries and transport. Around 19% was reserved for the coal sector while the remaining 10% was aid for which the primary objective was a specific manufacturing or service sector. The majority of Member States directed between 75% and 100% of their aid to horizontal objectives. However, in Germany (63%), Spain (55%), France (53%) and Portugal (41%), the share was significantly lower. The high share of sectoral aid in Portugal was due largely to a single regional aid tax scheme in Madeira that mainly supports financial services. The other three Member States have relatively high shares of aid to the coal sector (see Section 2.2).

When making comparisons between Member States, it is important to bear in mind that aid schemes are classified according to the primary objective. As a result, the level of aid for some categories may well be underestimated as they are classified elsewhere. For example, some aid classified under 'research and development' may also be aimed at 'small and medium size enterprises'. Notwithstanding the measurement difficulties, the data do give an indication as to which horizontal objectives are favoured by each Member State. For example, around 40% of aid in Austria and Finland was directed to research and development (EU average of 13%). Denmark (32% of total aid), Germany (27%) and Sweden (33%) tended to favour environmental objectives while in Italy 61% of aid was earmarked for small and medium-sized enterprises (EU average of 16%). The United Kingdom devoted 42% of its total aid (less agriculture, fisheries and transport) to training objectives (EU average of 6%). This aid was awarded almost exclusively for youth training.

Table 7: State aid for horizontal objectives and particular sectors, 2001

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(1) Includes aid for general regional development not elsewhere classified. (2) Includes aid for the steel sector as well as aid for rescue and restructuring not elsewhere classified. Source: DG Competition

In line with the commitments undertaken at the above-mentioned European Councils, Member States have continued to redirect aid towards such horizontal objectives of Community interest. Looking at recent trends, the share of EU aid granted for horizontal objectives increased by 10 percentage points from the period 1997-1999 to 1999-2001 (Graph 4). This was largely the result of a sharp increase (+8 points over this period) in aid for environmental objectives.

The positive trend was observed, to varying degrees, in the majority of Member States. In Germany, Spain, France, Portugal and the United Kingdom, the share of horizontal objectives increased by at least 10 percentage points over this period.

EU-wide, the share of aid granted for research and development (R&D) increased by 3 percentage points from the period 1997-1999 to 1999-2001. In Italy, the share of R&D aid rose by 10 percentage points. This may be seen in the context of the target set by the Barcelona European Council that overall spending on R&D in the Union should be increased with the aim of approaching 3% of GDP by 2010, with two-thirds of this investment coming from the private sector.

Graph 4: Share of State aid directed to horizontal objectives, 1997-2001

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Source: DG Competition

2.2 Coal and Steel

As regards the coal and steel sectors, the Commission adopted a Communication in 2002 clarifying certain aspects of the treatment of competition cases and the application of State aid procedures following the expiry of the ECSC Treaty in July 2002 [7]. The Commission also adopted a Regulation which lays down rules for the granting of State aid to the coal industry with the aim of contributing to the restructuring of this sector [8].

[7] OJ C 152, 26.06.2002, p.5

[8] Council Regulation (EC) No 1407/2002 of 23 July 2002 on State aid to the coal industry

State aid to the steel sector has dropped considerably over the last few years from around EUR330 million in 1997 to just over EUR30 million in 2001. More than 90% of aid to this sector is awarded for environmental purposes and classified as such.

In the case of coal, some EUR6.2 billion was granted to the sector in 2001. Aid to current production has continued to decrease steadily in line with the agreements on the reduction of volumes of aid to the coal industry until 2005. Table 8 provides an overview of aid to the coal industry over the period 1997 - 2001.

Table 8: State aid to coal mining, 1997-2001

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Source: DG Competition

2.3 State aid supporting regional development and cohesion

Introduction

The Stockholm European Council in 2001 called on the Member States to redirect aid toward horizontal objectives of common interest, including cohesion objectives. This implies an increase in aid in support of economic and social cohesion. However, the decision to grant aid for regional development can only be taken if the balance between the resulting distortions of competition and the advantages of the aid in terms of the development of a less favoured region can be guaranteed. Furthermore, to achieve greater cohesion it is essential that aid is concentrated on the least developed regions. Its effectiveness must not be compromised by the granting of disproportionate State aid in non-assisted regions.

Measuring the extent of financial support for the EU's regions is a particularly difficult task. Firstly, each Member State has its own regional policy and will devote part of its national budget, other than 'State aid', to regional development. Moreover, in Member States with a federal structure such as Germany, regional governments (the Länder) are responsible for significant areas of expenditure. In other Member States, there is an increasing tendency towards devolving power to regional and local governments. Then there are the EU Structural Funds financing multi-annual programmes which are drawn up in a partnership associating the regions, the Member States and the Commission. Such funding is excluded from the Scoreboard but it does impact on the amount of State aid earmarked for regions insofar as much Community funding is co-financed by national funding [9].

[9] It should be noted that a sizeable proportion of such national funding does not qualify as 'State aid' as it involves expenditure on infrastructure, etc.

In addition, each Member State targets part of its State aid towards the least developed regions, the so-called 'assisted regions' (see box). In practice, an aid scheme may either be specifically earmarked for an assisted region (or group of 'a' or 'c' assisted regions) or else be a nation-wide scheme [10]. Clearly, assisted regions will also benefit from aid granted through nation-wide schemes but, in the absence of data on the final beneficiaries of the aid, this is not possible to quantify. As a second best solution, it is however possible to measure all aid specifically earmarked in an aid scheme for 'a' assisted regions regardless of the overall objective of the aid [11].

[10] A third category exists whereby aid is awarded by regional authorities to regions which don't qualify for any form of assistance at NUTS II level but the overall amount of aid is not significant at the Community level.

[11] In previous Scoreboards, data on 'regional aid' included only aid where the primary objective was deemed to be 'regional' and therefore excluded aid granted to a specific region(s) but for which the primary objective was, say, small and medium-sized enterprises or research and development.

Defining the assisted regions

Under Article 87(3) of the Treaty, certain areas (regions) may be given a derogation from the incompatibility principle established by Article 87(1). Firstly, Article 87(3)(a) provides that aid "to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment" may be considered compatible with the common market. The 'a' regions are largely identical to the Objective 1 regions under the EU Structural Funds. In practice, a region qualifies for 'a' status if, being a NUTS [12] level II geographical unit, it has a per capita GDP of less than 75% of the EU average. Annex 1 provides a full list of 'a' regions approved for the period 2000-2006.

[12] NUTS is the Nomenclature of territorial units for statistics. http://europa.eu.int/comm/eurostat/ramon/ nuts/home_regions_en.html

Secondly, aid may be considered compatible with the common market under Article 87(3)(c) if it is to "facilitate the development of certain economic activities or of certain economic areas, where such aid does not adversely affect trading conditions to an extent contrary to the common interest." Article 87(3)(c) allows greater latitude than Article 87(3)(a) when it comes to defining the difficulties of a region that can be alleviated with the help of aid measures. However, as it is intended for regions which are less disadvantaged than those to which point (a) relates, only a small part of the national territory of a Member State may prima facie qualify for the aid in question.

According to the Guidelines on national regional aid (full text of 98/C 74/06 can be found on: http://europa.eu.int/comm/competition/ state_aid/legislation/), the Commission considers prima facie that the total extent of assisted regions in the Community must remain smaller than that of unassisted regions. In practice this means that the total coverage of regional aid in the Community must be less than 50% of the Community population. For the period 2000-2006, the Commission set the Community ceiling for regional aid at 42,7% of the Community's population. The national ceilings for each Member State are as follows:

Belgium: 30.9%

Denmark: 17.1%

Germany: 34.9%

Greece: 100%

Spain: 79.2%

France: 36.7%

Ireland: 100%

Italy: 43.6%

Luxembourg: 32%

Netherlands: 15%

Austria: 27.5%

Portugal: 100%

Finland: 42.2%

Sweden: 15.9%

United Kingdom: 28.7%

The regions of a Member State eligible under the derogations and the ceilings on the intensity of aid for initial investment or the aid for job creation approved for each region together form a Member State's regional aid map (http://europa.eu.int/comm/competition/ state_aid/regional/). The guidelines also define the areas where an additional regional bonus, in terms of aid intensities, may be awarded under horizontal policies such as for small and medium-sized enterprises.

State aid specifically earmarked for assisted regions

State aid data are not available below NUTS level II. This does not pose any problems when measuring State aid given to assisted regions under Article 87(3)a as all such regions are defined at NUTS level I or II. However under Article 87(3)c, often only part of a NUTS level II region is considered eligible. As a result, there are two types of 'c' area: one where the NUTS level II region is 'totally' assisted, the other where the region is only 'partly' assisted. For example, in Germany, Berlin is a totally assisted 'c' region while Bayern is a partly assisted 'c' region. In 2001, 2.5% of total EU aid (less agriculture, fisheries and transport for which a regional breakdown is not available) was reserved for totally assisted 'c' regions. In addition, a further 13% of aid was earmarked for partly assisted 'c' regions at NUTS level II. Unfortunately, in the absence of data on the beneficiaries at NUTS level III or below, it is not possible to determine what proportion of this aid actually went to the assisted part of the region. Consequently, figures for aid to assisted 'c' regions are not comparable between Member States.

For the Union as a whole, an estimated EUR8 billion of aid was earmarked exclusively for assisted 'a' regions in 2001. This represented just under one quarter of total aid (less agriculture, fisheries and transport for which a regional breakdown is not available).

Table 9: State aid specifically earmarked for assisted 'a' regions, 2001

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Note: There are no assisted 'a' regions in B, DK, L, NL and S.

* In 2000, Lisboa and Vale do Tejo changed from 'a' to 'c' status. Data are not yet available on specific aid schemes to this region so all aid is still classified under assisted 'a' regions.

** Data exclude agriculture, fisheries and transport for which a regional breakdown is not available. It is therefore not possible to measure aid to assisted 'a' regions as a proportion of total State aid. Source: DG Competition

Disparities between the Member States in the levels of aid reserved for assisted 'a' regions (Table 9) reflect not only differences in regional policy but also the size of each country's eligible population as well as the extent to which each Member State grants aid at a sub-central level. For the cohesion countries, some aid schemes are not earmarked for a specific region but, as the entire territory qualifies for assistance at either 'a' or 'c' level [13], the aid is in effect reserved for assisted regions.

[13] For Greece, the entire country is an 'a' assisted area. For Ireland and Portugal, 100% of the population is eligible but part of the country is a 'c' assisted area. In Spain, 80% of the population is eligible for a) or c) aid but at NUTS level II, the entire territory is either totally or partly assisted.

Aid to the 'a' regions, which are almost identical to the Objective 1 regions under the EU Structural Funds, has fallen dramatically over the last ten years or so, from a peak of EUR27 billion in 1993 to EUR8 billion in 2001. In 1993, Germany (EUR17 billion) and Italy (EUR7 billion) made up almost 90% of the total. For the former, this was part of the enormous investment made in the new German Länder during most of the 1990s. By 2001, these two Member States still made up more than half the EU figure but the level of aid had declined rapidly to EUR2.5 billion in Germany and EUR2.1 billion in Italy.

In spite of the reduction, aid to the 'a' regions continued to account for around half of Italy's total aid in 2001. In contrast, German aid to the 'a' regions made up 21% of total aid in 2001 compared with more than 50% in 1993. EU-wide, the corresponding percentage has fallen from around 45% of total aid in 1993 to 23% in 2001. Graph 5 shows the trend for EU-15 and these two Member States.

Graph 5: State aid specifically earmarked for assisted 'a' regions, 1991-2001

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New Multisectoral Framework for regional investment aid

In February 2002 the Commission adopted a major reform to establish a faster, simpler and more accountable control system of government support to large investments in the EU. The new "Multisectoral Framework on regional aid for large investment projects" will enter fully into force on 1 January 2004 and replaces the current framework that has been in force since September 1998. It includes a limited notification requirement for large projects balanced by a significant reduction in allowable aid levels. The new rules will also apply to the synthetic fibres industry and the motor vehicles sector, for which separate rules existed.

The need for a restrictive approach on regional aid to large-scale and mobile investment projects (i.e. projects which the company concerned could carry out in various locations) is widely acknowledged:

- the distorting effect of such aid is magnified as other government-induced distortions of competition are eliminated and markets become more open and integrated;

- large investments are less affected by region-specific problems in disadvantaged areas;

- moreover, companies making large investments usually possess considerable bargaining power vis à vis the authorities granting the aid, which may lead to a spiral of increasingly generous promises of aid, possibly to a level much higher than is needed to compensate for the respective regional handicaps.

According to the new framework, the actual aid intensity that a large project can receive corresponds to the aid ceiling laid down in the Regional aid maps, which is then automatically reduced in accordance with a reduction scale. A 'cohesion bonus' can be granted to very large projects co-financed by the Community Structural funds. In so doing, the new system will take into consideration the added value of these large co-financed projects for the economic and social cohesion of the Community.

The Framework also foresees a 'list of sectors suffering from structural problems'. No regional aid for investment projects in these sectors will be authorised above a threshold to be determined by the Commission, unless the Member State demonstrates that, although the sector is deemed to be in decline, the market for the product concerned is fast growing (typically the production of a certain product is only one of the activities carried out in a sector).

The new Framework will be fully applicable as from 1 January 2004 until 31 December 2009. There are some transition rules for projects in the synthetic fibres and motor vehicle sectors.

Regional aid post-2006

The current regional aid maps for the fifteen Member States will remain in place until 2006. Regional aid maps for the candidate countries have been, or are in the process of being, elaborated. For the period after 2006, a fundamental review of regional aid will be undertaken.

2.4 State aid instruments

Majority of Member States tend to provide aid to manufacturing in the form of grants ...

All State aid represents a cost or a loss of revenue to the public authorities and a benefit to recipients. However, the actual aid element may differ from the nominal amount transferred in the case of a subsidised loan or guarantee.

Graph 6: Share of each aid instrument in total EU aid to manufacturing, 1999-2001

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Source: DG Competition

... though significant differences still exist in the use of instruments

For the period 1999-2001, grants accounted for 63% of all State aid in the manufacturing sector. In addition to aid awarded through the budget, other aid is paid through the tax or social security system. EU-wide, tax exemptions make up 26% of the total. While Denmark, Spain, Luxembourg, Finland and the United Kingdom provide more than 85% of their aid in the form of grants, other Member States make greater use of tax exemptions, particularly Germany (36%), France (39%) and Ireland (77%). A similar instrument is a tax deferral which is used by only four Member States. Tax deferrals account for 5% of all manufacturing aid in the Netherlands.

There are other forms of aid instrument which vary from one Member State to another (Table 10). One such category covers transfers in which the aid element is the interest saved by the recipient during the period for which the capital transferred is at his disposal. The financial transfer takes the form of a soft loan or tax deferral. The aid elements in this category are much lower than the capital values of the transfers. EU-wide, soft loans represent around 7% of all manufacturing aid. In Spain, France, Austria, and Sweden the proportion is significantly higher (around 10%-12%).

Aid may also be in the form of state equity participation which represents less than 1% of all EU aid to the manufacturing sector. Finally, aid may be provided in the form of guarantees. The aid elements are much lower than the nominal amounts guaranteed, since they correspond to the benefit which the recipient receives free of charge or at lower than market rate if a premium is paid to cover the risk. Guarantees were awarded in 2001 by most Member States although the aid made up only 3% of total EU aid manufacturing.

Table 10: State aid to the manufacturing sector by type of aid instrument, 1999-2001

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PART THREE: PROCEDURAL PERFORMANCE IN THE EUROPEAN UNION

3.1 Registered aid cases

The Commission controls the Member States' granting of State aid by means of a formal and transparent procedure (Council regulation No 659/1999). In 2002, there were around 1000 cases registered by the Commission. Around 44% were in the manufacturing and service sectors, 38% in agriculture, 10% in fisheries and 8% in transport and energy.

According to the Council regulation, "any plans to grant new aid shall be notified to the Commission in sufficient time by the Member State concerned." However, for around 15% of investigated aid cases, it was not the Member State but the Commission that had to initiate the control procedure after finding out about the aid, for example following a complaint.

With a view to reducing the administrative burden for specific types of aid, two block exemptions, one for small and medium-sized enterprises, the other for training aid came into force in February 2001. As one would expect, the number of notifications for these two types of aid fell in 2002 as some Member States made use of the block exemptions: the Commission received 102 information forms on exempted training aid and 128 forms on exempted aid for SMEs. Four Member States, Germany, Spain, Italy and the United Kingdom accounted for 95% of the information sheets while most other Member States have not made use of the possibilities offered.

3.2 Commission Decisions

In the vast majority of cases, the Commission concludes that the examined aid is compatible with the State aid rules and allows Member States to award such aid without carrying out a formal investigation procedure. This was the case for 87% of decisions taken in 2002. Where the Commission has doubts whether certain aid measures comply with the rules, it carries out a formal investigation during which third parties and all Member States are invited to provide observations. At the end of the formal investigation procedure, the Commission either takes a positive or conditional decision (6% of the decisions in 2002) or that it does not comply with State aid rules and hence is not compatible with the Common Market and takes a negative decision (7% of all decisions in 2002). Graph 7 shows the share of incompatible and compatible aid cases that have been examined by the Commission during the period 2000-2002.

Graph 7: Share of negative decisions by Member State, 2000-2002

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Note: Excluded under 'final' decisions are all decisions taken in 2002 to open a formal investigation procedure as well as corrigenda, addenda, injunctions, etc. The total also excludes those decisions in which the Commission decides that the notified aid does not in fact constitute aid as defined under Article 87(1). There were 30 such decisions in 2002. Included under 'positive' decisions are the 10 conditional decisions taken during the period under review. Luxembourg has not been included in the graph due to the relatively small number of decisions (10 final decisions, of which 8 were positive) over this period.

Source: European Commission (DG Agriculture, Fisheries, Competition, Transport and Energy).

3.3 Recovery of aid

The Commission has the power to require that aid granted by Member States which is incompatible with the common market be repaid by recipients to the public authorities which granted it. The Member State must recover the aid immediately in accordance with domestic procedures. Table 11 gives an overview of the pending recovery orders. As of February 2003, there were 81 such orders, of which 43 involved Germany and 18 Spain.

Table 11: Recovery orders pending in February 2003

>TABLE POSITION>

Note: State aid recovery procedures in sectors other than agriculture, fisheries and transport.

Source: DG Competition.

In 2002, the Commission took 19 negative decisions in which it requested Member States to recover aid of well over EUR1 billion. This figure is underestimated as it is not possible to identify the exact amount of incompatible aid in cases when aid is awarded to a large number of beneficiaries through a scheme or when a certain type of instrument is used that is difficult to quantify, e.g., a guarantee.

3.4 Modernising State aid control

The Commission is continuing its efforts to modernise and reform State aid control with a view to simplifying State aid procedures for clear-cut cases and concentrating Commission resources on the most serious distortions of competition. The Commission recently undertook a detailed internal review to identify the possibilities for simplifying procedures and reducing their duration. As a result of this review, the Commission services identified a number of possible changes which are currently the subject of detailed consultation with experts from Member States. This work may lead to the preparation of implementing provisions under Article 27 of Regulation (EC) n° 659/1999 concerning the form, content and other details of notifications, the form, content and other details of annual reports, details of time-limits and the calculation of time-limits, and the interest rate for the recovery of unlawful aid, as well as other suggestions to improve current procedures and working methods.

More specifically, with regard to State aid procedures in the fisheries sector, the Commission has proposed to eliminate the separate state aid scrutiny of Member States' obligatory financial contributions to projects co-financed as part of the Community structural assistance in this sector. [14]

[14] Proposal for a Council Regulation amending Regulation (EC) No 2792/1999 laying down the detailed rules and arrangements regarding Community structural assistance in the fisheries sector, Art. 19 on "Obligatory financial contributions and state aid", COM(2002) 187 final of 28.5.2002, p. 11.

The Commission will also continue to a review its State aid instruments to simplify and clarify them, and remove possible conflicts between the different texts. This is a complex process which is likely to last several years. Nevertheless, much work has already been done.

The adoption of the new multi-sectoral framework (see Section 2.3) in 2002 sets out a much clearer set of rules for the evaluation of State aid for large regional investment projects and at the same time eliminates the need for prior notification of many aid projects, provided the aid is granted in the framework of an approved regional aid scheme. The new framework also brings together and consolidates in a single text the different texts which previously applied in the steel, synthetic fibres and automobile sectors.

Following the successful introduction of block exemption regulations for aid for small and medium-sized enterprises and training [15], the Commission adopted in 2002 a block exemption for State aid for employment [16]. This eliminates the need for prior notification of many State aids for the purposes of creating employment or aiding disadvantaged or disabled workers.

[15] Regulation (EC) N°68/2001 and N° 70/2001

[16] Regulation (EC) N°2204/2002

Within the framework of the Commission Communication to the European Parliament and the Council on the Mid Term Review of the Common Agricultural Policy [17], the Commission has recently adopted a draft block exemption system for certain types of State aid up to certain ceilings, granted to farmers or to companies processing and marketing agricultural products. This will allow Member States to grant various types of agricultural state aid without having to seek the Commission's prior clearance. Once adopted, this block exemption will speed up the implementation of new agricultural state aids. This, in turn, will facilitate national programmes aiming at the improvement of environmental, animal welfare and hygiene standards in the agriculture sector.

[17] COM (2002) 394 final of 10.7.2002

In addition, the Commission is continuing its work to clarify the relationship between the State aid rules and the provision by Member States of compensation for the cost of providing services of general economic interest. A first meeting with representatives of Member States took place in December 2002 on the basis of a non paper and detailed comments have since been received. The Commission is not yet in a position to finalise a position due to the evolving nature of the jurisprudence of the Court of Justice.

In 2003, the Commission intends to update the block exemptions for small and medium-sized enterprises (SMEs) and training aid, in particular to provide for a block exemption for research and development for SMEs.

The Commission will launch a comprehensive review of the guidelines on rescue and restructuring aid in view of the preparation of new guidelines to replace the existing ones which expire in 2004. This subject will be dealt with in more detail in the autumn edition of the Scoreboard.

The Commission will also undertake a review of the regional aid rules in readiness for the expiry of the current rules in 2006.

STATE AID FORA

The online Scoreboard contains internet-links to information on State aid policy issues of the Member States and the European Parliament.

HTTP://EUROPA.EU.INT/COMM/COMPETITION/ STATE_AID/SCOREBOARD/

TECHNICAL ANNEX

The Scoreboard covers national State aid as defined under Article 87(1) EC Treaty that is granted by the fifteen Member States and has been examined by the Commission. Accordingly, general measures are not included in the figures. For example, a general tax break for expenditure on research and development is not considered as State aid although it may well appear in Member States national budgets as public support for research and development. Furthermore, Community funds and instruments are also excluded. All State aid data refer to the implementation of Commission decisions and not cases that are still under examination, which once decided upon, may have an effect on historical data. State aid expenditure is attributed to the year it was made. In cases that result in expenditure over a number of years, the total amount is attributed to each of the years in which expenditure took place.

All data are provided in million (or billion where appropriate) euro at constant 2000 prices.

The following symbols have been used in the Scoreboard:

n.a. not available

- real zero

0 less than half the unit used

Further information on methodological issues and a wide array of statistical tables may be found on the online Scoreboard:

http://europa.eu.int/comm/competition/ state_aid/scoreboard/

Data for table 1 and graph 1

Total state aid by Member State, in million euro

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Total* aid: Total aid less agriculture, fisheries and transport.

Source: DG Competition

GDP by Member State, in million euro

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Source: Eurostat database Newcronos

Data for graph 2

Total state aid less agriculture, fisheries and transport as a percentage of GDP, 1997 - 2001.

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* Total aid less agriculture, fisheries and transport

** Data for Ireland cover the period 1998 - 1999 instead of 1997 - 1999.

Source: DG Competition

Total state aid as a percentage of GDP, 1997 - 2001.

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* Data for Ireland cover the period 1998 - 1999 instead of 1997 - 1999.

Source: DG Competition

Data for table 4

State aid by sector in the Community, in million euro, 1997 - 2001.

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* This category includes aid to other non-manufacturing sectors and aid for employment and training that can not be classified elsewhere.

Source: DG Competition

Data for table 6 and graph 3

State aid to the manufacturing sector* by Member State, in million euro.

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* see definition in Section 1.3

Source: DG Competition

Data for table 7

State aid for horizontal objectives and particular sectors, 1997 - 1999, in % of total aid less agriculture, fisheries and transport.

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* Data for Ireland cover the period 1998 - 1999 instead of 1997 - 1999.

(1) Includes aid for general regional development not elsewhere classified.

(2) Includes aid for the steel sector as well as aid for rescue and restructuring not elsewhere classified.

Source: DG Competition

State aid for horizontal objectives and particular sectors, 1999 - 2001, in % of total aid less agriculture, fisheries and transport.

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(1) Includes aid for general regional development not elsewhere classified.

(2) Includes aid for the steel sector as well as aid for rescue and restructuring not elsewhere classified.

Source: DG Competition

Data for graph 4

Share of state aid directed to horizontal objectives, 1997 - 2001.

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* data for Ireland cover the period 1998 - 1999 instead of 1997 - 1999.

** total aid less agriculture, fisheries and transport.

Source: DG Competition

Data for graph 5

State aid specifically earmarked for 'a' assisted regions, 1991 - 2001.

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* total aid less agriculture, fisheries and transport.

Source: DG Competition

Data for graph 7

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Source: EU Commission database Integrated State Aid Information System.

ANNEX 1

List of regions within the meaning of Article 87(3)a at NUTS level II

OESTERREICH BURGENLAND

DEUTSCHLAND BRANDENBURG

MECKLENBURG-VORPOMMERN

CHEMNITZ

DRESDEN

LEIPZIG

DESSAU

HALLE

MAGDEBURG

THUERINGEN

ESPANA GALICIA

ASTURIAS

CASTILLA-LEON

CASTILLA-LA MANCHA

EXTREMADURA

COMUNIDAD VALENCIANA

ANDALUCIA

MURCIA

CEUTA Y MELILLA

CANARIAS

SUOMI / FINLAND ITA-SUOMI

FRANCE GUADELOUPE

MARTINIQUE

GUYANE

REUNION

ELLADA ALL REGIONS

IRELAND BORDER, MIDLAND AND WESTERN

ITALIA CAMPANIA

PUGLIA

BASILICATA

CALABRIA

SICILIA

SARDEGNA

PORTUGAL NORTE

CENTRO

ALENTEJO

ALGARVE

ACORES

MADEIRA

UNITED KINGDOM MERSEYSIDE

SOUTH YORKSHIRE

CORNWALL AND ISLES OF SCILLY

WEST WALES AND THE VALLEYS

Note: Northern Ireland (UK), which prior to 2000 had 'a' status, was given special 'c' status for the period 2000-2006. For the purposes of the Scoreboard, however, Northern Ireland is regarded as being equivalent to an 'a' region due to the relatively high aid intensity for this area.