Commission notice on the expiry of the guidelines on State aid for undertakings in deprived urban areas

(notified under document number C(2002) 1806)

(2002/C 119/11)

(Text with EEA relevance)

1. The guidelines on State aid for undertakings in deprived urban areas have been adopted by the Commission on 2 October 1996 and were published on 14 May 1997 in the Official Journal of the European Communities(1). These guidelines lay down rules for identifying urban districts which can be classed as deprived urban areas eligible for State aid subject to certain conditions and ceilings which, if met, allow the aid to be considered compatible with the common market.

2. Paragraph 20 of the guidelines on State aid for undertakings in deprived urban areas states that "[t]hese guidelines have been approved for a period of five years from the date of publication in the Official Journal of the European Communities. Prior to the expiry of that period, the Commission will review the functioning of the guidelines in order to decide whether they should be extended or any amendments should be made". The guidelines will thus expire on 14 May 2002.

3. It appears that in the past five years there have been no cases where a Member State has granted aid under the guidelines. Indeed, the eligibility criteria imposed, which include:

- targeting only certain population groups in urban areas (thus excluding, for example, rural areas),

- the restriction that total population in selected areas must not exceed 1 % of national population,

as well as the form of the aid which is limited to investment and employment aid linked with such investment (thus excluding other objectives, like environmental or social considerations) have rendered the guidelines so restrictive that they could not effectively be used.

4. Modernisation of State aid rules must include abolishing obsolete or inappropriate rules. Since no use has been made of this instrument after it was adopted by the Commission, it is suggested neither to prolong the guidelines on State aid for undertakings in deprived urban areas in its current form beyond May 2002 nor to propose a revision thereof.

5. Obviously, schemes or individual cases granting State aid to undertakings in deprived urban areas approved in the past under other legal bases will in no way be affected by the non-prolongation of the guidelines on State aid for undertakings in deprived urban areas.

6. The Commission recognises that, in some instances, market forces alone appear to be inadequate to resolve or alleviate the socioeconomic problems of deprived areas. It follows that the non-prolongation of the guidelines does not imply that State aid for deprived urban areas would no longer be possible. Such aid may be found compatible under the existing rules applicable to State aid or, as the case may be and depending on the specific circumstances of the proposed aid in question, directly on the basis of Article 87(3)(c) of the EC Treaty. The Commission will examine any such cases in the light of Community objectives, in particular those pursued by the Community regional policy. Based on the experience gained in such future cases, the Commission will also examine whether there is a need for an additional, specific instrument dealing with State aid for undertakings in deprived urban areas and what the basic features for such an instrument would need to be.

(1) OJ C 146, 14.5.1997, p. 6.