Opinion of the Economic and Social Committee on the 'Proposal for a Council Regulation (EC) on the application of Articles 92 and 93 of the EC Treaty to certain categories of horizontal state aid'
Date: 1998-02-25
Institutions: European Economic and Social Committee
Subjects: State aid, advisory committee (EU), competition, control of State aid, single market

C 129/70

EN

Official Journal of the European Communities

27.4.98

k) main labour status (optional)

l)

income (optional)

m)

technical items relating to the interview:

— year or survey
— reference week
— interview week
— member state
— region of household
— degree of urbanization
— serial number of household
— type of household
— type of institution
— weighting factor
— sub-sample in relation to the preceding survey (annual survey)
— sub-sample in relation to the following survey (annual survey)
— sequence number of the survey wave

Opinion of the Economic and Social Committee on the ‘Proposal for a Council Regulation
(EC) on the application of Articles 92 and 93 of the EC Treaty to certain categories of
horizontal state aid’

(98/C 129/16)

On 7 October 1997 the Commission decided to consult the Economic and Social Committee,
under Article 198 of the Treaty establishing the European Community, on the above-mentioned
proposal.

The Section for Industry, Commerce, Crafts and Services, which was responsible for preparing
the Committee’s work on the subject, adopted its opinion on 6 February 1998. The rapporteur
was Mr van Dijk.

At its 352nd plenary session (meeting of 25 February 1998) the Economic and Social Committee
adopted the following opinion with 70 votes in favour and four abstentions.

1.

Introduction

c) aid granted to the economy of certain areas of the

Federal Republic of Germany.

The EC Treaty regards state aid as being generally
1.1.
incompatible with the common market. Articles 92 and
93 of the EC Treaty are devoted to this subject, and
Article 94 specifies how decisions are to be reached on
the measures to be taken.

The Treaty considers the following forms of aid

1.2.
to be compatible with the common market:

a) aid having a social character, granted to individual
consumers, provided that such aid is granted without
discrimination related to the origin of the products
concerned;

b) aid to make good the damage caused by natural

disasters or exceptional occurrences;

In addition, the following forms of state aid may

1.3.
be considered to be compatible:

a) aid to promote the economic development of areas
where the standard of living is abnormally low or
where there is serious underemployment;

b) aid to promote an important project of European
interest or to remedy a serious disturbance in the
economy of a Member State;

c) aid to stimulate certain economic activities or econ-
omic areas, where such aid does not adversely affect
the common interest;

27.4.98

EN

Official Journal of the European Communities

C 129/71

d) aid to promote culture and heritage conservation;

e) other aid agreed by the Council.

that

The Commission considers

1.7.2.
this aid
accounts for only a limited share of all aid. It intends to
simplify the monitoring procedures, releasing more
funds for assessing bigger and more distorting cases.
Therefore, the Commission is proposing to grant a block
exemption for certain categories of aid, which will then
no longer have to be notified to it in advance.

Article 93 specifies how the Commission is to

1.4.
check compliance with Article 92.

1.7.3. However, there are two restrictions:

1.5.
The Commission provides surveys of aid granted
by Member States. In the initial surveys the Commission
noted a drop in state aid. However, this was no longer
the case in the fifth survey. However, it must be pointed
out in this connection, as the Committee has already
done in its opinion on the twenty-sixth competition
policy report, that the high level of state aid for industry
is due to the additional aid given to industry in the
former East Germany. Aid for industry has stabilized
around the ECU 43 million mark or ECU 1 400 per
person employed in this sector. The Commission also
concludes that regions in the richer Member States
receive more aid than the cohesion countries. This is a
matter of serious concern to the Commission (1).

a) aid may not exceed a certain threshold, otherwise it
will still have to be notified to the Commission in
advance;

b) the Commission will continue to play a supervisory
role, even with regard to the application of block
exemptions.

1.7.4.
The proposal merely defines the parameters.
The actual figures and the objectives will be laid down
in separate decisions.

2. Gist of the Commission proposal

1.6.
The Commission expects that the supervision of
state aid will have to be intensified in the years
ahead. EMU, EU enlargement and rising unemployment
strengthen the case for stricter controls. In order to give
itself enough time and scope to act, the Commission
intends to make its controls more effective.

2.1.
The Commission aims in the near future to focus
its efforts on more rigorous scrutiny of major cases of
state aid which may seriously jeopardize competition,
by simplifying and clarifying the existing rules.

1.7.
Assessment criteria have already been determined
for specific categories of state aid, such as horizontal
aid, regional aid, export credit insurance and export
credits.

The Commission has also issued guidelines
1.7.1.
for horizontal aid, such as aid for R&D, small and
medium-sized enterprises, environmental protection and
energy saving. Member States can act on the basis of
these guidelines. Between 1992 and 1994, Member States
awarded on average ECU 12,5 billion in horizontal aid.
This is roughly 30 % of all state aid (2).

(1) Report from the Commission — Fifth Survey on state aid
in the European Union in the manufacturing and certain
other sectors (COM(97) 170 final, p. 40).

(2) Own calculation based on the statistical annex to the fifth

Survey, pages 62-73.

2.2.
This should take the form of an innovation in
the monitoring of state aid, with block exemptions being
granted — for the first time since the entry into force in
1958 of the Treaty of Rome — to a range of ‘horizontal’
aid measures, including aid for SMEs, R&D, environ-
mental protection, education and training, employment
and export credits. Essentially, the Commission takes
the view that, as these aid measures generally meet the
criteria laid down at Community level, the Member
States should, in principle, no longer be required formally
to notify it of their existence.

A first initiative towards the introduction of
2.3.
block exemptions was taken in November 1996, when
the Commission submitted its orientations on the use of
Article 94 of the EC Treaty to the Industry Council.
Article 94 stipulates that ‘the Council, acting by a
qualified majority on a proposal from the Commission
and after consulting the European Parliament, may
make any appropriate regulations for the application of
Articles 92 and 93 and may in particular determine the
conditions in which Article 93(3) shall apply and the
categories of aid exempted from this procedure’.

C 129/72

EN

Official Journal of the European Communities

27.4.98

2.4.
The introduction of block exemptions will lead
to the creation of clear legislative texts with direct effect.
This will increase transparency and predictability of
state aid control. It will thus improve the possibility for
additional state aid screening at national
level by
national administrations, national courts and national
auditors. Moreover, citizens will be able to complain to
national courts — just as they can at present — when
they suspect that aid granted without notification does
not fulfil the conditions for exemption laid down in the
block exemption regulations.

The proposed regulation provides for the estab-
2.5.
lishment of an advisory committee, to be consulted
before the publication and adoption of a draft Com-
mission regulation. It also provides for the consultation
of interested parties. The Commission will inform the
advisory committee of the views of interested parties
when it consults this committee before adopting a
regulation.

3. ESC comments

3.1.
The ESC approves the Commission proposal. It
thinks that the proposed approach complies with the
subsidiary principle and would simplify the procedure.
It also takes the view that implementation of the
proposals would lead to a more efficient and transparent
control of state aid than if individual notification in
advance was to be required. The resources saved in this
way could be better used to vet other forms of state aid.

3.1.1.
The Committee believes that transparency and
control are vital factors for a more efficient control of
state aid. The criteria and thresholds of block exemption
regulations should be defined as clearly as possible, in
order to reduce the risk of abuse. Furthermore, according
to the Committee, the mechanisms for control set out

Brussels, 25 February 1998.

in Article 4 are adequate provided the Commission
ensures an appropriate dissemination of information to
interested third parties.

The ESC notes that the proposal

3.2.
is merely
procedural. The Commission is simply proposing that
another procedure be applied: it has not made any
substantive changes.

3.3.
Since the ESC represents socio-economic interests
in the EU, it thinks that it, too, should be consulted on
the evaluation report.

3.4.

The ESC is concerned to ensure that:

— sufficient resources are deployed to ensure that the
regulation can be effectively and equitably enforced
in all Member States;

— an interim evaluation is undertaken within three

years after the new system is introduced;

— information derived from the Member State

reporting systems is effectively disseminated.

The ESC notes that the key to the evaluation of

3.5.
the proposals will lie in the answers to two questions:

— have the new exemption and de minimis systems
operated in an effective, efficient and equitable
manner?

— has the Commission, as a result of the new systems,
been able to concentrate its state aid expertise and
authority more effectively on the key cases where
state aid produce significant distortions of the single
market?

If the answer to these questions is in the
3.5.1.
negative, the ESC would query whether it is necessary
to enact these measures.

The President

of the Economic and Social Committee

Tom JENKINS