Information from the Commission - Multisectoral framework on regional aid for large investment projects
Date: 1998-04-07
Institutions: European Commission
Subjects: EU Member State, EU investment, capital movement, free movement of capital, right of establishment

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Multisectoral  framework  on  regional  aid  for  large  investment  projects

(98/C  107/05)

(Text  with  EEA  relevance)

1.

Need  for  and  scope  of  the  measure

1.1.(cid:218)The  need  for  more  systematic  controls  on  regional
aid  to  large(cid:220)scale  mobile  investment  projects  has
been  widely  acknowledged  in  recent  years.  The
completion  of  the  single  market  makes  it  more
important  than  ever  to  maintain  tight  controls  on
State  aid  for  such  projects,  since  the  distortive
effect  of  aid  is  magnified  as  other  government(cid:220)
induced  distortions  of  competition  are  eliminated
and  markets  become  more  open  and  integrated.  At
the  same  time,  it  is  important  to  strike  an  appro(cid:220)
priate  balance  between  three  core  objectives  of  EU
the
policy,  namely  undistorted  competition 
internal  market,  economic  and  social  cohesion  and
industrial  competitiveness.

in 

will  be  subject  solely  to  the  provisions  of  this
framework(cid:216)(ˇ)).  This  situation  will  be  reviewed
after  an  evaluation  has  been  carried  out  of  the
efficacy  of  this  framework.  In  other  sectors  the
only  current  restriction  on  regional  investment  aid
is  that  the  amount  of  aid  must  not  exceed  the
ceilings  authorised  by  the  Commission  for  the
regional 
the
regional  ceilings  are  in  general  designed  to  provide
an  incentive  for  the  type  of  investment  facing  the
biggest  problems  and  are  usually  in  excess  of  the
average  regional  handicaps.  The  purpose  of  this
framework  is  to  limit  this  net  incentive  for  large
projects  to  a  level  which  avoids  as  much  as  possible
adverse  sectoral  effects  caused  by  the  project.

in  question.  However, 

scheme 

1.2.(cid:218)Investors 

in 

large  projects  often  consider  alter(cid:220)
native  sites  in  different  Member  States,  which  may
lead  to  a  spiral  of  increasingly  generous  promises
of  aid.  Such  subsidy  auctions  carry  a  considerable
risk  of  distorting  competition  in  the  single  market.
In  addition,  they  clearly  favour  the  richer  Member
States  and/or  regions  with 
larger  regional  aid
budgets.  The  Commission  is  therefore  introducing
this  framework,  initially  for  a  trial  period  only,
with  the  aim  of  limiting  aid  for  large(cid:220)scale  projects
to  a  level  which  avoids  as  much  as  possible  adverse
effects  on  competition  but  which  at  the  same  time
maintains  the  attraction  of  the  assisted  area.  The
to  adopt  a  horizontal
Commission’s 
framework  on  State  aid  to  large(cid:220)scale  investment
projects 
first
announced  in  its  Communication  to  the  Council,
the  European  Parliament,  the  Economic  and  Social
Committee  and  the  Committee  of  the  Regions  on
"An 
the
competitiveness 
industrial 
European  Union’(cid:216)(˛).

industry  was 

sectors  of 

intention 

in  all 

policy 

for 

1.3.(cid:218)Several 

sensitive 

industrial 

sectors  are  already
subject  to  special  rules  on  aid,  notably  agriculture,
fisheries,  steel,  shipbuilding,  synthetic  fibres,  the
motor  industry,  transport  and  the  coal  industry.
During  the  trial  period  these  sectors  will  continue
to  be  covered  exclusively  by  their  own  existing
sectoral  codes  and  frameworks  (with  the  exception
textile  and  clothing  sector  which  will
of 

the 

1.4.(cid:218)Under  this  framework  the  Commission  will  decide
on  a  case(cid:220)by(cid:220)case  basis  a  maximum  allowable  aid
intensity  for  projects  which  are  subject  to  the
notification  requirement.  This  might  lead  to  aid
intensities  below  the  applicable  regional  ceiling.
This  framework  does  not  apply  to  restructuring  aid
cases,  which  will  continue  to  be  covered  by  the
Community  guidelines  on  State  aid  for  rescuing
and  restructuring  firms  in  difficulty(cid:216)(—).  Similarly,
this  framework  will  not  affect  the  operation  of  the
existing  horizontal 
the
Community  framework  for  State  aid  for  research
and  development(cid:216)((cid:209))  and  the  Community  guidelines
on  State  aid  for  environmental  protection(cid:216)((cid:210)).

frameworks, 

such  as 

1.5.(cid:218)The  Commission  would  stress  that 

it  has  no
intention  of  seeking  to  interfere  unnecessarily  with
the  discretion  of  Member  States  in  the  field  of
regional  policy.  Nor  does  it  seek  to  weaken  the
application  of  Article  92(3)(a)  and  (c)  of  the
Treaty,  which  aims  to  encourage  companies  to
invest  in  disadvantaged  areas,  despite  the  structural
handicaps  that  they  face  there.  On  the  contrary,
the  intention  is  strictly  to  limit  the  scope  of  the
new  rules 
large(cid:220)scale  projects,  often
capital  intensive  in  nature,  which  could  have  a
located
impact  on  unaided  competitors 
serious 

those 

to 

(ˇ)(cid:217)This 

framework  consequently  replaces 

the  Community
framework  for  aid  to  the  textile  industry  SEC(71)  363  final,
July  1971.

(˛)(cid:217)COM(94)  319  final.

(—)(cid:217)OJ  C  283,  19.9.1997,  p.  2.
((cid:209))(cid:217)OJ  C  45,  17.2.1996,  p.  5.
((cid:210))(cid:217)OJ  C  72,  10.3.1994,  p.  3.

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for 

in  the  EEA;  and  to  examine  more
elsewhere 
critically 
those
levels  of  aid 
the  planned 
projects  which  do  not  have,  directly  or  indirectly,  a
significant  impact  on  employment  in  the  region
important  objective  of
concerned,  which 
regional  policy.  Member  States  will  continue  to  be
able  freely  to  decide  on  the  aid  intensity  in  the  vast
majority  of  cases,  within  the  terms  of  the  approved
regional  aid  schemes.

is  an 

1.6.(cid:218)In  drawing  up  this  framework,  the  Commission  has
attempted  to  ensure  that,  as  far  as  possible,  it  is
clear  and  unambiguous,  predictable,  certain  and
efficient  and 
the  additional  administrative
burden  it  entails  is  kept  to  a  minimum.

that 

2.

Notification  requirement

2.1.(cid:218)Under  this  framework  Member  States  are  required
to  notify  pusuant  to  Article  93(3)  of  the  Treaty  any
proposal 
investment  aid(cid:216)((cid:211))
within  the  scope  of  an  approved  scheme(cid:216)((cid:212)),  where
either  of  the  following  two  criteria  are  met:

to  award  regional 

(i) the  total  project  cost 

is  at 

least  ECU  50
million(cid:216)((cid:213)),  and  the  cumulative  aid  intensity(cid:216)((cid:214))
the  eligible
expressed  as  a  percentage  of 
investment  costs 
the
regional  aid  ceiling  for  large  companies  in  the
area  concerned  and  aid  per  job  created  or
safeguarded 
least  ECU
40(cid:216)000(cid:216)(˛˝);  or

least  50(cid:216)%  of 

amounts 

is  at 

to 

at 

a  maximum  allowable  aid  intensity  for  a  proposal
to  award  aid.  It  will  begin  by 
identifying  the
maximum  aid  intensity  (regional  aid  ceiling)  which
a  large  company  could  obtain  in  the  assisted  area
concerned  within  the  context  of  the  authorised
regional  aid  system  valid  at  the  moment  of  notifi(cid:220)
cation  (unless  it  is  ad  hoc  aid  in  which  case  the  aid
ceiling  fixed  for  the  region  concerned  will  be
applied).  A  range  of  adjustment  factors  will  then  be
applied  to  that  percentage  figure,  in  accordance
with  three  specific  assessment  factors  (see  below),
in  order  to  calculate  a  maximum  allowable  aid
intensity  for  the  project  in  question.  In  the  case  of
the  third  criterion,  the  regional  impact  indicator,  a
positive  factor  or  bonus  may  be  applied,  depending
on  the  degree  of  benefit  the  project  is  likely  to
confer  on  the  region  concerned.  The  question  of
the  viability  of  an  individual  project  will  be  for
Member  States  themselves  to  determine.  However,
the  Commission  will  be  entitled,  if  it  deems  it  to  be
necessary,  to  request  information  on  a  project’s
viability.  Finally, 
the  Commission  will,  where
appropriate,  utilise  independent  external  data  to
in  the
assess  the 
relevant  market;  where  this  is  not  easily  obtainable,
however,  the  Commission  will  give  full  weight  to
representations  made  by  Member  States.

impact  on  competition 

likely 

The  three  assessment  criteria

(i) Competition  factor

(ii)(cid:217)the  total  aid  is  at  least  ECU  50  million.

Notification  format

2.2.(cid:218)The  standard  notification  form  is  contained  in  the
Annex.  This  form  should  be  sent  directly  to  the
Directorate(cid:220)General  for  Competition.

3.

Assessment  rules

3.1.(cid:218)The  Commission  will  determine, 

in  accordance
with  the  calculation  formula  set  out  in  point  3.10,

((cid:211)) Regional  investment  aid  awarded  solely  for  the  creation  of
jobs  as  described  in  the  Community  regional  aid  guidelines
is  not  covered  by  this  framework.

((cid:212)) The  notification  requirement  also  applies,  of  course,  to

proposals  to  award  ad  hoc  aid.

((cid:213)) ECU  15  million  in  the  case  of  projects  carried  out  in  the

textile  and  clothing  sector.

((cid:214)) Including  any  co(cid:220)financing  from  the  Structural  Funds.
(˛˝)(cid:217)ECU  30(cid:216)000  in  the  case  of  projects  carried  out  in  the  textile

and  clothing  sector.

3.2.(cid:218)The  authorisation  of  aid  to  companies  operating  in
sectors  which  are  in  structural  overcapacity  poses
particular  risks  for  the  distortion  of  competition.
Any  capacity  expansion  which  is  not  compensated
by  capacity  reductions  elsewhere  will  exacerbate
the  problem  of  structural  overcapacity.  If  such
expansion  is  aided,  the  aid  recipient  may  be  left
with  excess  capacity  that  it  will  not  be  able  to  use
in  the  future  or  it  may  start  a  price(cid:220)war  in  order  to
drive  other  producers  out  of  the  relevant  market.  It
is  also  likely  to  threaten  jobs  elsewhere.  Thus  the
competition  factor  will 
involve  an  analysis  of
whether  the  proposed  project  would  take  place  in  a
sector  or  subsector  suffering  from  structural  over(cid:220)
capacity.

3.3.(cid:218)In  determining  whether  structural  overcapacity
exists  in  the  sector  or  subsector  concerned,  the
Commission  will  consider,  at  the  Community  level,
the  difference  between  the  average  capacity  utili(cid:220)
sation  rate  for  manufacturing  industry  as  a  whole
and  the  capacity  utilisation  rate  of  the  relevant
sector  or  subsector.  In  order  to  allow  for  cyclical

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fluctuations  in  relative  capacity  utilisation  rates,  the
reference  period  will  be  the  last  five  years  for
which  data  are  available.

investment  project  in  question  and  can  thus  be
assessed  in  terms  of  investment  aid,  as  opposed  to
employment  aid.

3.4.(cid:218)In  the  absence  of  sufficient  data  on  capacity  utili(cid:220)
sation,  the  Commission  will  consider  whether  the
investment  takes  place  in  a  declining  market.  For
this  purpose,  the  Commission  will  compare  the
evolution  of 
the
product(s) 
is,  production  plus
imports  minus  exports)  with  the  growth  rate  of
EEA  manufacturing  industry  as  a  whole.

apparent 
in  question  (that 

consumption  of 

3.5.(cid:218)For 

to  which 

the
the  purpose  of  determining  whether 
investment  will  result  in  a  capacity  expansion,  the
relevant  capacity  is  the  total  viable  capacity  of  the
prospective  beneficiary  (and/or,  if  appropriate,  the
Group 
the  relevant
it  belongs) 
product.  In  all  cases,  viable  capacity  would  include
is,  capacity  that
temporarily 
would  be  reactivated  when  sales 
improve)  but
would  exclude  obsolete  and  inactive  capacity  (that
is,  idle  capacity  that  cannot  be  reused  without
substantial  additional  investment).

idle  capacity  (that 

for 

3.6.(cid:218)Wherever  a  company,  prior 

to  making  an
application  for  aid,  already  has  a  high  market
share  for  the  product(s)  concerned,  which  for  the
purpose  of  this  framework  will  be  assumed  to  be  at
is  a  risk  that  the  award  of
least  40(cid:216)%,  there 
maximum  levels  of  aid  normally  permitted  in  the
region  concerned  will  unduly  distort  competition.
In  such  circumstances  the  company  should, 
in
principle,  receive  less  aid  than  would  otherwise  be
investment  contributes  to
the  case,  even 
regional  development.  There  could,  however,  be
exceptions  to  this  general  rule,  for  example  where
the  company  creates,  through  genuine  innovation,
a  new  product  market.

its 

if 

3.8.(cid:218)This  criterion  would  also  take  account  of  the
possible  distorting  effect  of  the  aid  on  the  price  of
the  final  product.  Undertakings  with  a  relatively
high  share  of  capital 
in  total  costs  realise  an
important  reduction  of  their  unit  cost  through  the
aid  and  could  obtain 
thereby  a  considerable
competitive  advantage  over  non(cid:220)aided  competitors.
The  higher  the  capital  intensity  of  the  supported
investment  project,  the  more  distortive  the  effects
of  capital  grants  on  competition  are  likely  to  be.

(iii) Regional  impact  factor

to 

that 

3.9.(cid:218)Whereas  the  competition  and  capital(cid:220)labour  factors
look  at  the  project’s  potentially  distorting  effects,
the  regional  impact  factor  takes  account  of  the
beneficial  effects  on  the  economies  of  the  assisted
job
regions.  The  Commission  considers 
creation  can  be  used  as  an  indicator  of  a  project’s
contribution 
the  development  of  a  region.
Where  a  capital(cid:220)intensive  investment  creates  only  a
limited  number  of  direct  jobs,  it  may  nevertheless
create  a  significant  number  of  indirect  jobs  in  the
assisted  region  concerned  and  any  adjacent  assisted
region(s).  Job  creation  in  this  context  refers  to  jobs
created  directly  by  the  project  together  with  jobs
created  by  first(cid:220)tier  suppliers  and  customers 
in
response  to  the  aided  investment.  When  applying
this  factor  to  the  calculation  formula  to  arrive  at
an  allowable  aid  intensity,  the  Commission  will
give  a  higher  positive  weighting  to  the  indirect
creation  of  jobs  by  aid  recipients  located  in  Article
92(3)(a)  regions  than  in  Article  92(3)(c)  regions  in
recognition  of  the  more  severe  economic  problems
faced  by  the  former.

(ii) Capital(cid:220)labour  factor

Calculation  formula

3.7.(cid:218)Since  regional  aid  is  usually  granted  in  the  form  of
capital  subsidies,  there  is  a  natural  tendency  for
capital  intensive  projects  to  locate  in  assisted  areas.
While  this  is  a  positive  development,  such  a  policy
does  not  necessarily  contribute  to  the  creation  of
many  new 
the  reduction  of  unem(cid:220)
ployment.  Only  highly  capital(cid:220)intensive  projects
will  be  captured  by  this  factor.  The  notion  of  jobs
safeguarded  will  only  be  relevant  where 
is
demonstrated  that  they  are  directly  linked  to  the

jobs  and 

it 

3.10.(cid:217)The  complete  calculation  formula  is  obtained  by
multiplying  the  regional  aid  ceiling  by  the  coef(cid:220)
ficients  that  result  from  the  examination  of  the
three  factors  mentioned  above,  which  are  repre(cid:220)
sented  by  the  following  symbols:

R =(cid:217)authorised  maximum  aid  intensity  for  large
companies  in  the  assisted  area  concerned
(regional  ceiling),

T =(cid:217)competition  factor,

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I =(cid:217)capital(cid:220)labour  factor,
M(cid:217)=(cid:217)regional  impact  factor.

3. Regional  impact  indicator

formula  of 

The 
intensity  ist  then:  R(cid:216)(cid:141)(cid:216)T(cid:216)(cid:141)(cid:216)I(cid:216)(cid:141)(cid:216)M.

the  maximum  allowable  aid

The  following  adjustment  factors  will  apply  to
each  of  the  three  assessment  criteria:

1. Competition  factor

(i)(cid:217)Project  which 

results 

in  a
capactiy  expansion  in  a  sector
facing  serious  structural  overca(cid:220)
absolute
pacity 
decline  in  demand

and/or 

an 

(ii) Project  which 

results 

in  a
capacity  expansion  in  a  sector
structural  overcapacity
facing 
and/or  a  declining  market  and
which  is  likely  to  reinforce  high
market  share

(iii) Project  which 

results 

in  a
capacity  expansion  in  a  sector
facing 
structural  overcapacity
and/or  a  declining  market

(iv) No 

likely  negative  effects 

in

terms  of  (i)(cid:220)(iii)

Article
92(3)(a)
regions

Article
92(3)(c)
regions

1,5(cid:217)

1,2

1,25

1,1

1,0(cid:217)

1,0

(i)(cid:217)High  degree  of 

indirect
job  creation(cid:216)(˛)  for  each
job  created  by  the  aid
recipient 
than
100(cid:216)%)

(more 

(ii)(cid:217)Medium 

degree 

of
indirect  job  creation  for
each  job  created  by  the
aid 
(between
50(cid:216)%(cid:220)100(cid:216)%)

recipient 

(iii)(cid:217)Low  degree  of 

indirect
job  creation  for  each  job
created 
aid
by 
recipient  (less  than  50(cid:216)%)

the 

0,25

0,50

0,75

1,00

(˛)(cid:217)That  is,  jobs  created  with  first(cid:220)tier  suppliers  and  customers  in
the  assisted  region  where  the  company  is  located  or  in  any
adjacent  assisted  regions  (i.e.  Article  92(3)(a)  or  (c)  regions).

NB:(cid:217)No  project  would  of  course  be  allowed  to  receive  aid  above

the  regional  ceiling.

4.

Date  of  introduction  and  period  of  validity

4.1.(cid:218)This  framework  will  be  applicable  from  1  Sep(cid:220)
tember  1998  for  an  initial  trial  period  of  three
years.  Before  the  end  of  the  trial  period,  the
Commission  will  carry  out  a  thorough  review  of
the  utility  and  scope  of  the  framework,  which  will
inter  alia  consider  the  question  of  whether 
it
should  be  renewed,  revised  or  abolished.

2. Capital(cid:220)labour  factor

New  capital/jobs(cid:216)(˛)
(ECU  000s)

Factor

5.

Procedure 
Commission

for 

assessment  of 

cases  by 

the

q 200

200  to  400

401  to  700

701  to  1(cid:216)000

r 1(cid:216)000

1,0

0,9

0,8

0,7

0,6

(˛)(cid:217)Total  amount  of  proposed  capital  divided  by  number  of  jobs

created  or  safeguarded.

5.1.(cid:218)The  Commission  aims, 

in  principle,  to  take  a
decision  either  to  authorise  the  aid  or  to  open  the
Article  93(2)  procedure  within  a  period  of  two
months  following  the  receipt  of  a  complete  notifi(cid:220)
cation,  which  should  follow  the  standard  format
set  out  in  the  Annex.  (In  the  case  of  incomplete
notifications,  the  Commission  will  send  a  request
for  additional  information  to  the  Member  State
two(cid:220)month
within 
time(cid:220)limit  may  only  be  extended  with  the  consent
of  the  Member  State  concerned.

ten  working  days).  The 

5.2.(cid:218)In  the  event  that  the  Commission 

intiates  an
Article  93(2)  procedure,  the  Commission  will  take
a  final  decision  within  four  months  following  the
decision  to  open  the  procedure.  The  Commission

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will  take  account  of  all  the  evidence  which  can  be
gathered  during  that  period,  including  information
from  interested  third  parties  and  any  additional
elements  not  considered  during  the  initial  investi(cid:220)
gation.  Thus  the  maximum  period  for  investigation
into  an  individual  case  would  normally  not  exceed
six  months.

6. Ex(cid:220)post monitoring

6.1.(cid:218)In  view  of  the  sensitive  nature  of  the  large  mobile
investments 
that  a
it 
mechanism  exists  which  helps  to  ensure  that  the
level  of  aid  actually  disbursed  to  the  beneficiary
conforms  with  the  Commission  decision.

involved, 

essential 

is 

6.2.(cid:218)For 

in 

the 

each 

event 

under 

provision 

approved 

by 
framework, 

aided  project 
this 

the
the
Commission 
Commission  will  require  either 
that  any  aid
contract  between  the  relevant  authority  of  the
Member  State  and  the  aid  recipient  contains  a
reimbursement 
of
non(cid:220)compliance  with  the  contract  or  that  the  final
significant  payment  of  the  aid  (e.g.  25(cid:216)%)  will  be
made  only  when  the  aid  beneficiary  has  satisfied
the  Member  State  that  execution  of  the  project  is
in  compliance  with  the  Commission  decision  and
on  condition  that  the  Commission,  on  the  basis  of
information  provided  by 
the  Member  State
concerning 
implementation  of  the  project,  has,
within  60  working  days,  indicated  its  agreement  or
raised  no  objections  to  the  final  payment  of  the
aid.

6.3.(cid:218)A  copy  of  any  aid  contract  between  the  Member
State 
aid 
be
immediately
the  Commission 
communicated 
after  it  has  been  signed  by  the  parties.

beneficiary  must 

the 
to 

and 

6.4.(cid:218)In  order 

to 

ensure 

information  on 

compliance  with 

the
Commission  decision,  the  Member  States,  in  coop(cid:220)
eration  with  the  aid  beneficiaries,  must  provide  the
Commission  with  an  annual  report  on  the  project,
including 
the  subsidies  already
paid,  any  interim  report  on  the  execution  of  the
indicating  the
aid  contract,  and  a  final  report 
objectives 
the
timetable, 
investments,  and  compliance  with  any  specific
conditions  laid  down  by  the  authority  granting  the
aid.

terms  of 

the 

in 

change  in  the  product  or  production  process  of  an
existing  establishment  (by  means  of  rationalisation,
diversification  or  modernisation).  It  may  also  take
the  form  of  the  takeover  of  an  establishment  which
has  closed  or  which  would  have  closed  had  such  a
takeover  not  taken  place,  but  does  not  include  the
acquisition  of  assets  from  a  company  in  financial
difficulties  (for  which  the  Community  guidelines
on  State  aid  for  rescuing  and  restructuring  firms  in
difficulty  apply).

An  investment  project  should  not  be  artificially
divided  into  sub(cid:220)projects  in  order  to  escape  the
notification  obligation.

Total  project  cost

7.3.(cid:218)"Total  project  cost’  means  the  total  expenditure  on
tangible  and  non(cid:220)tangible  new  assets  which  are
purchased  by  an  undertaking  to  carry  out  an
investment  project  and  will  be  depreciated  (or
leased)  over  the  lifetime  of  the  assets  concerned.

Eligible  expenses

7.4.(cid:218)"Eligible  expenses’  mean  expenditure  on 

those
tangible  and  non(cid:220)tangible  assets  permitted  under
the  Community  regional  aid  guidelines(cid:216)(˛˛).

Jobs

7.5.(cid:218)"Job’  means  a  permanent  full(cid:220)time 

job  or 

its
part(cid:220)time  equivalent.  It  may  be  a  new  job  or  the
safeguarding  of  an  existing  job  to  the  extent  that
the  latter  is  directly  associated  with  the  investment
project,  would  require  a  significant  amount  of
re(cid:220)training  and  would  no  longer  exist  at  the  start
of  the  new  production  if  not  for  that  investment.

Relevant  market

7.

Definition  of  terms  used

7.1.(cid:218)The  following  definitions  of  the  terms  used  in  this

framework  will  apply.

Investment  project

7.6.(cid:218)The  relevant  product  market(s)  for  determining
market  share  comprises  the  products  envisaged  by
the  investment  project  and,  where  appropriate,  its
substitutes  considered  by  the  consumer  (by  reason
of  the  products’  characteristics,  their  prices  and
their  intended  use)  or  by  the  producer  (through
flexibility  of  the  production  installations)(cid:216)(˛ˇ).  The

7.2.(cid:218)"Investment  project’  means  an  initial  investment  in
fixed  assets  in  the  creation  of  a  new  establishment,
the  extension  of  an  existing  establishment  or
engaging  in  an  activity  involving  a  fundamental

(˛˛)(cid:217)Adopted  on  16  December  1997  (OJ  C  74,  10.3.1998).
(˛ˇ)(cid:217)If  the  investment  concerns  the  production  of  intermediates,
the  relevant  market  may  be  the  market  for  the  final  product
if  most  of  the  production  is  not  sold  on  the  open  market.

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relevant  geographic  market  comprises  usually  the
EEA  or,  alternatively,  any  significant  part  of  it  if
the  conditions  of  competition  in  that  area  can  be
sufficiently  distinguished  from  other  areas  of  the
EEA.  Where  appropriate  the  relevant  market(s)
may  be  considered  to  be  global.

Structural  overcapacity

7.7.(cid:218)Structural  overcapactiy  is  deemed  to  exist  when,
on  average  over  the  last  five  years,  the  capacity
utilisation 
sector  or
the 
subsector(cid:216)(˛—)  is  more  than  two  percentage  points
below  that  of  manufacturing  as  a  whole.  Serious

rate  of 

relevant 

(˛—)(cid:217)The  sector  or  subsector  will  be  established  at  the  lowest

available  segmentation  of  the  NACE  classification.

structural  overcapacity  is  deemed  to  exist  when
difference  with  respect  to  the  average  for  manufac(cid:220)
turing  is  more  than  five  percentage  points.

Declining  market

7.8.(cid:218)The  market  for  the  product(s)  in  question  will  be
deemed  to  be  declining  if,  over  the  last  five  years,
the  average  annual  growth  rate  of  apparent
consumption  of 
is
the  product(s) 
significantly  (more  than  10(cid:216)%)  below  the  annual
average  of  EEA  manufacturing 
industry  as  a
whole,  unless  there  is  a  strong  upward  trend  in  the
relative  growth  rate  of  demand  for  the  product(s).
An  absolutely  declining  market  is  one  in  which  the
average 
apparent
growth 
consumption  over  the  last  five  years  is  negative.

in  question 

annual 

rate 

of 

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ANNEX

Standard  notification  form  pursuant  to  the  multisectoral  framework  on  regional  aid  for  large
investment  projects

Introduction

This  form  specifies  the  information  to  be  provided  by  a  Member  State  when  notifying  the  European
Commission  of  an  investment  project  to  be  located  in  an  assisted  area  which  is  subject  to  the  notification
rules  of  the  multisectoral  framework  on  regional  aid  for  large  investment  projects.

The  Member  States  should  note  that:

(a)(cid:217)all  information  requested  by  this  form  must  be  provided.  However  if  notifying  parties,  in  good  faith,
are  unable  to  provide  a  response  to  a  question  or  can  only  respond  to  a  limited  extent  on  the  basis  of
available  information  they  should  indicate  this  and  give  reasons;

(b) unless  all  sections  are  completed  in  full  or  adequate  reasons  are  given  explaining  why  it  has  not  been
possible  to  answer  the  questions  in  full,  the  notification  will  be  incomplete  and  will  become  effective
only  on  the  date  on  which  all  the  information  is  received;

(c) the  Commission  may  request  the  Member  State  and  the  aid  recipient  concerned  to  provide  additional
information  and/or  explanation  on  the  information  supplied  in  this  form  in  order  to  facilitate  the  initial
assessment,  which  should  be  provided  within  ten  working  days  and  may  form  the  subject  of  a  technical
meeting  to  be  arranged  by  the  Directorate(cid:220)General  for  Competition  with  the  competent  public
authority.

Supporting  documentation

(a)(cid:217)a  copy  of  the  draft  aid  agreement  or,  if  that  is  unavailable,  a  copy  of  the  envisaged  aid  offer  letter.  If
the  draft  aid  agreement  is  unavailable  at  the  time  of  the  notification,  it  should  be  submitted  as  soon  as
possible  and  not  later  than  when  it  is  posted  to  the  aid  recipients;

(b) copies  of  the  most  recent  annual  reports  and  accounts  of  the  aid  recipient(s),  and  if  the  recipient  is  part

of  a  larger  group,  the  most  recent  annual  reports  and  accounts  of  the  group;

(c) a  list  and  short  description  of  the  contents  of  all  other  analyses,  reports,  studies  and  surveys  prepared
by  or  for  the  aid  recipient(s)  for  the  purpose  of  assessing  or  analysing  the  proposed  aided  investment
with  respect  to  competitive  conditions,  competitors  (actual  and  potential),  and  market  conditions.  Each
item  in  the  list  must  include  the  name  and  position  of  the  author.

How  to  notify

The  notification  must  be  completed  in  an  official  language  of  the  European  Union  appropriate  for  the
Member  State  concerned.  This  language  will  thereafter  be  the  language  of  the  proceeding  for  all  notifying
parties.

Supporting  documents  must  be  submitted  in  their  original  language;  where  this  is  not  an  official  language
of  the  European  Union  they  must  be  translated  into  the  language  of  the  proceeding.

The  financial  data  requested  must  be  provided  in  local  currency  or  ecu/euro  indicating  the  conversion  rates
used.

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The  notification  should  be  sent  to:

European  Commission,
Directorate(cid:220)General  for  Competition,
(DG  IV),
State  Aid  Directorate,
(Cort.  150),
rue  de  la  Loi/Wetstraat  200,
B(cid:220)1049  Brussels,

or  delivered  by  hand  during  normal  Commission
working  hours  to  the  following  address:

European  Commission,
Directorate(cid:220)General  for  Competition,
(DG  IV),
State  Aid  Directorate,
avenue  de  Cortenberg/Kortenberglaan  150
B(cid:220)1040  Brussels.

Secrecy

The  Member  State  and/or  the  aid  recipient  concerned  should  take  note  that  any  of  the  information
requested  may  be  used  as  a  basis  to  prepare  a  decision  on  the  case.  Notifying  parties  should  indicate  that
part  of  the  information  submitted  in  this  notification  which  should  not  be  published  or  otherwise  divulged
to  other  parties  by  marking  it  "Business  secrets’.  They  should  also  set  out  the  reasons  why  this  information
should  not  be  divulged  or  published.  However,  if  sensitive  information  is  needed  in  the  preparation  of  the
decision,  the  Commission  would  first  consult  the  Member  State  and/or  the  aid  recipient  about  the  publi(cid:220)
cation  of  the  parts  of  the  decision  containing  sensitive  information.

Ex(cid:220)post control

The  Commission  acknowledges  that  part  of  the  information  requested  in  this  notification  form  cannot  be
given  entirely  accurately  in  advance.  The  Member  State  and/or  the  aid  recipient  concerned  are  requested
to  give  their  best  estimate  and  to  provide  a  justification  of  the  information  to  be  provided.  The  aided
investment  project  will  be  subject  to  ex(cid:220)post  control  by  which  the  Commission  can  verify  the  accuracy  of
the  information  provided  in  the  context  of  the  notification.

SECTION  1

MEMBER  STATE

1.1.

Information  on  notifying  public  authority

1.1.2.(cid:217)name  and  address  of  notifying  authority;

1.1.3.(cid:217)name,  telephone,  fax  and  e(cid:220)mail  address  of,  and  position  held  by,  the  person(s)  to  be  contacted  in

case  of  further  inquiry.

1.2.

Information  of  contact  in  permanent  representation

1.2.1.(cid:217)name,  telephone,  fax  and  e(cid:220)mail  address  of,  and  position  held  by,  the  person  to  be  contacted  in  case

of  further  inquiry.

SECTION  2

AID  RECIPIENT

2.1.

Structure  of  a  company  or  companies  investing  in  the  project

2.1.1.(cid:217)identity  of  aid  recipient;

2.1.2.(cid:217)if  the  legal  identity  of  the  aid  recipient  is  different  from  the  undertaking(s)  that  finance(s)  the  project

or  that  receive(s)  the  aid,  describe  also  these  differences;

2.1.3.(cid:217)identify  the  parent  group  of  the  aid  recipient,  describe  the  group  structure  and  ownership  structure

of  each  parent  company.

2.2.

For  a  company  or  companies  investing  in  the  project,  provide  the  following  data  for  the  last  three
financial  years:

2.2.1.(cid:217)worldwide  turnover,  EEA  turnover,  turnover  in  Member  State  concerned;

2.2.2.(cid:217)profit  after  tax  and  cash  flow  (on  a  consolidated  basis);

2.2.3.(cid:217)employment  worldwide,  at  EEA  level  and  in  Member  State  concerned;

2.2.4.(cid:217)market  breakdown  of  sales  in  the  Member  State  concerned,  in  the  rest  of  the  EEA  and  outside  the

EEA.

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2.3.

If  the  investment  takes  place  in  an  existing  industrial  location,  provide  the  following  data  for  the  last
three  financial  years  of  that  entity

2.3.1.(cid:217)total  turnover;

2.3.2.(cid:217)profit  after  tax  and  cash  flow;

2.3.3.(cid:217)employment;

2.3.4.(cid:217)market  breakdown  of  sales:  in  the  Member  State  concerned,  in  the  rest  of  the  EEA  and  outside  the

EEA.

SECTION  3

PROVISION  OF  PUBLIC  ASSISTANCE

For  each  measure  of  proposed  public  assistance,  provide  the  following:

3.1. Details

3.1.1.(cid:217)scheme  title  (or  indicate  if  it  is  an  "ad(cid:220)hoc’  aid);

3.1.2.(cid:217)legal  basis  (law,  decree,  etc.);

3.1.3.(cid:217)public  entity  providing  the  assistance;

3.1.4.(cid:217)if  the  legal  basis  is  an  aid  scheme  approved  by  the  Commission,  provide  the  date  of  the  approval  and

the  State  aid  case  reference  number.

3.2.

Form  of  the  proposed  assistance

3.2.1.(cid:217)is  the  proposed  assistance  a  grant,  interest  subsidy,  reduction  in  social  security  contributions,  tax
credit  (relief),  equity  participation,  debt  conversion  or  write  off,  soft  loan,  deferred  tax  provision,
amount  covered  by  a  guarantee  scheme,  etc.?

3.2.2.(cid:217)provide  the  conditions  attached  to  the  payment  of  the  proposed  assistance.

3.3. Amount  of  the  proposed  assistance

3.3.1.(cid:217)nominal  amount  of  support  and  its  gross  and  net  grant  equivalent;

3.3.2.(cid:217)is  the  assistance  measure  subject  to  corporate  tax  (or  other  direct  taxation)?  If  only  partially,  to  what

extent?

3.3.3.(cid:217)provide  a  complete  schedule  of  the  payment  of  the  proposed  assistance.

For  the  package  of  proposed  public  assistance,  provide  the  following:

3.4. The  characteristics  of  the  assistance  measures

3.4.1.(cid:217)are  any  of  the  assistance  measures  of  the  overall  package  not  yet  defined?  If  yes,  specify;

3.4.2.(cid:217)indicate  which  of  the  abovementioned  measures  does  not  constitute  State  aid  and  for  what  reason(s).

3.5.

Financing(cid:216)(˛)  from  Community  sources  (EIB,  ECSC  instruments,  Social  Fund,  Regional  Fund,  other)

(˛)(cid:217)The  notion  of  State  aid  may  include  Community  financing.

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3.5.1. are  some  of  the  abovementioned  measures  to  be  co(cid:220)financed  by  Community  funds?  Explain;

3.5.2.

is  some  additional  support  for  the  same  project  to  be  requested  from  any  other  European  or  inter(cid:220)
national  financing  institutions?  If  so,  for  what  amounts?

3.6.

Cumulation  of  public  assistance  measures

3.6.1. estimated  gross  grant  equivalent  (before  taxation)  of  the  combined  aid  measures;

3.6.2. estimated  net  grant  equivalent  (after  taxation)  of  the  combined  aid  measures.

SECTION  4

ASSISTED  PROJECT

(The  information  to  be  given  in  this  section  is  used  inter  alia  to  determine  the  outcome  of  the  application
of  the  capital(cid:220)labour  assessment  factor.)

4.1.

Location  of  the  project

4.1.1.(cid:217)Specify  the  region  and  the  municipality  as  well  as  the  address.

4.2. Duration  of  the  project

4.2.1.(cid:217)Specify  the  start  date  of  the  investment  project  as  well  as  the  completion  date  of  the  investment.

4.2.2.(cid:217)Specify  the  planned  start  date  of  the  new  production  and  the  year  by  which  full  production  may  be

reached.

4.3. Description  of  the  project

4.3.1.(cid:217)Specify  the  type  of  the  project  and  whether  it  is  a  new  establishment  or  a  capacity  expansion  or

other.

4.3.2.(cid:217)Provide  a  short  general  description  of  the  project.

4.4.

Breakdown  of  the  project  costs

4.4.1.(cid:217)Specify  the  total  cost  of  capital  expenditure  to  be  invested  and  depreciated  over  the  lifetime  of  the

project;

4.4.2.(cid:217)Provide  a  detailed  breakdown  of  the  capital  and  non(cid:220)capital(cid:216)(ˇ)  expenditure  associated  with  the

investment  project  by  filling  in  the  following  table:

Total  expenditure

Eligible  expenditure

Year  1

Year  2

Year  3

Etc.

Year  1

Year  2

Year  3

Etc.

Capital

land

buildings

installations,  machines

tools

intangibles(cid:216)(˛)

other  (specify)

Non(cid:220)capital

additional  working  capital

R&D

launching  costs

other  (specify)

Total(cid:218)

(˛)(cid:217)For  large  enterprises,  certain  categories  of  intangible  investments  can  be  included  in  the  eligible  capital
expenditure,  however,  not  exceeding  25(cid:216)%  of  the  total  eligible  capital  expenditure  (cf.  Regional  aid  guidelines,
point  4.6).

(ˇ)

Investment  expenditure  that  cannot  be  depreciated  over  the  lifetime  of  the  investment  project.

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4.5.

Financing  of  total  project  costs

4.5.1.(cid:217)Indicate  the  financing  of  the  total  cost  of  the  investment  project  by  filling  in  the  following  table:

Amount

Year  1

Year  2

Year  3

Etc.

Internal  resources

Equity  contributions

Borrowing  from  private  institutions

Borrowing  from  public  institutions

Public  assistance
(national  and  Community)

Other  (specify)

Total(cid:218)

4.6.

Employment  creation

4.6.1.(cid:217)Does  the  project  create  new  permanent  jobs  (full(cid:220)time  equivalent)?  If  yes,  provide  a  number  of  the

jobs  to  be  created  and  over  which  period  as  well  as  a  description  of  the  jobs  to  be  created.

4.7.

Safeguard  of  existing  employment

4.7.1.(cid:217)Does  the  project  safeguard  existing  permanent  jobs?  If  yes,  provide  a  number  of  the  jobs  to  be

safeguarded  and  over  which  period  as  well  as  a  description  of  the  jobs  to  be  safeguarded;

4.7.2.(cid:217)explain  in  detail  the  re(cid:220)training  in  average  number  of  hours  and  cost  (excluding  the  salaries  of  the

trainees)  necessary  to  safeguard  these  permanent  jobs;

4.7.3.(cid:217)explain  why  these  jobs  would  be  at  imminent  risk  if  the  project  was  not  realized.

CAPACITY  CONSIDERATIONS  AND  AFFECTED  MARKET(S)

SECTION  5

(The  information  to  be  given  in  this  section  is  used  to  determine  the  outcome  of  the  application  of  the
competition  assessment  factor.  A  definition  of  the  relevant  market(s)  as  well  as  a  definition  of  structural
overcapacity  and  market(s)  in  decline  are  given  in  the  appendix.)

5.1. Characterisation  of  product(s)  envisaged  by  the  project

5.1.1.(cid:217)Specify  the  product(s)  that  will  be  produced  in  the  aided  facility  upon  the  completion  of  the
investment  (indicate  the  CN  code)  and  the  relevant  (sub(cid:220))sector(s)  to  which  the  product(s)  belong(s)
(indicate  the  NACE  code);

5.1.2.(cid:217)what  product(s)  will  it  replace?  If  these  replaced  products  are  not  produced  at  the  same  location,

indicate  where  they  are  currently  produced;

5.1.3.(cid:217)what  other  product(s)  can  be  produced  with  the  same  new  facilities  at  little  or  no  additional  cost?

5.2. Characterisation  of  relevant  geographic  market(s)

5.2.1.(cid:217)Specify  the  relevant  geographic  market(s)  where  different  from  EEA;

5.2.2.(cid:217)why  is  the  geographic  market  considered  to  be  different  from  EEA?

5.3. Capacity  considerations

5.3.1.(cid:217)Quantify  the  impact  of  the  project  on  the  aid  recipient’s  total  viable  capacity  in  the  EEA  (including
at  Group  level)  for  each  of  the  product(s)  concerned  (in  units  per  year  in  the  year  preceding  the  start
year  and  on  completion  of  the  project).

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5.3.2.(cid:217)Provide  an  estimate  of  the  total  EEA  (or  of  the  relevant  geographic  market)  capacity  utilisation  rate
of  the  relevant  (sub(cid:220))sector(s)  for  the  last  five  years.  What  proportion  of  this  capacity  during  this
period  is  accounted  for  by  the  aid  recipient  and  what  has  been  its  rate  of  capacity  utilisation  in  the
relevant  (sub(cid:220))sector?

5.4. Market  data

5.4.1.(cid:217)Provide  for  each  of  the  last  five  financial  years  data  on  apparent  consumption(cid:216)(—)  of  the  product(s)

concerned.  If  available,  include  statistics  prepared  by  other  sources  to  illustrate  the  answer;

5.4.2.(cid:217)provide  for  the  next  three  financial  years  a  forecast  of  the  evolution  of  apparent  consumption  of  the
product(s)  concerned.  If  available,  include  statistics  prepared  by  other  sources  to  illustrate  the
answer;

5.4.3.(cid:217)is  the  relevant  market  in  decline  and  for  what  reasons?  If  not,  why?

5.4.4.(cid:217)An  estimate  of  the  market  share  (in  value)  of  the  aid  recipient  or  of  the  group  to  which  the  aid

recipient  belongs  in  the  year  preceding  the  start  year  and  on  completion  of  the  project.

SECTION  6

REGIONAL  IMPACT

(The  information  to  be  given  in  this  section  is  used  to  determine  the  outcome  of  the  application  of  the
regional  impact  assessment  factor.)

6.1.

Information  on  the  employment  created  with  first(cid:220)tier  suppliers  and  customers  of  the  aid  recipient

6.1.1.(cid:217)In  the  opinion  of  the  Member  State  and/or  aid  recipient,  which  of  the  three  options  below  best
describes  the  degree  of  jobs  created  with  first(cid:220)tier  suppliers  and  customers  resulting  from  the  project:

(i)(cid:217)high  degree  of  job  creation  for  each  job  created  by  the  aid  recipient  (more  than  100(cid:216)%);

(ii)(cid:217)medium  degree  of  job  creation  for  each  job  created  by  the  aid  recipient  (between  50(cid:216)%(cid:220)100(cid:216)%);

(iii)(cid:217)low  degree  of  job  creation  for  each  job  created  by  the  aid  recipient  (less  than  50(cid:216)%)?

6.1.2.(cid:217)Justify  and  explain  your  answer  to  the  previous  question.

6.1.3.(cid:217)Provide  as  complete  a  list  as  possible  of  the  prospective  first(cid:220)tier  suppliers  for  the  new  production

within  the  assisted  region  and/or  assisted  regions.

6.1.4.(cid:217)Provide  as  complete  a  list  as  possible  of  the  prospective  customers  for  the  new  production  within  the

assisted  region  and/or  assisted  regions.

(—)(cid:217)Production  plus  imports  minus  exports.