WRITTEN QUESTION E-2385/03 by Christopher Huhne (ELDR) to the Commission. State aids assessment.
Date: 2003-07-18
Institutions: European Parliament, Provisional data
Subjects: State aid, United Kingdom, aid system, control of State aid, exchange of information, industrial building, less-favoured region, stamp duty, tax exemption

20.3.2004

EN

Official Journal of the European Union

C 70 E/93

Answer given by Mr Monti on behalf of the Commission

(12 September 2003)

It has to be noted that the press notice only gives a summary of the decision and, in order to obtain
1.
more details, the Commission would refer the Honourable Member to the reasoning in Commission
Decision 2003/433/EC of 21 January 2003 on the aid scheme ‘Stamp duty exemption for non-residential
properties in disadvantaged areas’ notified by the United Kingdom (1).

The Commission would like to remind that in the field of the administrative procedure instituted
2.
under Article 88(2) of the EC Treaty, it is settled case-law that: ‘the Commission is not obliged to forward
to interested parties the observations or information it has received from the government of the Member
State. However, it should be observed that the limited nature of the rights of parties concerned does not
affect the Commission’s duty under Article 253 EC to provide an adequate statement of reasons for its final
decision’ (2).
the Commission would like to indicate that United
Kingdom’s comments are all gathered under heading IV of the above-mentioned Commission decision and
subsequently analysed under heading VI on ‘assessment of the aid’.

this jurisprudence,

In the light of

(1) OJ L 149, 17.6.2003.
(2) Case T-613/97, Ufex and others v Commission, [2000] ECR II-04055, paragraph 90.

(2004/C 70 E/097)

WRITTEN QUESTION E-2385/03

by Christopher Huhne (ELDR) to the Commission

(18 July 2003)

Subject: State aids assessment

1. Will the Commission state the reasons why, despite the scepticism in evidence in its invitation to
comment published in the Official Journal of 27 April 2002, it changed its mind concerning these state
aids? What are the criteria that it applied in this case?

Did cost effectiveness in the pursuit of public policy objectives in any way enter into the assessment

2.
and if not, why not?

Is the Commission of the view that this is one of the most cost-effective ways that a Member State

3.
has yet devised to encourage economic activity in disadvantaged regions?

4. Will the Commission give its estimate of the likely deadweight cost (cid:1) i.e. the cost to the public
exchequer not related to the achievement of the objectives (cid:1) involved in the UK Government’s decision to
provide stamp duty exemption for non-residential property in disadvantaged areas?

Answer given by Mr Monti on behalf of the Commission

(12 September 2003)

The Commission would like to recall that the invitation to comment published in the Official Journal
1.
of the European Union (1) was the Commission Decision on the opening of procedure. Article 6 of the
Council Regulation on State aid procedure (2) provides that a decision to initiate the formal investigation
procedure must include a ‘preliminary assessment of the Commission as to the aid character of the
proposed measure’.

It is settled case-law that: ‘It follows that the classification of a measure as State aid in a decision to initiate
the formal investigation procedure is merely provisional. The very aim of initiating the procedure is to
enable the Commission to obtain all the views it needs in order to be able to adopt a definitive decision on
the point’ (3).

C 70 E/94

Official Journal of the European Union

EN

20.3.2004

The Commission considers thus that it did not change its mind, as the Honourable Member suggests, but
merely gave a preliminary assessment and invited interested parties to comment in order to be able to take
a final decision. The criteria that it applied in that case were those stated in its final Decision (4),
in particular, under heading VI entitled ‘assessment of the aid.’

2. and 3.
The assessment of the notified scheme was made on the basis of the following considerations:
State aid character of the measure, its legality and exemption grounds. Within the heading of exemption
grounds, the Commission analysed the compatibility of the scheme with a number of its guidelines and
finally its compatibility with Article 87(3)(c) of the EC Treaty in the light of Community objectives and the
effect on trading conditions between Member States.

low-return investment,

The cost-effectiveness of the scheme was addressed by the Commission in points 56 and 57 of its
Decision. According to the first, ‘as a regeneration instrument, the stamp duty exemption could fulfil the
economic rationale of contributing to reducing risks for investors in brownfield sites. Regeneration has
traditionally been perceived as a high-risk,
in particular because there is the
perception of weak market demand; bureaucratic grant arrangements; unclear procedures in the programs
and lack of funding initiatives. Favourable conditions for investment include a perceived total return as
well as new business opportunities, transparent existing strategies and the level of risk in the project.’ Point
57 follows: ‘it is only when the risk is reduced that investment will increase: this would have several spin-
off effects such as reducing the exit-cost, which in turn will further reduce the risks of investing in urban
regeneration. The temporary exemption of the stamp duty is likely to contribute to activating the market
for regeneration and derelict land in deprived areas as well as having spill-over effects. The system itself
would be transparent which matches market demands.’ This is in addition to paragraph 62 which states
‘the average amount of aid to the individual undertakings in the proposed scheme is GBP 50 000 (around
EUR 78 500). Aid of this magnitude does not normally distort or threaten to distort competition. In cases
where the aid beneficiary receives the stamp duty exemption several times, or receives it cumulated with
other kinds of aid, the aid could be significant and thus affect competition and/or affect trade. It is
therefore imperative that the cumulation of aid is closely monitored and controlled.’

Finally, the Commission would like to remind the Honourable Member that the cost-effectiveness of the
measure will also be analysed ex post by the Commission at the time of receiving the detailed annual
imposed as a condition by Article 3 of the Commission Decision. The second paragraph of
reports,
Article 3 requires a degree of detail of the reports to allow the Commission to make an evaluation of the
effects of the scheme on the physical regeneration of the areas that benefit from it.

The Commission is well aware that for every aid scheme it approves, there may be beneficiaries who
4.
would also have invested, created jobs, provided training, etc. without the incentive of State aid. The aid
might nevertheless have affected their choice of
its timing.
The Commission is unable to assess the real dead-weight cost of the Stamp duty exemption for non-
residential properties in disadvantaged areas.

the project or

the size of

location,

(1) OJ C 102, 27.4.2002.
(2) Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for application of Article 93

(now 88) of the Treaty, OJ L 83, 27.3.1999.

(3) Case C-204/97 Portugal v Commission [2001] ECR I-3175, paragraph 33; Joined Cases T-371/94 and T-394/94

British Airways and Others and British Midland Airways v Commission [1998] ECR II-2405, paragraph 59.

(4) Commission Decision 2003/433/EC of 21 January 2003 on the aid scheme ‘Stamp duty exemption for non-

residential properties in disadvantaged areas’ notified by the United Kingdom, OJ L 149, 17.6.2003.

(2004/C 70 E/098)

WRITTEN QUESTION E-2396/03

by María Sornosa Martínez (PSE) to the Commission

Subject: Measures to combat desertification in the EU

(21 July 2003)

During the World Day to Combat Desertification and Drought organised by the United Nations in June
2003, data was made public on the effects of desertification in Mediterranean Europe. This deterioration of