Report - State Aid Scoreboard   spring 2005 update
Date: 2005-04-20
Institutions: European Commission
Subjects: Central and Eastern European countries, State aid, accession to the European Union, aid to undertakings, competition law, control of State aid, economic analysis, sectoral aid, transitional period (EU)

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 20.4.2005 
COM(2005) 147 final 

REPORT 

State Aid Scoreboard 

- spring 2005 update - 

(presented by the Commission) 

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EXECUTIVE SUMMARY 

Starting with the Lisbon agenda in 2000 which launched the process of reducing the general 
level of State aids and shifting the emphasis from supporting individual companies or sectors 
towards  tackling  horizontal  objectives  of  Community  interest,  the  Council  has  adopted  a 
series  of  conclusions  on  State  aid.  In  2001,  at  the  Stockholm  European  Council,  Member 
States  committed  themselves  “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.” The latest European Council held on 22-23 
March 2005 reiterated its call to Member States “to continue working towards a reduction in 
the general level of State aid, while making allowance for any market failures.” Similarly a 
recent  Commission  Communication1  on  the  mid-term  review  of  the  Lisbon  Strategy  stated 
that  Member  States  “should  reduce  and  redirect  State  Aids  to  address  market  failures  in 
sectors with a high growth potential as well as to stimulate innovation.” 

While a slight decline in the level of aid in relation to GDP can be observed in the majority of 
Member States, the underlying trend since the launch of the Lisbon agenda is more stable than 
downward. In contrast, Member States appear to have responded more positively to the call 
for  the  second  part  of  the  equation,  i.e.  “better  targeted  State  aid”.  As  well  as  measuring 
Member States’ progress towards these goals, this update of the Scoreboard includes a special 
focus on aid to the broadcasting sector and a summary of ongoing efforts to recover unlawful 
aid. 

This Scoreboard includes a concise update of the state aid situation in the new Member States 
over the four-year period prior to accession. The data are not directly comparable with those 
of the EU-15 Member States for various methodological reasons and therefore EU-25 figures 
will be produced only from the reference year 2004. See autumn 2004 Scoreboard for details. 

Main findings 

Slight decline in level of State aid in relation to GDP but the underlying trend is more 
stable than downward 

The  overall  level  of  State  aid2  granted  by  the  fifteen  Member  States  was  estimated  at  € 53 
billion in 2003. From the relatively high levels of State aid in the early and mid-nineties, the 
overall  volume  of  aid3  fell  dramatically  from  € 74  billion  in  1996  to  € 55  billion  in  1999. 
Between 1999 and 2001, total aid hovered around the € 55 billion mark, rising to € 57 billion 
in 2002 but then falling in 2003 by some € 4 billion to € 53 billion.  

Total  State  aid  amounted  to  0.57%  of  EU-15  GDP  in  2003  (or  0.40%  excluding  the 
agriculture,  fisheries  and  transport  sectors).  The  underlying  trend  is  stable  rather  than 
downward: for the Union as a whole, total aid amounted to 0.59% (or 0.43% excluding the 
agriculture,  fisheries  and  transport  sectors)  of  GDP  on  average  for  the  period  2001-2003 
compared  with  0.61%  (or  0.44%  excluding  the  agriculture,  fisheries  and  transport  sectors) 
during 1999-2001. A slight decrease can be observed in ten Member States. 

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2 

3 

(« Working together for growth and jobs » - COM(2005) 24, 2.2.2005, Section 3.2.2. 
Total  State  aid  in  the  sense  of  Article  (87)1  of  the  Treaty,  covering  manufacturing,  services,  coal, 
agriculture, fisheries and transport with the exception of the railway sector. 
Total excludes aid to the railway sector. 

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In sectoral terms, around € 32 billion of aid was earmarked for the manufacturing and service 
sectors, € 14 billion for agriculture and fisheries, just over € 5 billion for coal and a little over 
€ 1  billion  for  the  transport  (excluding  railways)  sector.  Finally,  in  terms  of  comparing  the 
Member States, the EU-15 average of 0.40% (total aid excluding the agriculture, fisheries and 
transport sectors) masks significant disparities: the share of aid to GDP ranged from less than 
0.20%  in  the  Netherlands  and  the  United  Kingdom  to  0.68%  in  Germany  and  0.96%  in 
Portugal. In absolute terms, Germany granted the most aid (€ 16 billion) in 2003 followed by 
France (€ 9 billion) and Italy (€ 7 billion). 

Clear  shift  in  emphasis  from  supporting  individual  companies  or  sectors  towards 
tackling horizontal objectives 

In the mid-1990s when State aid levels were much higher, the share of total aid earmarked for 
horizontal  objectives  such  as  R&D,  small  and  medium-sized  enterprises,  environment, 
employment and training and regional economic development was around 50%. In line with 
the commitments undertaken at various European Councils, Member States have continued to 
redirect aid towards such horizontal objectives. Over the period 1999-2001 to 2001-2003, the 
share  of  total  aid  for  horizontal  objectives  increased  by  5  percentage  points,  largely  as  the 
result  of  significant  increases  in  aid  for  the  environment  and  energy  saving  (+6  points)  and 
R&D (+2 points) as well as a reduction in sectoral aid for some Member States. 

By  2003,  the  share  of  horizontal  aid  had  risen  to  79%  of  total  aid  (excluding  agriculture, 
fisheries  and  transport).  The  four  main  horizontal  objectives  were  environment  and  energy 
saving  (23%  of  total  aid),  regional  economic  development  (21%),  R&D  (14%)  and  SMEs 
(13%)  –  see  Table  7.  The  remaining  21%  was  aid  directed  at  specific sectors  (mainly  coal) 
including  aid  to  rescue  and  restructure  ailing  firms.  Any  interpretation  of  the  relatively  low 
share of sectoral and ad hoc aid in the Union should take into account that some aid measures 
cannot  be  quantified.  Although  the  number  of  such  measures  is  limited,  the  distortion  of 
competition is often very significant, e.g., the unlimited State guarantees previously available 
to  Electricité  de  France  (EDF)  and  to  the  German  Landesbanken.  Another  factor  that  keeps 
the  volume  of  sectoral  and  ad  hoc  aid  artificially  low  is  that  Commission  decisions  which 
follow  a  formal  investigation  procedure  tend  to  refer  to  aid  that  was  granted  up  to  several 
years previously and involve ad hoc awards of aid to individual companies. Although the data 
for all years are adjusted retrospectively when the Commission takes its decision, the overall 
level is clearly underestimated. 

Notwithstanding  these  measurement  difficulties,  in  ten  of  the  fifteen  Member  States,  more 
than 90% of all the aid awarded in 2003 was earmarked for horizontal objectives. However, in 
Germany  (73%),  Spain  (63%),  France  (76%),  Ireland  (64%)  and  Portugal  (19%),  the  share 
was  significantly  lower.  The  high  share  of  sectoral  aid  in  Portugal  was  due  largely  to  an 
increase  in  expenditure  on  a  tax  scheme  in  Madeira  that  supports  financial  services.  In 
Ireland, although aid awarded through the Irish Corporation Tax has decreased significantly, 
it  still  accounts  for  a  relatively  high  share  of  total  aid.  Germany,  France  and  Spain  have 
relatively high shares of aid to the coal sector. 

In  the  new  Member  States,  the  share  of  pre-accession  aid  to  horizontal  objectives  was 
low  but  a  large  proportion  of  existing  aid  measures  were  earmarked  for  horizontal 
objectives 

In  the  context  of  redirecting  aid,  prior  to  accession,  aid  granted  for  horizontal  objectives 
accounted for around 24% of total aid in the new Member States. This share is rather low in 

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comparison to 79% in the EU-15 Member States in 2003. The disparity can be explained in 
part by the relatively strong support of several industries (e.g., financial sector, coal and steel) 
before  accession  in  the  context  of  privatisation  or  to  ensure  viability.  There  were  large 
disparities between countries in the share of sectoral objectives ranging from 28% of total aid 
in Slovenia to 90% or more in Lithuania, the Czech Republic and Malta. In Estonia, no aid 
was earmarked for sectoral objectives. It is encouraging to note that a large proportion of the 
aid  measures  qualifying  as  existing  aid  upon  accession  were  earmarked  for  horizontal 
objectives. 

Overall  level  of  aid  earmarked  for  the  least  developed  regions  remains  around  the 
€ 8 billion mark, around one fifth of total aid 

In  the  EU-15  an  estimated  € 7.6  billion  of  aid  was  earmarked  exclusively  for  the  least 
developed  regions,  the  so-called  assisted  ‘a’  regions  in  2003.  This  represented  around  one 
fifth  of  total  aid  (less  agriculture,  fisheries  and  transport).  Aid  to  the  assisted  ‘a’  regions, 
which  are  almost  identical  to  the  Objective  1  regions  under  the  EU  Structural  Funds,  fell 
dramatically  from  a  peak  of  € 28  billion  in  1993  to  € 9  billion  in  2000,  due  largely  to  a 
reduction in aid in Germany and Italy. While aid to the least developed regions continues to 
decrease in Germany (only € 1 billion was exclusively earmarked in 2003) there has been an 
upturn in Italy. 

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

As  to  the  instruments  used  when  aid  is  awarded  to  the  manufacturing  and  service  sectors, 
grants were by far the most frequently used form making up around two-thirds (67%) of total 
State  aid  in  EU-15  during  the  period  2001-2003.  In  addition  to  aid  awarded  through  the 
budget, other aid is paid through the tax or social security system. Tax exemptions made up 
23%  of  the  total.  While  Belgium,  Denmark,  Spain,  Luxembourg,  Austria  and  Sweden 
provided at least 85% of their aid in the form of grants, other Member States tended to make 
greater  use  of  tax  exemptions,  particularly  Germany  (29%),  Ireland  (62%)  and  Portugal 
(82%). 

Following  the  adoption  of  the  Broadcasting  Communication  in  2001,  the  Commission 
has analysed the financing of broadcasting systems in several Member States. 

Starting  in  the  seventies,  broadcasting  has  gradually  been  opened  up  to  competition. 
Nevertheless,  as  has  been  recognised  in  Community  Primary  law,  namely  the  Amsterdam 
Protocol  concerning  public  service  broadcasting,  the  importance  of  broadcasting  for  social, 
democratic and cultural life continues to explain Member State’s willingness to compensate 
for  well-defined  public  service  obligations  complying  with  the  principles  of  entrustment, 
transparency4 and proportionality. This update of the Scoreboard includes an in-depth look at 
the State financing of public service broadcasting by describing the State aid rules applicable 
in this area.  

The  Commission  continues  to  investigate  the  financing  of  broadcasting  systems  in  several 
Member States to check whether or not a particular case involves State aid and if so whether 

4 

It  should  however  be  noted  that  Directive  2004/18/EC  on  public  procurements  does  not  apply  to 
broadcasting activities. 

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there has been any overcompensation. In this context, new challenges are expected to emerge 
as technological developments further change the broadcasting landscape. 

Around 12% of all State aid cases registered in 2004 were non notified measures 

In  2004,  there  were  just  under  700  cases  registered  by  the  Commission  of  which  570  were 
notified  by  Member  States  and  87  (around  12%)  non-notified  cases  initiated  by  the 
Commission.  Of  the  87  non-notified  cases,  20  concerned  Italy,  19  Germany,  11  the  United 
Kingdom and 7 France. Around 47% of the cases concerned the agricultural sector, 43% the 
manufacturing and service sectors, 7% transport and energy and 4% the fisheries sector.  

With  a view  to reducing the  administrative  burden for specific types of  aid,  State  aid  block 
exemption regulations have been introduced over the last four years. To date, more than 900 
information  sheets  have  now  been  submitted  covering  aid  to  SMEs,  training,  employment 
and,  more  recently,  certain  types  of  aid  in  the  fisheries  sector  and  aid  to  SMEs  in  the 
agricultural sector. Five Member States, Italy (26% of the total), the United Kingdom (22%), 
Germany  (11%),  Spain  (8%)  and  Belgium  (7%)  accounted  for  75%  of  all  the  information 
forms  submitted  in  2004.  Compared  with  2003,  virtually  all  other  Member  States  increased 
their  use  of  the  possibilities  offered  to  exempt  aid.  Six  of  the  ten  new  Member  States  also 
submitted information forms on exempted aid by the end of 2004. 

In 2004, the Commission approved the award of State aid in 93% of its decisions 

In 2004, the Commission took 566 final decisions. In around 87% of cases, the Commission 
approved  the  aid  without  carrying  out  a  formal  investigation  procedure.  A  further  6%  were 
approved at the end of a formal investigation procedure while in the remaining 7% of cases 
the  Commission  took  a  negative  decision  after  concluding  that  the  aid  did  not  comply  with 
State aid rules and hence was not compatible with the Common Market.  

Of the 118 negative decisions over the period 2001-2003, more than half concerned Germany 
(35)  and  Italy  (25).  Only  two  other  Member  States,  Spain  (13)  and  France  (12)  reached 
double-figures  with  as  many  as  nine  of  the  EU-15  Member  States  having  less  than  five 
negative decisions in the last three years. 

Around € 4.6 billion of unlawful aid remains to be recovered 

Recovery  of  incompatible  state  aid  is  a  lengthy  process:  21  of  the  recovery  decisions  still 
pending at the end of 2004 were adopted before the year 2000. Of the 91 decisions adopted 
between 2000 and 2004, only 21 were closed by the end of 2004. 

Of  the  € 9.7  billion  of  aid  (for  which  the  aid  amount  is  known)  to  be  recovered  under 
decisions  adopted  since  2000,  some  € 6.7  billion  (including  interest)  had  been  effectively 
recovered  by  the  end  of  2004.  Four  Member  States  (Germany,  Spain,  Italy  and  France) 
account for more than 90% of the pending recovery cases. 

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INTRODUCTION 

The main aim of this update of the Scoreboard is to assess Member States progress towards 
meeting  the  Lisbon  objectives  and  more  specifically  the  specific  commitments  agreed  at 
Stockholm  in  2001  to  show  a  downward  trend  in  the  level  of  State  aid  relative  to  GDP  by 
2003 while redirecting aid from specific sectors to horizontal objectives. The recent European 
Council held on 22-23 March 2005 reiterated its call to Member States “to continue working 
towards a reduction in the general level of State aid, while making allowance for any market 
failures.” 

As  underlined  by  the  European  Council  of  November  2004  and  the  Commission 
Communication1 on the mid-term review of the Lisbon Strategy in February 2005, there is a 
need for renewed impetus to the so-called Lisbon Strategy. As described in the Commission 
Communication  on  “A  pro-active  Competition  Policy  for  a  Competitive  Europe”5,  State  aid 
policy does contribute to the Lisbon objectives by avoiding distortions of competition while 
allowing aid to horizontal measures which address market failures.  

While state aid levels fell dramatically in the 1990s, since the year 2000 the trend has been 
more stable than downward. In contrast, throughout the Union Member States have shifted or 
are  shifting  the  emphasis  from  supporting  individual  companies  or  sectors  towards  tackling 
horizontal objectives of Community interest.  

Clearly there are areas in which more progress can be achieved. Under the Danish Presidency 
in 2002, Council conclusions on State aid were adopted in which Member States were invited 
not  only  to  “consider  before  granting  State  aid  whether  it  is  targeted  on  clearly  identified 
market failures…” but to also consider “whether an intervention in the form of State aid is the 
most  appropriate  and  effective  way  to  address  these  issues”.  Furthermore,  Member  States 
pledged 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”. While significant progress has been made in several Member States (see autumn 
2003 and 2004 updates of the Scoreboard), a more concerted effort is required to ensure that 
distortions of competition are reduced to a minimum and that, also in the face of constraints 
on  national  public  finances,  the  granting  of  aid  is  targeted  as  far  as  possible  at  meeting  the 
Lisbon objectives. 

The Scoreboard is divided into three main parts. Part one looks at the extent to which Member 
States  have  responded  to  the  Lisbon  Strategy  by  first  providing  an  overview  of  the  amount 
and type of (potentially) distortive State aid awarded by the Member States in 2003 and then 
examining the underlying trends. This part also includes a focus on how the Commission has 
dealt with a series of cases on State aid awarded to public service broadcasters, an area which 
has aroused much interest in recent years.  

Part  Two  looks  in  some  detail  at  State  aid  control  procedures  and  includes  an  extensive 
section on the recovery of unlawful State aid. Finally, part three summarises ongoing work to 
modernise State aid control through legislative and policy means.  

5 

COM(2004) 293, 20.4.2004. 

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Improvements have been made to the quality and timeliness of the State aid data published in 
this Scoreboard. A revised Standardised Reporting Format6 means that Member States submit 
information on all existing State aid measures in a harmonised way. The revision also aims to 
improve  the  timeliness  of  the  data  so  that  expenditure  figures  for  2004  should  be  published 
already in the autumn 2005 Scoreboard. 

In addition to this paper edition, a permanent online Scoreboard consisting of a series of key 
indicators and a range of statistical information for the EU Member States is available on the on 
site 
the 
(http://europa.eu.int/comm/competition/state_aid/scoreboard/).  

the  Competition  Directorate  General’s 

homepage 

Internet 

of 

6 

The  new  provisions  can  be  found  in  Commission  Regulation  (EC)  No  794/2004  of  21  April  2004. 
Annex  IIIA  covers  all  sectors  except  agriculture  (Annex  IIIB)  and  fisheries  (Annex  IIIC)  : 
http://europa.eu.int/eur-lex/en/archive/2004/l_14020040430en.html 

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What is a State Aid ?  

This Scoreboard covers State aid as defined under Article 87(1) EC Treaty7 that has been granted by 
the EU Member States up to the end of 2003 and has been the subject of a final Commission decision8. 
General  measures and public subsidies  that have no affect on trade and do not distort or threaten to 
distort competition are not dealt with in the Scoreboard as they are not subject to the Commission’s 
investigative  powers.  All  aid  compensating  for  services  of  general  economic  interest  (SGEI)  is  also 
excluded from the Scoreboard (see below). 

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. 
In  order  to  determine  whether  a  measure  constitutes  State  aid,  a  distinction  has  thus  to  be  drawn 
between the situation where the support is directed at certain undertakings or the production of certain 
goods, as specified in Article 87(1) of the Treaty, and the situation where the measures in question are 
equally applicable throughout the Member State and are intended to favour the whole of the economy. 
In the latter case, there is no State aid within the meaning of Article 87(1).  

This  selective  character  thus  distinguishes  State  aid  measures  from  general  economic  support 
measures.  Most  nation-wide  fiscal  measures  would  be  regarded  as  general  measures  as  they  apply 
across the board to all firms in all sectors of activity in a Member State. The distinction is, however, 
not always clear-cut. For example, a measure that is open to all sectors may be selective if there is an 
element of discretion by the awarding authorities. On the other hand, the fact that certain companies 
might  benefit  more  than  others  from  a  measure  does  not  necessarily  mean  that  the  measure  is 
selective. The interpretation of the concept of selectivity has evolved over the years following various 
Commission  decisions  and  Court  rulings.  Details  of  the  most  important  cases  can  be  found  on  the 
Commission  website  at  http://europa.eu.int/comm/competition/state_aid/register/  or  in  recent  Annual 
Competition Reports at http://europa.eu.int/comm/competition/annual_reports/. 

The distinction between State aid measures and general economic support measures should be borne in 
mind when interpreting some of the data included in the Scoreboard. Some of the detailed statistical 
tables  in  the  online  Scoreboard  show  that  in  some  Member  States  the  amount  of  State  aid  for  some 
horizontal  objectives  such  as  employment  or  training  has  fallen  or  remained  stable.  This  does  not 
however  mean  that  public  expenditures  on  these  activities  have  fallen.  Instead,  Member  States  may 
have increased spending on general economic support measures. 

Another important area concerns aid which compensates for the provision of SGEI. In its judgment in 
the Altmark case9, the Court of Justice ruled that compensation to undertakings that perform a SGEI is 
not State aid, provided certain conditions are fulfilled. As a result, similar measures are now classed as 
aid,  or  non-aid  depending,  for  example,  on  whether  a  certain  kind  of  tender  was  used.  All  aid 
compensating for SGEI is therefore excluded from the Scoreboard. In contrast, in cases where part of 
the  aid  is  found  to  overcompensate  for  the  SGEI  the  appropriate  amount  is  included,  e.g.,  in  the 
Deutsche Post case10. 

The above text is without prejudice to the definition of State aid as provided by the Court of Justice. 

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The  measure  constitutes  state  aid  if  it  is  granted  by  a  Member  State  or  through  State  resources,  it 
distorts or threatens to distort competition, it favours certain undertakings or the production of certain 
goods, and it affects trade between Member States. 
Expenditure under the block exemption regulations is also included. 
Case C-280/00 of 24 July 2003 concerning the grant of licences for scheduled bus transport services in 
the Landkreis of Stendal (Germany) and public subsidies for operating those services.  
C 61/1999 in which the Commission reached a negative decision on 19.6.2002. 

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1. 

PART ONE: PROGRESS TOWARDS THE LISBON AGENDA 

This  chapter  provides  an  overview  of  (potentially)  distortive  State  aid  granted  in  the  EU 
Member States up to 2003 in order to measure Member States response to the Lisbon agenda 
and  more  specifically  the  commitments  agreed  at  Stockholm  in  2001  to  show  a  downward 
trend  in  the  level  of  State  aid  relative  to  GDP  by  2003  while  redirecting  aid  from  specific 
sectors to horizontal objectives. 

1.1. 

State aid in absolute and relative terms 

Total State aid11 granted by the fifteen Member States was estimated at € 53 billion in 2003. 
In  absolute  terms,  Germany  granted  the  most  aid  (€ 16  billion)  in  2003  followed  by  France 
(€ 9 billion) and Italy (€ 7 billion).  

Table 1: State aid awarded in the EU-15 Member States, 2003 

Total state aid less railways in billion €

Total state aid less agriculture, fisheries 
and transport in billion €

EU-15

BE

DK

DE

EL

ES

FR

IE

IT

LU

NL

AT

PT

FI

SE

UK

52.8

1.1

1.3

16.4

0.6

4.0

8.8

0.9

7.1

0.1

1.5

1.5

1.6

2.0

1.6

4.2

Total aid less railways as % of GDP

0.57

0.40

0.67

0.77

0.40

0.54

0.57

0.69

0.54

0.30

0.33

0.66

1.24

1.41

0.60

0.26

37.3

0.7

0.9

14.4

0.3

3.2

4.8

0.4

5.7

0.0

0.5

0.6

1.3

0.5

1.0

3.0

Total aid less agriculture, fisheries and 
transport as % of GDP

0.19  
(Potentially) distortive State aid as defined under Article 87(1) EC Treaty that has been granted by the fifteen 
Member States for all sectors except railways and has been examined by the Commission. All data are quoted at 
constant prices. Source: DG Competition 

0.22

0.43

0.31

0.15

0.40

0.24

0.49

0.68

0.31

0.44

0.11

0.96

0.36

0.39

0.26

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

In relative terms, State aid amounted to 0.57% of EU Gross Domestic Product (GDP) in 2003. 
This  average  masks  significant  disparities  between  Member  States:  the  share  of  total  aid  to 
GDP  ranges  from  0.26%  in  the  United  Kingdom  to  1.41%  in  Finland  (Table  1).  The  high 
proportion  in  Finland  can  be  explained  by  the  relatively  large  amount  of  aid  to  agriculture 
which represents more than 70% of total aid in this country. Indeed, due to the particularities 
associated  with  aid  to  agriculture  and  fisheries,  it  is  worth  looking  at  total  aid  less  these 
sectors.  This  second  indicator  produces  a  rather  different  ranking  of  Member  States  (Graph 
1). For example, such aid in Finland represents 0.36% of GDP, just below the EU-15 average 
of 0.40%. Germany (0.68%) and Portugal (0.96%) remain well above the average. 

11 

The  total  covers  aid  to  manufacturing,  services,  coal,  agriculture,  fisheries  and  part  of  the  transport 
sector but excludes aid to the railway sector (see section 1.3). 

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Graph 1: State aid as a percentage of GDP, 2003 

BE

DK

DE

GR

ES

FR

IE

IT

LU

NL

AT

PT

FI

SE

UK

in %

1.60

1.40

1.20

1.00

0.80

0.60

0.40

0.20

0.00

EU-
15

Total aid less railways

Total aid less agriculture, fisheries and transport

Source: DG Competition 

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

From the relatively high levels of State aid in the early and mid-nineties, the overall volume 
of aid12 fell dramatically from € 74 billion in 1996 to € 55 billion in 1999 (Table 2). The four 
Member  States  that  contributed  most  to  this  marked  decrease  were  Italy,  Germany,  France 
and  the  United  Kingdom.  In  Germany,  this  can  be  attributed  to  the  phasing  out  of  the 
enormous  restructuring  programme13  carried  out  in  the  new  German  Bundesländer.  In  Italy 
too, aid to the least developed regions fell sharply while in France, aid levels were particularly 
high in the mid to late 1990s due to the large amounts of rescue and restructuring aid awarded 
to  the  banking  sector.  In  the  United  Kingdom,  aid  to  the  coal  sector  dropped  considerably 
over this period.  

Between 1999 and 2001, total aid hovered around the € 55 billion mark, rising to € 57 billion 
in 2002 but then falling in 2003 by some € 4 billion to € 53 billion. However, the underlying 
trend  as  measured  by  the  two  periods  1999-2001  and  2001-2003  does  not  show  any 
significant change in the overall level of aid (Table 2). 

12 

13 

Total excludes aid to the railway sector. 
Aid given via the Treuhandanstalt or the Bundesanstalt für vereinigungsbedingte Sonderaufgaben. 

EN 

10 

   EN 

 
 
                                                 
Table 2: Trend in the level of State aid, EU-15, 1992-2003 

Total state aid less railways in 
billion €

Total state aid less agriculture,
fisheries and transport in billion €

Total aid less railways as % of 
GDP

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Average 
1999-2001

Average 
2001-2003

75.1

80.2

77.3

76.0

73.9

93.8

62.8

55.0

55.2

55.3

57.4

52.8

55.2

55.2

57.9

64.1

59.0

56.4

55.4

74.9

47.6

39.0

39.8

40.2

40.9

37.3

39.7

39.5

1.09

1.18

1.10

1.00

0.95

1.15

0.74

0.63

0.60

0.59

0.61

0.57

0.61

0.59

Total aid less agriculture, fisheries 
and transport as % of GDP

0.42  
Note:  The  exceptionally  high  figure  in  1997  can  be  largely  attributed  to  the  Credit  Lyonnais  case  in  France. 
Source: DG Competition. 

0.74

0.84

0.43

0.71

0.45

0.84

0.94

0.91

0.43

0.44

0.40

0.56

0.44

At  the  Stockholm  European  Council  in  2001,  Member  States  pledged  to  demonstrate  a 
downward trend in State aid in relation to GDP by 2003. This indicator can be measured by 
looking  at  year  on  year  changes,  i.e.  the  trend  from  2002  to  2003  or  by  observing  the 
underlying  trend over the periods 1999-2001 and 2001-2003. In order to eliminate as far as 
possible annual fluctuations, the latter option is preferred. For the Union as a whole, total aid 
amounted  to  0.59%  of  GDP  on  average  for  the  period  2001-2003  compared  with  0.61% 
during  1999-2001.  A  slight  decrease  can  be  observed  in  ten  Member  States.  Ireland 
experienced  the  sharpest  fall  between  the  two  periods  under  review.  In  Ireland,  this  is 
primarily the result of a cut in the Irish Corporation Tax14 coupled with an increase in GDP. 
In contrast, aid in relation to GDP increased slightly in four Member States though for three 
of them the rise can be explained largely by increases in aid for horizontal objectives: R&D 
and  environment  aid  in  the  United  Kingdom,  aid  for  energy  saving  in  Sweden,  and  aid  for 
several horizontal objectives including cohesion in Italy. In spite of the increases, these three 
Member  States  lie  below  the  EU-15  average.  In  Portugal,  the  increase  is  due  largely  to  a 
sizeable  increase  in  a  regional  aid  tax  scheme  in  Madeira  that  mainly  supports  financial 
services15 (Graph 2). 

In making comparisons between Member States, it is important to bear in mind the effect that 
the trend in GDP has on this indicator. Member States which have experienced relatively high 
economic  growth  over  the  period  under  review  could  theoretically  increase  the  level  of  aid 
and still demonstrate a downward trend. 

14 

15 

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. 
Although  the  scheme  was  stopped  in  2000  and  there  are  no  new  companies  benefiting  from  the  aid, 
there is considerable ongoing expenditure. Payments will cease in 2011. 

EN 

11 

   EN 

 
                                                 
Graph 2: Trend in State aid as a percentage of GDP, 1999 – 2003 (Stockholm 
‘Reduction’ indicator) 

in %

1.6

1.4

1.2

1.0

0.8

0.6

0.4

0.2

0.0

EU-
15

BE

DK

DE GR

ES

FR

IE

IT

LU

NL

AT

PT

FI

SE

UK

1999-2001

2001-2003

Source: DG Competition. 

1.2. 

Sectoral distribution of aid 

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

The data currently available do not provide an accurate picture of the final recipients of the 
aid.  Nevertheless,  they  do  give  some  indication  as  to  which  sectors  are  favoured  by  each 
Member  State.  In  2003,  around  60%  of  State  aid  in  the  Union  was  earmarked  for  the 
manufacturing16  and  service  sectors.  A  further  27%  was  directed  towards  agriculture17  and 
fisheries,  10%  for  coal  and  the  remaining  2%  going  to  the  transport  (excluding  railways) 
sector (Graph 3) 

There are significant differences between Member States in the sectors to which they direct 
aid (Table 3). Aid directed at the manufacturing and service sectors represented between 70% 
and  80%  of  total  aid  in  Denmark,  Italy,  Portugal  and  the  United  Kingdom.  Aid  to  the 
agricultural  and  fisheries  sectors  accounted  for  20%  or  less  of  overall  aid  in  Denmark, 
Germany, Spain and Italy while in Austria, the Netherlands and Finland the share was more 
than 60%. Aid to the coal industry made up 20% of total aid in Germany and 28% in Spain. 

16 

17 

For the purposes of the Scoreboard, the manufacturing sector includes aid for steel, shipbuilding, other 
manufacturing  sectors,  aid  for  general  economic  development  and  aid  for  horizontal  objectives 
including research and development, SMEs, environment, energy saving, employment and training for 
which  the  specific  sector  is  not  always  known.  As  a  result,  data  on  aid  to  manufacturing  may  be 
overestimated.  
Data for the agricultural sector refer to the year 2002 as figures for 2003 are not yet available. 

EN 

12 

   EN 

 
 
                                                 
Between 1999-2001 and 2001-2003, this sectoral distribution remained relatively unchanged.  

Graph 3: Total State aid by sector, EU-15, 2003 

Agriculture and 
Fisheries
27%

Coal
10%

Transport 
excluding 
railw ays
2%

Manufacturing 
and services
61%

Note: (Potentially) distortive State aid as defined under Article 87(1) EC Treaty that has been granted by the 
fifteen Member States for all sectors except railways and has been examined by the Commission. Source: DG 
Competition, DG Transport and DG Fisheries and DG Agriculture. Data for agriculture refer to the year 2002. 

Table 3: Sectoral distribution of aid by Member State, 2003 

Manufacturing

EU-15
BE
DK
DE
EL
ES
FR
IE
IT
LU
NL
AT
PT
FI
SE
UK

55
57
71
62
51
49
40
37
74
51
33
36
14
24
57
70

Services
(including tourism,
financial, media and
culture)
6
4
3
5
2
2
3
8
6
-
0
3
63
1
7
0

% of total

Million euro

Agriculture

Fisheries

Coal

Transport 
excluding 
railways

Other non-
manufacturing

Total

26
37
20
12
44
18
40
55
16
49
66
60
22
74
25
24

1
0
0
0
2
3
0
1
1
-
1
0
1
0
0
2

10
-
-
20
-
28
10
-
-
-
-
-
-
-
-
1

2
1
6
1
-
0
5
0
3
-
-
0
0
0
10
3

0
-
-
0
1
0
0
-
0
-
-
-
-
-
0
1

52775
1075
1254
16431
615
4019
8827
934
7087
71
1505
1495
1616
2028
1609
4209

Due to the rounding of figures, the percentages of some Member states do not sum up to exactly 100. Source: 
DG Competition, DG Transport and DG Fisheries and DG Agriculture. Data for agriculture refer to the year 
2002. 

EN 

13 

   EN 

 
 
 
1.3. 

State aid to the transport sector  

The Commission’s State aid control in the transport sector is rather complex arising from the 
need to take account not only of the general provisions on State aid, but also the special rules 
in  the  Treaty  and  secondary  legislation  dealing  specifically  with  transport,  in  particular 
Article  73  of  the  Treaty  as  implemented  by  Regulations  (EEC)  No  1191/6918,  (EEC)  No 
1107/7019  and  (EEC)  No  1192/6920.  In  addition,  to  reinforce  the  Internal  market  and 
economic and social cohesion, Article 154 EC Treaty provides for Community support, in the 
context of open and competitive markets, of trans-European networks. The transport sector, in 
particular  the  railways,  continues  to  benefit  from  a  considerable  amount  of  public  financial 
support. Relatively large subsidies are paid as compensation for the provision of services of 
general  economic  interest  (SGEI)  and,  as  such,  some  of  them  are  exempted  from  prior 
notification  to  the  Commission21.  This  may  also  apply  to  a  substantial  part  of  public 
investment in transport infrastructures that are open to all users on a non-discriminatory basis 
and which do not benefit a particular undertaking carrying out an economic activity. As such 
these subsidies do not constitute State aid in the meaning of Article 87(1). 

For  the  transport  sector  as  a  whole,  excluding  railways,  around  € 1.5  billion  of  aid  was 
awarded  per  year  over  the  period  2001-2003.  This  represents  an  increase  of  around  50%  in 
relation to the period 1999-2001 (Table 4).  

Two-thirds  of  total  transport  aid  (around  € 1  billion)  was  awarded  to  the  maritime  sector 
every year during the period 2001-2003. Sizeable amounts were given by Denmark, France, 
Italy, the Netherlands, Sweden and the United Kingdom. 

Before liberalisation of the airline sector, considerable amounts of aid (exceeding € 2.5 billion 
in  1994  and  1995)  were  awarded  to  national  airlines  for  restructuring  in  the  mid-nineties. 
Since  1997,  however,  aid  levels  to  the  industry  have  fallen  dramatically  though  some  aid 
continues to be authorised. Over the period 2001-2003, an annual average of € 265 million of 
aid  was  awarded  to  the  air  transport  sector  (Table  4).  The  increase  as  compared  to  the 
previous  period  is  mainly  due  to  the  impact  that  the  11/9/2001  attacks  had  on  the  aviation 
industry and the subsequent public support measures that became necessary following those 
attacks. 

18 

19 

20 

21 

Regulation (EEC) No 1191/69 of the Council of 26 June 1969 on action by Member States concerning 
the obligations inherent in the concept of a public service in transport by rail, road and inland waterway. 
Regulation (EEC) No 1107/70 of the Council of 4 June 1970 on the granting of aid for transport by rail, 
road and inland waterway. 
Regulation  (EEC)  No  1192/69  on  common  rules  for  the  normalisation  of  accounts  of  railway 
undertakings  is  particularly  important  from  a  State  aid  monitoring perspective  as  it  exempts  from  the 
notification  procedure  a  number  of  different  compensations  from  public  authorities  to  railway 
undertakings. 
In  particular,  Article  17(2)  of  Regulation  (EEC)  1191/69  exempts  from  the  notification  procedure 
compensations paid pursuant to the provisions laid down in the regulation. 

EN 

14 

   EN 

 
                                                 
Table 4: State aid to the transport sector (excluding railways), 1999-2003 

Annual average 1999-
2001

Annual average 2001-
2003

€ million

129
691
4
116
940

196
998
3
265
1 462

Transport sector

Road and combined transport
Maritime transport
Inland water transport
Air transport
Total

Source: DG Energy and Transport 

Railways 

The Commission has for some years pursued a policy of shifting the balance between modes 
of  transport  and  promoting  modes  that  are  less  damaging  to  the  environment  in  order  to 
achieve  a  sustainable  transport  system.  In  its  2001  White  Paper  on  a  common  transport 
policy22,  the  Commission  recalled  that  rail  transport  was  the  strategic  sector  on  which  the 
success of the efforts to shift the balance will depend. The Commission therefore continues to 
take a favourable approach to aid in the rail sector, both with regard to rail services and, in 
particular, to investments in rail infrastructure which, due to heavy investments costs, are not 
viable  without  public  co-financing.  For  example,  in  2002  the  Commission  took  some 
important  decisions  related  to  the  infrastructure  management  of  the  main  national  railway 
network  in  the  United  Kingdom.  First,  it  approved  a  financial  rescue  package  to  ensure  the 
continued  provision  of  rail  infrastructure  services,  without  which  the  UK  rail  sector  risked 
imminent  collapse.  Subsequently,  the  Commission  approved  a  financial  package  to  allow  a 
newly  established  company,  Network  Rail,  to  take  over  responsibility  for  operating  and 
managing  the  UK  rail  network  on  a  not-for-profit  basis.  The  overall  figure  of  around 
€ 36 billion was deemed not to constitute State aid.  

Much of the public financial support to the railways is not notified to the Commission, either 
because the financing, due to the lack of liberalisation of the sector, is not deemed by Member 
States to constitute State aid within the meaning of Article 87(1) of the Treaty, or because it 
represents  compensation  for  public  services  in  accordance  with  Regulation  (EEC)  No 
1191/69.  Member  States  are  however  required  to  report  overall  public  expenditure  to  this 
sector. Disparities between Member States may reflect different interpretations of the scope of 
this annual reporting exercise (Table 5). 

22 

White Paper “European Transport Policy for 2010: Time to Decide”. 

EN 

15 

   EN 

 
 
                                                 
Table 5: Subsidies(1) to the railway sector, 1998-2004 

EU-15
BE
DK
DE
EL
ES
FR
IE
IT
LU
NL
AT
PT
FI
SE
UK

1999
20.221
1.783
120
5.218
514
1.061
4.577
41
3.822
112
1.693
15
9
357
763
137

2000
26.308
1.815
181
4.760
446
1.112
4.857
206
4.578
134
1.974
13
8
330
817
5.077

2001
26.150
1.843
197
4.871
625
1.107
6.146
219
5.045
162
2.613
13
13
283
816
2.198

2002
27.486
1.905
213
4.887
552
1.098
6.244
277
5.483
178
2.865
16
15
331
844
2.577

in million current €
2003
24.891
2.024
202
4.433
636
1.089
4.890
321
4.268
201
3.232
13
35
407
n.a.
3.141

2004
n.a.
1.909
243
3.475
n.a.
1.119
6.205
180
3.920
207
2.668
n.a.
36
488
n.a.
n.a.

(1) Includes all public subsidies that have been communicated to the Commission as well as subsidies that have 
been  notified  and  authorised  by  the  Commission  under  relevant  State  aid  rules.  However  the  figures  exclude 
compensation for  services of  general economic  interest.  Data  for  EL,  AT, PT  and  SE are  provisional.  Source: 
DG Energy and Transport. 

See also section 3.9 on legislative and policy developments in the transport sector. 

1.4. 

State aid to the coal and steel sectors 

The European Coal and Steel Community Treaty expired on 23 July 2002 upon which a new 
Council  Regulation  was  established  as  the  new  legal  framework  for  state  aid  to  the 
Community coal industry23.  

The  overall  amount  of  State  aid  to  the  coal  sector  in  the  Union  of  fifteen  continued  to 
decrease from an annual average of € 7.1 billion for the period 1999-2001 to € 6.1 billion for 
the period 2001-2003. Germany contributed most to this fall (Table 6). 

In  2003,  around  € 5.4  billion  was  granted  to  the  EU-15  coal  sector  with  some  60%  of  this 
figure  related  to  current  production.  As  from  2003,  aid  to  current  production  will  decrease 
significantly and steadily in line with the agreements on the reduction of volumes of aid to the 
coal industry until 2005. The total amount of aid to current production to be granted annually 
shall  in  any  event  not  exceed  the  amount  of  aid  authorized  by  the  Commission  for  the 
reference year 2001.  

Only  four  Member  States  granted  aid  to  the  coal  sector  in  2003:  Germany  (€ 3.3  billion), 
Spain  (€ 1.1  billion),  France  (€ 900  million)  and  the  United  Kingdom  (€ 22  million).  With 
regard  to  Germany,  the  Commission  approved  the  restructuring  plan  for  the  period  2003-
2005,  which  foresees  a  reduction  in  total  aid  from  € 3.3  billion  in  2003  to  € 2.7  billion  in 
2005.  Spain  also  notified  a  restructuring  plan  concerning  the  period  2003-2005,  but  the 

23 

Council Regulation (EC) No 1407/2002 of 23 July 2002. In addition, the provisions of Article 88 EC 
Treaty and Council Regulation (EC) No 659/1999 also apply. 

EN 

16 

   EN 

 
 
                                                 
Commission  has  opened  an  investigation  procedure  and  has  not  yet  approved  the  aid 
measures.  Finally,  aid  measures  were  approved  to  cover  the  costs  of  closure  of  the  last 
underground  mines  in  France  which  closed  in  April  2004  as  well  as  for  an  investment  aid 
scheme in the United Kingdom covering the period 2003-2005 and amounting to just under 
€ 90 million.  

Table 6: State aid to coal mining, 1999 - 2003 

Yearly average of aid not 
destined to current production
(in million €)

Yearly average of aid 
destined to current 
production (in million €)

EU-15
DE
ES
FR
UK

1999 - 2001

2001 - 2003

2413
990
759
665
-

2673
1125
836
705
8

1999 - 2001
4688
3685
786
384
93

2001 - 2003

3463
2610
614
280
46

Note: The Commission has not yet approved the aid to the Spanish coal industry for 2003. Source: DG Energy 
and Transport 

State  aid  to  the  steel  sector  fell  dramatically  from  € 424  million  in  1997  to  € 58  million  in 
1998  after  which  it  has  remained  relatively  stable.  A  total  of  € 95  million  was  awarded  in 
2003 almost exclusively for environmental purposes. 

1.5. 

State aid to the shipbuilding sector 

The  amount  of  State  aid  to  the  shipbuilding  sector  fell  from  an  annual  average  of  € 1 151 
million  for  the  period  1999-2001  to  € 658  million  for  the  period  2001-2003.  The  highest 
amounts of aid were given to the restructuring of public yards in Spain in 2000 (just over € 1 
billion). In 2003, a total of € 685 million was granted to the EU-15 shipbuilding sector mainly 
by Germany (55%), France (13%) and Denmark (8%). 

Some 55% of the overall figure constituted operating aid, and represented essentially the use 
of  the  temporary  defensive  mechanism  (TDM)  schemes  approved  by  the  Commission 
pursuant  to  a  Council  Regulation  permitting  exceptionally  and  temporarily  direct  aid  in 
support  of  contracts  for  the  building  of  container  ships,  chemical  and  product  tankers  and 
LNG carriers. In 2004, the Council decided to extend the TDM until 31 March 2005 when it 
expires definitively.  

1.6. 

State aid for 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. 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, one of the most potentially distortive types of State aid.  

EN 

17 

   EN 

 
 
Due to data constraints, this section looks at horizontal objectives in the context of total aid 
less agriculture, fisheries and transport. 

In ten of the EU-15 Member States, more than 90% of all the aid awarded in 2003 was 
for horizontal objectives, including cohesion 

In  the  EU-15  aid  earmarked  for  horizontal  objectives,  including  cohesion  objectives, 
accounted for 79% of total aid less agriculture, fisheries and transport in 2003. The four main 
horizontal  objectives  were  environment  and  energy  saving  (23%  of  total  aid),  regional 
economic development (21%), R&D (14%) and SMEs (13%) – see Table 7.  

The remaining 21% was aid directed at specific sectors (mainly coal) including aid to rescue 
and restructure ailing firms. In interpreting these figures, however, it is important to bear in 
mind  that  some  aid  measures  can  not  be  quantified.  Although  the  number  of  measures  is 
limited,  the  distortion  of  competition  is  often  very  significant,  e.g.,  the  unlimited  State 
guarantees  previously  available  to  Electricité  de  France  (EDF)  and  to  the  German 
Landesbanken. Another factor that keeps the volume of sectoral and ad hoc aid artificially low 
is that Commission decisions which follow a formal investigation procedure tend to refer to 
aid  that  was  granted  up  to  several  years  previously  and  involve  ad  hoc  awards  of  aid  to 
individual  companies.  Although  the  data  for  all  years  are  adjusted  retrospectively  when  the 
Commission takes its decision, the overall level is clearly underestimated. 

In  ten  of  the  fifteen  Member  States,  more  than  90%  of  all  the  aid  awarded  in  2003  was 
earmarked for horizontal objectives, including cohesion. However, in Germany (73%), Spain 
(63%),  France  (76%),  Ireland  (64%)  and  Portugal  (19%),  the  share  was  significantly  lower. 
The high share of sectoral aid in Portugal was due to the previously mentioned regional aid 
tax scheme in Madeira. In Ireland, although aid awarded through the Irish Corporation Tax24 
has  decreased  significantly  it  still  accounts  for  a  relatively  high  share  of  total  aid.  Finally, 
Germany,  France  and  Spain  have  relatively  high  shares  of  aid  to  the  coal  sector  (see  also 
Section 1.4). It should be noted that in Member States with relatively low overall aid levels, 
the grant of a single, relatively large ad hoc aid may cause large variations. 

Large  disparities  between  Member  States  in  the  share  of  aid  awarded  to  various 
horizontal objectives 

When making comparisons between Member States, it is important to bear in mind that aid 
measures are classified according to their primary objective at the time the aid was approved 
and  not  to  the  final  recipients  of  the  aid.  Notwithstanding  the  measurement  difficulties,  the 
data  do  give  an  indication  as  to  which  horizontal  objectives  are  favoured  by  each  Member 
State  (see  Table  7).  For  example,  the  share  of  total  aid  directed  exclusively  to  research  and 
development in Belgium, the Netherlands, Austria and Finland was more than twice the EU-
15 average of 14%. Sweden (75% of total aid), Denmark (49%), Finland (38%) and Germany 
(38%),  the  Netherlands  (27%),  Austria  (24%)  and  the  United  Kingdom  (22%)  tended  to 
favour environmental objectives (EU-15 average 23%)25. 

24 

25 

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. 
Including aid for energy saving which was reported separately in previous updates of the Scoreboard. 

EN 

18 

   EN 

 
                                                 
Table 7: State aid for horizontal objectives and sectoral aid, 2003 

Horizontal Objectives

EU-15 BE
79

100

DK

DE

EL

ES

FR

IE

IT

LU

NL

AT

PT

FI

SE

UK

Percentage of total aid less agriculture, fisheries and transport

94

4
49
0
-
4
33
4
0

6
-
6
-

73

10
38
4
0
1
0
0
20

27
23
3
1

97

1
4
1
-
1
2
-
84

3
-
3
0

63

5
4
15
0
2
4
14
19

37
35
2
0

76

21
5
24
3
5
1
1
17

24
19
5
-

64

12
2
3
-
6
16
4
22

36
-
27
9

96

16
6
33
0
-
8
7
27

4
-
1
3

100

21
0
3
-
-
-
-
76

-
0
0
0

91

45
27
2
4
-
0
-
14

9
-
9
0

99

37
24
10
0
-
4
6
17

1
-
1
1

19

2
0
10
0
0
2
3
2

81
-
1
80

99

32
38
6
3
4
6
0
9

1
-
-
1

100

7
75
2
-
11
-
-
5

-
-
-
-

99

24
22
12
0
0
0
5
35

1
1
0
-

14
23
13
1
2
3
3
21

21
14
3
4

30
1
32
1
4
5
3
24

-
-
-
-

37.334

655

921 14.398

333

3.174

4.806

417

5.689

36

497

590

1.254

519

1.039

3.006

     Research and Development
     Environment and energy saving
     SME
     Commerce
     Culture and heritage conservation
     Employment aid
     Training aid
     Regional development n.e.c. (1)

Sectoral aid (2)
     Coal
     Manufacturing
     Services

Total aid less agriculture, 
fisheries and transport in million 
€

(1) Aid for general regional development not elsewhere classified. (2) Aid for specific sectors awarded under 
measures for which there was no horizontal objective as well as aid for rescue and restructuring. Source: DG 
Competition. 

The  Commission  has  also  collated  some  information  on  secondary  objectives26.  This 
improves  in  particular  the  data  coverage  of  aid  earmarked  for  SMEs.  In  2003,  just  under 
€ 5 billion, 13% of total aid, was made up of measures for which the primary objective was 
SMEs. In addition, almost €1 billion of aid, 3% of total aid, was directed exclusively at SMEs 
as a ‘secondary’ objective. For the most part, the primary objective of these aid measures was 
R&D. Combining primary and secondary objectives, 38% of aid in Belgium was earmarked 
exclusively for small and medium-sized enterprises, 33% in Italy, 27% in France and 25% in 
the United Kingdom compared with an EU-15 average of 15%.  

1.7. 

Trend in State aid for horizontal objectives 

In the mid-1990s when State aid levels were much higher, the share of total aid granted for 
horizontal  objectives  was  around  50%.  In  line  with  the  commitments  undertaken  at  the 
various  European  Councils,  Member  States  have  however  continued  to  redirect  aid  towards 
such  horizontal  objectives.  Looking  at  recent  trends,  the  share  of  total  aid  for  horizontal 
objectives  increased  by  5  percentage  points  over  the  period  1999-2001  to  2001-2003  (from 
71% to 76% of total aid). This upward trend was largely the result of significant increases in 
aid  for  the  environment  and  energy  saving  (+6  points)  and  research  and  development  (+2 
points) as well as a reduction in sectoral aid for some Member States. See sections 1.7.1 and 
1.7.2 for more detailed analysis. 

The  positive  trend  was  observed,  to  varying  degrees,  in  the  majority  of  Member  States, 
particularly in Ireland (+16 points), Spain (+10 points) and Germany (+6 points) and Italy (+6 
points).  In  four  Member  States,  the  trend  was  slightly  downward  but  for  three  of  them,  the 
share of total aid earmarked for horizontal objectives remains relatively high (85% or more). 
The exception is Portugal where the share of horizontal aid fell due largely to the increase in 
sectoral aid. 

26 

For the purposes of the Scoreboard, a secondary objective is one for which, in addition to the primary 
objective, the aid was exclusively earmarked at the time the aid was approved. For example, a scheme 
whose primary objective is R&D may also be limited exclusively to SMEs. 

EN 

19 

   EN 

 
 
                                                 
Over the periods under review, there were appreciable increases in the share of total aid for 
environmental and energy saving objectives in Sweden (+21 points), Finland (+12 points), the 
Netherlands (+12 points) and Germany (+10 points) while the share of aid for R&D rose by 
between 4 and 6 points in France, Ireland, the Netherlands and the United Kingdom.  

Graph 4: Share of State aid directed to horizontal objectives, 1999-2003 (Stockholm 
‘Redirection’ indicator) 

in %

100

90

80

70

60

50

40

30

20

10

0

EU-15 BE

DK

DE

EL

ES

FR

IE

IT

LU

NL

AT

PT

FI

SE

UK

1999-2001

2001-2003

Note: State aid less agriculture, fisheries and transport for which a breakdown by horizontal/sectoral objective is 
not available. Source: DG Competition. 

1.7.1. 

State aid for environmental objectives and energy saving  

The spring 2004 European Council declared that sustainable growth must be environmentally 
sound. It emphasised further that the improvement in energy efficiency and increased use of 
renewable  energy  sources  are  essential  not  only  for  environmental  but  also  for 
competitiveness reasons. 

The  favourable  attitude  of  the  Commission  towards  environmental  aid  is  reflected  by  the 
provisions of the Community guidelines on State aid for Environmental Protection. Decisions 
taken in 2004 to approve individual aids and aid schemes include many of the different areas 
covered by the Guidelines, such as aid for waste management and aid for renewable energy 
sources, wind power, solar power and biofuels. In a few cases, the Commission approved aid 
directly on the basis of Article 87(3)(c) since, despite a positive effect on the environment, the 
aid  did  not  fall  within  the  scope  of  the  Guidelines.  These  cases  concerned  e.g.,  pipeline 
transport  and  aid  for  safety  and  the  environment.  In  a  number  of  cases,  however,  the 
Commission found that aid was not compatible with the common market, since the companies 
involved  had  to  make  the  investments  to  live  up  to  Community  standards  anyway.  It  also 
carefully  assessed  the  eligible  costs  in  some  cases  to  make  sure  grants  for  companies  were 

EN 

20 

   EN 

 
 
truly aimed at environmental benefits, taking into account, e.g., the cost savings generated by 
the investment concerned. 

State  aid  earmarked  for  the  environment  and  energy  saving  objectives  continues  to  rise 
significantly.  In  2003,  expenditure  in  this  area  stood  at  € 8.5  billion,  more  than  double  the 
1999 level. The share in total aid (less agriculture, fisheries and transport) rose from 13% over 
the period 1999-2001 to 18% during 2001-2003. By 2003, this proportion stood at 23%.  

Germany accounts for more than € 5 billion of this figure due primarily to its large ecological 
tax scheme of aid granted since 1999 to a wide range of undertakings in the form of tax relief, 
mainly  on  mineral  oils  used  as  fuel,  and  on  electricity27.  The  three  Nordic  Member  States 
(Denmark, Finland and Sweden) also devote a large share of their State aid to such objectives 
(see  Table  7).  Sweden,  for  example,  spent  75%  of  its  state  aid  on  environment  and  energy 
saving in 2003. Almost three quarters, i.e. € 568 million, of all aid to environment and energy 
saving were taken up by an energy tax exemption on electricity used in production processes. 
The  exemption  has  been  granted  to  the  manufacturing  industry  with  the  objective  to  steer 
towards energy saving and energy efficiency. Following a Commission investigation into this 
aid, Sweden, on 1 July 2004, has brought the measure into line with new requirements under 
the  Community  guidelines  on  State  aid  for  environmental  protection  as  well  as  with  the 
Energy Taxation Directive. 

1.7.2. 

State aid for research and development (R&D) 

Investment  in  R&D  is  a  crucial  factor  to  make  the  EU  economy  competitive  and  to  ensure 
sustainable  growth.  The  Barcelona  European  Council  of  March  2002  recognised  this  by 
setting the objective for expenditure on R&D to 3% of GDP by 2010. In addition, two thirds 
of  this  expenditure  should  be  funded  by  the  private  sector.  Following  this,  the  spring  2004 
European Council stressed in particular that besides public funding, increased private funding 
of investment is crucial to achieve a sustainable level of 3% and accorded priority status to the 
strengthening of business investment in R&D. 

National  governments  have  a  range  of  measures  to  choose  from  to  fund  and  consequently 
trigger R&D. These public measures, when granted on a selective basis, might contain State 
aid. Even though State aid constitutes only a small part of public R&D funding, competition 
could be distorted by favouring some enterprises over others. On the other hand, state aid may 
in  certain  circumstances  be  the  best  available  option  to  provide  incentives  triggering  R&D. 
The  Commission  thus  tries  to  strike  a  balance  through  the  application  of  the  framework  on 
R&D  aid  thereby  ensuring  that  R&D  is  furthered  to  the  largest  extent  while  minimising 
distortions of competition as far as possible.  

Figures  for  2003  show  that  investment  in  R&D  is  not  sufficient  to  meet  the  Barcelona 
objectives:  for  the  Union  as  a  whole,  R&D  investment  stood  at  2.0%  of  GDP,  Sweden  and 
Finland  being  the  only  countries  to  reach  the  3%  level  with  4.3  and  3.5%  respectively28. 
Drawing conclusions from the so far sluggish development of R&D investment, it is clear that 
with  growth  remaining  at  the  current  level,  the  European  economy  will  not  achieve  the 

27 

28 

N 449/2001 (OJ C 137, 8.6.2002). 
Source: DG Research ; Data: OECD, Eurostat. 

EN 

21 

   EN 

 
                                                 
Barcelona targets by 2010. Rather, growth needs to be accelerated and new impetus given to 
investment in R&D29. 

As regards (potentially) distortive State aid to R&D, total expenditure stood at € 5.3 billion in 
2003. The underlying trend is upward with the total rising from € 4.8 billion over the period 
1999-2001 to € 5.5 billion in 2001-2003. In spite of this increase, State aid to R&D represents 
a relatively small share in public funding (EU-15, 0.06% of GDP in 2003) although there are 
significant differences between Member States.  

Table 8: State aid for research and development (R&D) 

Aid to Research & Development     
(in million €), 2003

Share of R&D aid in total aid, 
annual average 2001-2003

Share of R&D aid in total aid   (% 
point difference 1999-2001 and 
2001-2003)

Share of R&D aid to GDP (in %), 
2003

EU-15

BE

DK

DE

EL

ES

FR

IE

IT

LU

NL

AT

PT

FI

SE

UK

5271.3

195.6

40.8

1460.0

5.0

152.2

1000.2

48.8

934.3

7.5

221.8

217.3

26.6

166.7

72.0

722.5

14

20

4

10

1

8

22

6

14

15

31

37

1

38

11

25

1.7

2.4

-5.0

1.1

0.7

0.1

4.5

5.2

1.0

-2.8

5.6

3.1

-0.2

2.1

-6.2

3.9

0.06

0.07

0.02

0.07

0.00

0.02

0.06

0.04

0.07

0.03

0.05

0.10

0.02

0.12

0.03

0.05

Source: DG Competition. 

1.8. 

State aid supporting regional development and cohesion 

Each Member State targets part of  its State aid towards the least developed regions, the so-
called  ‘assisted  regions’.  For  the  Union  as  a  whole,  an  estimated  € 7.6  billion  of  aid30  was 
earmarked  exclusively  for  assisted  ‘a’  regions31  in  2003,  of  which  some  € 3.1  billion  was 
approved under the Guidelines for national regional aid. The € 7.6 billion represented around 
one fifth of total aid (less agriculture, fisheries and transport for which a regional breakdown 
is not available). 

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.  

Aid  to  the  assisted  ‘a’  regions  fell  dramatically  from  a  peak  of  € 28  billion  in  1993  to 
€ 9 billion in 2000, due largely to the phasing out of the restructuring programme in the new 
German Bundesländer. Aid to the assisted ‘a’ regions in Germany stood at € 1 billion in 2003. 
The  level  of  aid  to  the  poorer,  southern  regions  in  Italy  also  fell  rapidly  from  a  peak  of 

29 

30 

31 

In  May  2005,  the  Commission  will  adopt  a  Communication  following  up  the  action  plan  which  has 
been worked out to implement the Barcelona Council conclusions. The Communication will report on 
the  progress  made  towards  achieving  the  Barcelona  targets  and  provide  detailed  figures  on  R&D 
expenditure and funding. 
This  figure  includes  all  aid  specifically  earmarked  for  assisted  ‘a’  regions  regardless  of  the  overall 
objective of the aid. However, due to an absence of data on the final beneficiaries of the aid, it is not 
possible  to  quantify  the  amount  of  aid  granted  through  nation-wide  schemes  from  which  assisted 
regions will also clearly benefit. See spring 2003 update of the Scoreboard for further information on 
methodological issues. 
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. 

EN 

22 

   EN 

 
                                                 
€ 9 billion  in  1995  to  just  over  € 2  billion  in  2000.  However,  since  then,  there  has  been  a 
remarkable upturn. 

EN 

23 

   EN 

 
Table 9: State aid specifically earmarked for assisted ‘a’ regions, 2003 

EU-15

BE

DK

DE

EL

ES

FR

IE

IT

LU

NL

AT

PT

FI

SE

UK

Total state aid less 
agriculture, fisheries 
and transport, mio €

Aid for assisted 'a' 
regions, mio €

Aid for assisted 'a' 
regions as a 
percentage of total 
aid

37333.9

654.8

921.5

14398.4

332.9

3174.2

4805.6

417.2

5688.6

35.9

497.3

589.5

1253.8

519.3

1038.6

3006.3

7 603

20

-

-

-

-

1 003

333

916

647

382

2 859

7

100

29

13

92

50

-

-

-

-

46

1 254

8

100

-

-

-

-

162

5  

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. 

1.9. 

State aid instruments 

Majority  of  Member  States  tend  to  provide  aid  to  manufacturing  and  services  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 5: Share of each aid instrument in total aid for manufacturing and services, 
EU, 2001 – 2003 

Tax deferrals
2.6%

Tax exem ptions
22.7%

Soft loans
4.8%

Guarantees
2.2%

Equity 
participation
0.7%

Grants
67.0%

Source: DG Competition 

EN 

24 

   EN 

 
 
… though significant differences still exist in the use of instruments 

During the period 2001-2003, grants accounted for around two-thirds (67%) of total State aid 
in the manufacturing and service sectors. In addition to aid awarded through the budget, other 
aid  is  paid  through  the  tax  or  social  security  system.  Tax  exemptions  made  up  23%  of  the 
total.  While  Belgium,  Denmark,  Spain,  Luxembourg,  Austria  and  Sweden  provided  at  least 
85% of their aid in the form of grants, other Member States tended to make greater use of tax 
exemptions,  particularly  Germany  (29%),  Ireland  (62%)  and  Portugal  (82%).  A  similar 
instrument is a tax deferral which was used by only seven Member States during the period 
under  review.  Tax  deferrals  accounted  for  17%  of  all  aid  in  Italy  compared  with  an  EU-15 
average of 3%. 

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.  In  the  EU-15  soft  loans  represented 
around 5% of all aid to manufacturing and services. In France and the United Kingdom the 
proportion was more than double this average.  

Aid may also be in the form of state equity participation which represented less than 1% of all 
aid  to  the  manufacturing  and  service  sectors.  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 by most Member 
States although the aid made up only 2% of total aid in the Union. 

Table 10: State aid for manufacturing and services by type of aid instrument,  
2001 – 2003 

          TYPE OF AID INSTRUMENT

Grants

Tax deferrals

Tax 
exemptions

Soft loans Guarantees

% of  total

Equity 
participation

EU-15
BE
DK
DE
EL
ES
FR
IE
IT
LU
NL
AT
PT
FI
SE
UK

67.0
85.3
94.3
64.3
72.6
93.8
59.9
35.2
69.2
96.3
63.5
89.8
11.7
68.5
86.5
56.7

Source: DG Competition 

2.6
1.2
-
-
-
0.0
0.1
0.4
17.5
0.0
10.1
-
0.6
-
-
-

EN 

22.7
6.4
5.7
29.0
27.1
-
26.0
62.1
9.1
-
18.1
-
82.2
19.1
7.9
27.0

25 

4.8
6.0
-
1.6
0.3
6.0
11.3
0.2
3.5
3.7
4.9
7.2
5.2
5.9
4.6
15.2

2.2
1.1
0.0
4.1
0.0
0.0
2.7
0.1
0.1
-
3.4
3.0
0.0
0.1
0.1
-

0.7
0.1
-
1.0
-
0.2
-
1.9
0.6
-
0.0
-
0.3
6.4
1.0
1.1

   EN 

 
 
1.10. 

State aid situation in the new Member States 

This section includes a concise update of the data presented in the autumn 2004 Scoreboard, 
which  dealt  in  detail  with  the  specific  state  aid  situation  in  the  new  Member  States.  For 
methodological  reasons,  the  data  are  not  completely  comparable  with  those  of  the  EU-15 
Member States (see autumn 2004 Scoreboard for more explanation on methodology and other 
enlargement-related issues). 

Total State aid32 granted by the ten new Member States during the four-year period prior to 
accession  was  estimated  on  average  at  € 6.1  billion  per  year.  In  absolute  terms,  the  three 
biggest  countries  in  terms  of  population  awarded  the  most  aid:  Poland,  the  Czech  Republic 
and Hungary accounted for 86% of total aid in the ten new Member States. During the period 
under review, the level of State aid increased from € 5 billion in 2000 to € 9.2 billion in 2003. 
The  increase  was  caused  by  very  large  awards  of  aid  in  2002  to  the  Czech  banking  sector 
(€ 2.6  billion)  and  in  2003  to  the  Polish  coal  sector  (almost  € 4  billion).  See  Table  11  and 
Annex I for more detailed figures. 

Table 11: State aid in the new Member States, 2000 – 2003 

Total State aid less agriculture, 
fisheries and transport in million €

State aid as percentage of GDP (%)

Population (million)

State aid per capita (PPS)

Source: DG Competition. 

EU-15 New MS

CZ

EE

CY

LV

LT

HU

MT

PL

SI

SK

39 839

6 066

2 050

8

315

27

41

769

155

2 403

168

130

0.43

379.50

105

1.38

74.63

160

2.73

10.24

409

0.11

1.36

11

2.76

0.70

542

0.28

2.36

24

0.29

3.48

26

1.10

10.18

152

3.51

0.39

596

1.26

38.54

127

0.67

1.99

121

0.49

5.38

57

In terms of State aid as a percentage of GDP, aid amounted to 1.38% over the period 2000-
2003. Although this is significantly higher than the EU-15 average  of 0.43%  over the same 
period,  there  were  large  disparities  between  the  new  Member  States:  Malta,  Cyprus  and 
Czech Republic reported aid levels, as a percentage of GDP, well above the average. Faced 
with a general banking crisis, the Czech Republic paid out € 2.6 billion in 2002 in the form of 
guarantees in order to restructure and subsequently privatise several banks. In Cyprus, aid was 
mainly  granted  through  tax  relief  under  the  International  Business  Enterprises  Act  (almost 
60% of total aid over the period 2000-2003). In Malta, restructuring aid to shipbuilding and 
the ship repair sector accounted for around 50% of total aid. All  of  the above measures are 
either being phased out under transitional arrangements or limited in time. If the aid amounts 
given under these types of aid measures are excluded, a different picture emerges: the overall 
level of state aid drops to 0.67% of GDP for the ten new Member States. 

In  contrast,  the  three  Baltic  States  had  by  far  the  lowest  shares:  Estonia  (0.11%),  Latvia 
(0.28%)  and  Lithuania  (0.29%).  Moreover  when  aid  is  expressed  in  per  capita  terms,  a 
slightly  different  picture  emerges  with  the  Slovak  Republic  joining  the  three  Baltic  states 
below the EU-15 average of 105 PPS per person.  

In  the  context  of  redirecting  aid,  prior  to  accession,  aid  granted  for  horizontal  objectives33 
accounted for around 24% of total aid in the new Member States. This share is rather low in 

32 

33 

Total State aid less agriculture, fisheries and transport. 
Including aid for cohesion objectives (regional aid). 

EN 

26 

   EN 

 
 
                                                 
comparison to 79% in the EU-15 Member States in 2003. The disparity can be explained in 
part by the relatively strong support of several industries (e.g., financial sector, coal and steel) 
before  accession  in  the  context  of  privatisation  or  to  ensure  viability.  There  were  large 
disparities between countries in the share of sectoral objectives ranging from 28% of total aid 
in Slovenia to 90% or more in Lithuania, the Czech Republic and Malta. In Estonia, no aid 
was earmarked for sectoral objectives. 

The financial sector received the most support in these years (28%), due almost entirely to the 
legacy  of  a  general  banking  crisis  in  the  1990s  in  the  Czech  Republic.  A  further  24%  was 
directed  towards  the  manufacturing  sector34,  23%  for  coal  (mainly  in  Poland)  and  the 
remainder (1%) split between other non-manufacturing and service sectors. 

For a variety of reasons, an accurate forecast of future expenditure levels is not possible for 
the new Member States. Nevertheless, the available data do show that for some new Member 
States,  a  large  part  of  the  aid  awarded  in  2003  was  through  measures  that  did  not  continue 
after  accession.  For  others,  the  data  show  that  a  significant  proportion  of  total  aid  was 
awarded  under  a  transitional  arrangement.  This  implies  that  aid  levels  are  likely  to  remain 
relatively high up to the end of the transitional period but will probably decrease in the long 
term.  

In  order  to  prevent  incompatible  aid  from  being  “imported”  into  the  EU  on  the  date  of 
accession,  a  system  was  set  up  to  examine  measures  which  were  put  into  effect  in  the 
Acceding  Countries  before  1  May  2004  and  were  still  applicable  after  that  date.  This  was 
known as the “existing aid” mechanism. During the first phase of the existing aid mechanism 
in  2002,  some  222  measures  were  approved  by  the  Commission  and  listed  in  the  Treaty  of 
Accession.  During  the  second  phase,  the  so-called  interim  procedure,  overall  559  measures 
were submitted. A significant number of these measures was regarded as not applicable after 
accession and therefore was withdrawn by the countries. By March 2005 the Commission had 
approved 329 measures as existing aid in the course of the interim procedure. The number of 
measures  varies  considerably  from  one  new  Member State to another. While some opted to 
create aid schemes, such as Hungary, other countries such as the Czech Republic preferred to 
notify individual aid awards (Table 12). A few measures are still under assessment. 

Table 12: State aid measures approved as existing aid upon accession35 

CZ

EE CY

LV

LT HU MT PL

SI

SK Total

Approved and listed in 
the Treaty
Approved under the 
interim mechanism

120

3

31

6

3

21

118

11

21

19

13

23

Opening of formal 
investigation procedure
Under assessment as of 
March 2005

1

1

-

-

-

-

-

-

-

-

1

2

7

1

-

1

7

15

9

222

42

18

63

329

1

15

1

-

-

-

4

19

Source: DG Competition 

34 

35 

This figure excludes aid earmarked for the manufacturing sector which had a horizontal objective. 
The  figures  include  state  aid  measures  to  the  manufacturing,  service  and  coal  sectors  as  well  as  the 
fisheries sector. 

EN 

27 

   EN 

 
 
                                                 
1.11. 

State aid to the broadcasting sector 

Starting  in  the  seventies,  broadcasting  has  gradually  been  opened  up  to  competition. 
Accordingly, the Commission has had to investigate the financing of broadcasting systems in 
several Member States to check whether or not a particular case involves State aid and if so 
whether  there  has  been  any  overcompensation.  This  section  describes  the  State  aid  rules 
applicable to the public service broadcasting sector. 

Funding of  public broadcasters can be based on  direct budgetary support,  a  licence fee or a 
combination of public funds. This funding normally compensates for the costs of the public 
service  that  the  public  broadcaster  provides.  According  to  the  Court  of  Justice  ruling  on 
Altmark,  compensation  to  undertakings  that  perform  a  service  of  general  economic  interest 
(SGEI) is not State aid, provided certain conditions are fulfilled.  

Information concerning public funding granted to the broadcasting sector can be found in the 
publications  of  several  institutions,  e.g.  in  the  Yearbooks  of  the  European  Audiovisual 
Observatory (EAO). Annex II of the Scoreboard gives brief summaries of the decisions that 
have  been  taken  by  the  Commission  since  the  adoption  of  the  Communication  on  the 
application of State aid rules to public service broadcasting36.  

1.11.1.  Policy context  

the  seventies,  broadcasting  has  undergone 

As  from 
important  changes.  Television 
broadcasting was traditionally an activity that the State reserved for itself or a State controlled 
operator, mainly as a consequence of the limited availability of broadcasting frequencies and 
the  high  barriers  to  entry.  However,  economic  and  technological  developments  made  it 
increasingly  possible  for  Member  States  to  allow  private  operators  to  broadcast.  Member 
States have therefore decided to introduce competition in the market. Important developments 
in  broadcasting  are  still  ongoing.  Changes  are  occurring  due  to  technological  development, 
digital  broadcasting  based  on  various  technological  platforms  is  spreading  more  and  more, 
pay-TV  is  establishing  its  market  position  and  the  borders  between  broadcasting  and  other 
media activities have become blurred.  

Whilst  opening  the  market  to  competition,  Member  States  considered  that  public  service 
broadcasting  ought  to  be  maintained,  as  a  way  to ensure the  coverage  of  a  number  of  areas 
and the satisfaction of needs such as cultural diversity, pluralism, social cohesion, linguistic 
diversity  that  private  operators  would  not  necessarily  fulfil  to  the  optimal  extent.  Increased 
competition, together with the presence of State-funded operators, has also led to a number of 
complaints by private operators alleging infringements of Article 87 of the Treaty. 

1.11.2.  The rationale behind public financing of public service broadcasting (“PSB”) 

Although public service broadcasting has a clear economic relevance, it is not comparable to a 
public service in any other economic sector. No other service has, at the same time, access to 
such a wide sector of the population, provides it with so much information and content, and 
by doing so conveys and influences both individual and public opinion. Public broadcasting is 
generally perceived as an important and reliable source of information. It thus enriches public 
debate  and  ultimately  ensures  that  virtually  all  citizens  participate  to  some  degree  in  public 

36 

OJ C 320, 15.11.2001, p. 5. 

EN 

28 

   EN 

 
                                                 
life.  The  importance  of  PSB  for  social,  democratic  and  cultural  life  in  the  Union  was 
confirmed in the Resolution of the Council and of the Representatives of the Governments of 
the Member States, Meeting within the Council of 25 January 1999 concerning public service 
broadcasting37 (“the Resolution”). 

As  any  other  service  of  general  economic  interest  (“public  service”),  PSB  falls  within  the 
scope of Article 86(2) and Article 16 of the Treaty. In line with the Resolution and in the light 
of  the  particular  nature  of  the  broadcasting  sector,  the  interpretation  of  the  principles 
contained  in  those  articles  is  outlined  in  the  interpretative  protocol  on  the  system  of  public 
broadcasting  in  the  Member  States,  annexed  to  the  EC  Treaty  by  the  Treaty  of  Amsterdam 
("the Protocol"). The Protocol, which forms an integral part38 of the EC Treaty, emphasizes 
"that  the  system  of  public  broadcasting  in  the  Member  States  is  directly  related  to  the 
democratic,  social  and  cultural  needs  of  each  society  and  to  the  need  to  preserve  media 
pluralism". This instrument also specifies that “the provisions  of the Treaty establishing  the 
European  Community  shall  be  without  prejudice  to  the  competence  of  Member  States  to 
provide  for  the  funding  of  public  service  broadcasting  insofar  as  such  funding  is  granted  to 
broadcasting organisations for the fulfilment of the public service remit as conferred, defined 
and  organised  by  each  Member  State,  and  insofar  as  such  funding  does  not  affect  trading 
conditions  and  competition  in  the  Community  to  an  extent  which  would  be  contrary  to  the 
common interest, while the realisation of the remit of that public service shall be taken into 
account.” 

At the end of 2001, the Commission adopted a Communication on the application of State aid 
rules to public service broadcasting setting out the principles for the application of Articles 87 
and  86(2)  to  State  funding  of  public  service  broadcasting  (“the  Communication”)  that  takes 
into account the Amsterdam Protocol.  

1.11.3.  The need for State aid control and the relevant rules  

As briefly mentioned, broadcasting has undergone a transformation from a reserved activity 
to  a  competitive  one.  PSB  operators  compete  for  audience  and  advertising  revenues  with 
private  broadcasting  operators,  while  in  many  cases  they  receive  State  funding  for  the 
fulfilment  of  the  public  service  remit.  Moreover,  the  activity  of  PSB  operators  is  often  not 
limited  to  the  diffusion  of  programs  and  related  activities.  PSB  operators  are  often  allowed 
under their national legal system to develop purely commercial activities in addition to their 
public  service  task  (e.g.  sale  of  advertising  space  or  programs).  The  availability  for  PSB 
operators  of  State  resources  in  this  competitive  environment  creates  the  need  for  State  aid 
control.  Otherwise  these  resources  could  be  used  to  the  advantage  of  the  PSB  operator  and 
distort  competition.  The  focus  of  the  Commission‘s  investigation  in  this  area  has  been  to 
determine whether or not a particular case involves State aid and if so whether there has been 
any overcompensation to undertakings performing the public service task.  

It should be stressed that for a limited period there was considerable uncertainty as to whether 
or  not  State  financing  of  PSB  qualified  as  State  aid  within  the  meaning  of  Article  87(1). 
Following the Ferring judgement39, it seemed that any compensation proportional to the net 
costs  incurred  in  the  discharge  of  a  public  service  obligation  was  not  to  be  considered  as  a 

37 

38 

39 

OJ C 30, 5.2.1999, p. 1 
According to Article 311 EC Treaty. 
C-53/00 - Judgment of 22.11.2001, Ferring, Rec. 2001, p. I-9067. 

EN 

29 

   EN 

 
                                                 
State  aid.  With  the  Altmark  judgement40,  the  Court  clarified  the  scope  of  its  previous 
judgement.  Compensations  for  the  costs  incurred  in  the  discharge  of  a  public  service 
obligation do not qualify as State aid provided that a number of conditions are met. So far, the 
Altmark  conditions  have  not  been  fulfilled  in  any  broadcasting  case  brought  to  the 
Commission’s attention. When these conditions are not met, State financing of public service 
broadcasters  is  generally  to  be  regarded  as  State  aid.  Indeed,  PSB  operators  are  normally 
financed out of the State budget or through a levy on TV-set holders. 

Article  86(2)  allows  to  derogate  to  Article  87  to  the  extent  necessary  to  allow  the  PSB 
operators to fulfil their PSB task. The Court has clarified that in order for a measure to benefit 
from such a derogation it is necessary to respect the principles of definition, entrustment and 
proportionality. In the case of PSB, this Article should be applied in the light of the Protocol, 
which refers to the "public service remit as conferred, defined and organised by each Member 
State" (definition and entrustment) and provides for a derogation from the Treaty rules in the 
case  of  the  funding  of  public  service  broadcasting  "in  so  far  as  such  funding  is  granted  to 
broadcasting  organisations  for  the  fulfilment  of  the  public  service  remit  ...  and  ...  does  not 
affect  trading  conditions  and  competition  in  the  Community  to  an  extent  which  would  be 
contrary to the common interest, while the realisation of the remit of that public service shall 
be taken into account" (proportionality).  

These principles have been taken into account and further specified in the Communication. It 
is  necessary  to  establish  a  precise  official  definition  of  the  public  service  mandate.  The 
Commission  has  recognised  that  a  public  service  mandate  encompassing  "a  wide  range  of 
programming  in  accordance  with  its  remit",  as  stated  by  the  Resolution,  can  in  principle  be 
considered as legitimate. The role of the Commission as regards this definition is limited to 
checking  for  manifest  error.  The  public  service  remit  should  be  entrusted  to  one  or  more 
undertakings by means of an official act. It is also necessary that the public service is actually 
supplied as provided for in that act. It is therefore desirable that an  appropriate authority or 
appointed body monitors its application.  

Compensation  is  justified  only  for  the  net  costs  of  the  public  service  mission.  The 
proportionality assessment that the Commission must carry out is twofold. On the one hand, 
the Commission has to calculate the net cost of the public service task entrusted to the PSB 
operator  and  verify  whether  or  not  this  cost  has  been  overcompensated.  Second,  the 
Commission has to investigate any element at its disposal suggesting that the PSB has inflated 
this  cost  by  deliberately  not  maximising  revenues  from  the  commercial  exploitation  of  the 
public service activities. 

Separation  of  accounts  allows  the  Commission  to  carry  out  its  proportionality  test  and 
examine  alleged  cross-subsidisation.  Accordingly,  Member  States  have  been  required  by 
Directive 80/723/EEC41 (“Transparency directive”) to take the measures necessary to ensure 
that PSB operators make a separation in their accounts between costs and revenues of public 
service and non-public service activities.  

40 

41 

Judgement of 24 July 2003, Case C-280/00, Altmark Trans, ECR 2003 p. I-7747. 
OJ L 195, 29.7.1980, p. 35, as last amended by Directive 2000/52/EC (OJ L 193, 29.7.2000, p. 75). 

EN 

30 

   EN 

 
                                                 
1.11.4.  Changing environment 

Over  the  past  number  of  years,  the  broadcasting  sector  has  been  subject  to  constant  change 
pushed  by  technological  development  which  has  led  to  the  creation  of  numerous  new 
activities  and  services.  Firstly,  broadcasters  in  many  Member  States  are  increasingly 
preparing to switch from analogue to digital transmission of broadcasting signals. Due to this 
change,  more  frequencies  will  become  available  (the  ‘digital  dividend’)  and  thus  new 
channels.  The  digital  age  is  also  changing  the  broadcasting  landscape  into  one  of 
communication.  “Convergence”  is  the  term  used  by  the  industry.  Innovation  will  make 
broadcasters move into areas of new media, delivering new content over all kind of platforms, 
such  as  mobile,  satellite,  and  Internet.  Telecommunication  operators  are  entering  the 
broadcasting  market  by  distributing  TV  signals  over  DSL.  At  the  same  time,  other  media 
companies, such as traditional publishing companies are also entering the new media market.  

2. 

PART TWO: STATE AID CONTROL PROCEDURES AND RECOVERY  

2.1. 

Registered aid cases 

The Commission controls the Member States’ granting of State aid by means of a formal and 
transparent procedure (Council Regulation (EC) No 659/1999). According to the regulation, 
“any  plans  to  grant  new  aid  shall  be  notified  to  the  Commission  in  sufficient  time  by  the 
Member  State  concerned.”  Although  the  vast  amount  of  aid  is  notified,  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 complaint42. 

In  2004,  there  were  just  under  700  cases43  registered  by  the  Commission:  570  cases  were 
notified  by  Member  States,  87  non-notified  cases  initiated  by  the  Commission,  41  cases 
examining existing aid44. In addition, 322 information forms were submitted under the block 
exemption  regulations  (see  below).  Excluding  the  information  forms,  47%  of  all  registered 
cases  in  2004  concerned  the  agricultural  sector  and  43%  the  manufacturing  and  service 
sectors. Of the remaining cases, 7% involved transport and energy and 4% the fisheries sector 
(Table 13). 

Of the 570 notifications, more than 380 were received from the five largest EU-15 Member 
States:  Italy  accounted  for  30%,  Germany  13%,  France  10%,  Spain  8%  and  the  United 
Kingdom 6%. Of the 87 non-notified cases, 20 concerned Italy, 19 Germany, 11 the United 
Kingdom and 7 France.  

Table 13: Number of registered aid cases in 2004 

42 

43 

44 

In 2004 there were 223 registered complaints, some of which may lead to new registered cases.  
This figure excludes the information sheets submitted under the block exemption regulations as well as 
the 72 cases which were withdrawn during the course of the year. 
The vast majority concerned agricultural cases in the new Member States. 

EN 

31 

   EN 

 
                                                 
Sector

Notified 
aid cases 

Non-
notified 
aid cases

Existing 
aid cases

Total

Agriculture
Manufacturing and services 
Transport and energy
Fisheries
Total

252
257
41
20
570

40
36
5
6
87

36
5
0
0
41

328
298
46
26
698

Source: DG Competition, DG Fisheries, DG Agriculture, DG Transport. 

With a view to reducing the administrative burden for specific types of aid, block exemptions 
for aid to SMEs, training aid, employment aid, certain types of aid in the fisheries sector and 
aid to SMEs in the agricultural sector have come into force over the past few years45. As one 
would expect, the number of notifications for these types of aid has fallen as Member States 
make  increasing  use  of  the  possibilities  offered  by  the  block  exemption  regulations.  By  the 
end of January 2005, more than 900 information sheets had been submitted (see Table 14). In 
2004 alone, the Commission received 151 information forms on exempted aid for SMEs, 78 
forms on exempted training aid, 21 forms on exempted employment aid and 72 for SMEs in 
the agricultural sector.  

Five  Member  States,  Italy  (26%  of  the  total),  the  United  Kingdom  (22%),  Germany  (11%), 
Spain (8%) and Belgium (7%) accounted for 75% of all the information forms submitted in 
2004.  Compared  with  2003,  virtually  all  other  Member  States  increased  their  use  of  the 
possibilities  offered  to  exempt  aid.  Six  of  the  ten  new  Member  States  also  submitted 
information forms on exempted aid by the end of 2004. 

Table 14: Trend in the number of information sheets submitted under the block 
exemption regulations 

Type of block 
exemption regulation

2001

2002

2003

2004 

Year

January 
2005

Total as of 
end January 
2005

SME
Training
Employment
SMEs in agriculture
Total number

101
48
0
-
149

124
81
0
-
205

139
53
8
-
200

151
78
21
72
322

26
6
2
2
36

541
266
31
74
838

Note: Figures exclude cases withdrawn. By the end of January 2005, 5 information sheets had been submitted 
under the recently adopted block exemption regulation for fisheries. Source: DG Competition, DG Fisheries, DG 
Agriculture. 

45 

Commission  Regulations  (EC)  No  70/2001  of  12  January  2001  on  State  aid  to  SMEs  (OJ  L  10, 
13.1.2001,  p.  33);  (EC)  No  68/2001  of  12  January  2001  on  training  aid  (OJ  L  10,  13.1.2001,  p.  20); 
(EC)  No  2204/2002  of  5  December  2002  on  State  aid  for  employment  (OJ  L  337,  13.12.2002,  p. 3); 
(EEC)  No  1/2003  of  23  December  2003  on  State  aid  to  SMEs  in  the  agricultural  sector  (OJ  L  1, 
3.1.2004, p. 1). 

EN 

32 

   EN 

 
 
 
                                                 
2.2. 

Commission decisions 

In  2004,  the  Commission  took  566  final  decisions46.  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 around 87% of decisions taken in 2004. 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  (making  up  6%  of  the  decisions  in  2004  in  addition  to  the  87%  of 
decisions approved without a formal procedure) 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 2004).  

Table 15 shows the share of incompatible and compatible aid cases on which the Commission 
reached a decision between 2002 and 2004. Over this three-year period, the five largest EU-
15  Member  States  accounted  for  more  than  70%  of  all  final  decisions:  Italy  and  Germany 
each made up around 20% of the total, France (13%), Spain (12%) and the United Kingdom 
(9%). Following accession in May 2004, ten final decisions were taken in 2004 on new aid 
measures in the new Member States. 

Of the 118 negative decisions over this period, more than half concerned Germany (35) and 
Italy (25). Only two other Member States, Spain (13) and France (12) reached double-figures 
with as many as nine of the EU-15 Member States having less than five negative decisions in 
the last three years. 

Just  under  half  (47%)  of  all  final  decisions  over  the  period  2002-2004  were  in  the 
manufacturing  and  service  sectors,  followed  by  agriculture  (40%),  fisheries  (7%)  and 
transport (6%). It is important to bear in mind that these figures do not distinguish between 
large and complex cases involving billions of euro and requiring a lengthy investigation and 
relatively minor measures for which the aid amount may be less than one million euro. 

Table 15: Number of negative and positive decisions, 2002-2004 

46 

Excluded  under  ‘final’  decisions  are  all  decisions  taken  in  2004  to  open  a  formal  investigation 
procedure (42 in 2004), corrigenda, information injunctions, court cases, proposal appropriate measures 
as well as measures approved under the block exemption regulations for which there is no Commission 
decision as such. The total however includes 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 22 such decisions 
in 2004. Also included under ‘positive’ decisions are the 4 conditional decisions taken in 2004.  

EN 

33 

   EN 

 
                                                 
2002-2004

2004

Approved 
without 
objections
1693
9
61
45
299
43
203
220
45
349
5
105
48
37
35
33
156

Other 
positive 
decisions
175
1
11
7
43
1
17
20
4
27
0
7
6
9
1
3
18

Total
New MS
BE
DK
DE
EL
ES
FR
IE
IT
LU
NL
AT
PT
FI
SE
UK

Negative

Total

118
0
8
1
35
3
13
12
1
25
2
4
3
3
1
1
6

1986
10
80
53
377
47
233
252
50
401
7
116
57
49
37
37
180

Approved 
without 
objections
470
9
18
12
76
8
41
52
16
130
1
30
8
8
8
8
45

Other 
positive 
decisions
54
1
7
4
9
1
4
10
2
6
0
2
1
1
1
1
4

Negative

Total

42
0
3
1
10
1
3
6
0
12
0
1
1
1
0
1
2

566
10
28
17
95
10
48
68
18
148
1
33
10
10
9
10
51

Note: Some double-counting exists in those cases for which there is both a negative and positive decision. The 
category  ‘other  positive  decisions’  is  made  up  of  positive  and  conditional  decisions  following  a  formal 
investigation procedure as well as all ‘no aid’ decisions. For the ten new Member States in 2004, 10 decisions 
were  taken,  9  approved  without  objections  and  the  other  a  no  aid  decision.  Source:  DG  Competition,  DG 
Fisheries, DG Agriculture, DG Transport. 

2.3. 

Recovery of unlawful aid 

Article 14(1) of Council Regulation (EC) No 659/1999 states that “where negative decisions 
are  taken  in  cases  of  unlawful  aid,  the  Commission  shall  decide  that  the  Member  State 
concerned shall take all necessary measures to recover the aid from the beneficiary.”  

As of 31 December 2004, there were 93 pending recovery decisions, compared to 90 at the 
end  of  2003.  In  the  course  of  2004,  19  cases  were  closed  while  a  further  22  new  recovery 
decisions were taken (Table 16). The “inflow” of new recovery cases is likely to remain high 
in 2005 and in 2006 (first recovery decisions for the ten new Member States are expected later 
this year). 

The  geographical  distribution  of  pending  recovery  cases  remains  stable:  Germany  accounts 
for almost half the pending recovery cases (47%) followed by Spain (22%), Italy (12%) and 
France  (11%).  It  should  also  be  noted  that  there  are  no  pending  cases  in  six  of  the  EU-15 
Member States nor are there any as yet in the ten new Member States. 

Table 16: Pending recovery cases by Member State, 2004 

EN 

34 

   EN 

 
 
Member 
State

DE
ES
IT
FR
BE
NL
EL
PT
SW
AT
DK
TOTAL

Situation 
01/01/04
44
20
8
8
5
3
1
1
0
0
0
90

New cases
In 2004
8
3
5
3
0
0
0
0
1
1
1
22

Cases 
closed in 
8
3
2
1
2
1
0
0
0
1
1
19

Situation 
31/12/2004
44
20
11
10
3
2
1
1
1
0
0
93

Source: DG Competition. 

Table 17 provides data on the amounts of aid to be recovered under the 91 recovery decisions 
adopted since 200047. For 69 of these decisions, relatively accurate information exists on the 
amount of aid involved. This information shows that the total amount of aid to be recovered 
on the basis of decisions adopted between 2000 and 2004 is € 9.7 billion. Half of this is due to 
decisions taken in 2004 (Landesbanken, France Télécom, Spanish shipyards).  

47 

On  31.12.2004,  there  were  still  a  further  21  recovery  decisions  pending  that  were  adopted  before 
1.1.2000. 

EN 

35 

   EN 

 
 
                                                 
Table 17: Trend in the number of recovery decisions and amounts to be recovered, 
2000-2004 

Number of recovery 
decisions adopted

Number of recovery 
decisions for which the 
aid amount is known
Total aid* to be 
recovered (in million €)
Aid already recovered 
(million €)
   Of which:
   (a) Principal 
reimbursed/in blocked 
account
   (b) Aid lost in 
bankruptcy
   (c) Recovery interest 
paid
Amount outstanding 
(excluding interest)
% still pending to be 
recovered

2000

2001

Date of Decision
2002
2003

2004

Total

16

15

21

12

22

17

10

8

22

17

93

69

361,6

1827,5

1577

1115,3

4822,2

9703,6

17,1

797,8

1438,8

1227,4

3272,1

6753,2

17,1

797,8

1036,4

892,4

2324,8

5068,5

1,2

1,2

402,4

335

947,4

1684,8

344,5

1029,7

539,4

222,9

2497,4

4633,9

95,30% 56,30% 34,20% 20,00% 51,80% 47,80%

* Only for Decisions for which the aid amount is known 

Source: DG Competition. 

For  22  of  the  recovery  decisions  adopted  since  2000,  there  is  unfortunately  no  accurate 
information on the total volume of aid involved. Most of these decisions (namely 20) concern 
aid schemes. Especially in the fiscal and social security schemes, Member States often claim 
that it is particularly difficult to collect this information. Among the main reasons given: the 
large  number  of  beneficiaries;  aid  granted  is  partially  compatible,  which  requires  a  full 
examination of each individual file; older records are no longer kept.  

Of  the  €  9.7  billion  of  aid  to  be  recovered  under  decisions  adopted  since  2000,  some  €  6.7 
billion  (including  interest)  had  been  effectively  recovered  by  the  end  of  February  2005. 
Excluding interest, almost 50% of the total amount to be recovered is still pending.  

Recovery  of  incompatible  state  aid  is  a  lengthy  process:  21  of  the  recovery  decisions  still 
pending at the end of 2004 were adopted before the year 2000. Of the 91 decisions adopted 
between  2000  and  2004,  only  21  have  been  closed/are  proposed  to  be  closed  by  the  end  of 
2004 (Table 18). 

EN 

36 

   EN 

 
 
Table 18: Trend in the closure of recovery cases 

Year of the Decision

2000

2001

2002

2003

2004

Total

Number of recovery 
decisions adopted
Number of recovery 
cases closed as of 
31/12/04

Source: DG Competition. 

16

7

21

2

22

7

10

3

22

2

91

21

The  time  required  to  complete  recovery  procedures  is  particularly  long  in  cases  where 
beneficiaries  are  in  insolvency  proceedings.  Of  the  59  pending  recovery  cases  that  concern 
individual aid, 28 relate to companies that have been declared insolvent and that are at various 
stages  of  national  bankruptcy  proceedings.  For  17  of  these  28  companies,  Member  States 
have  submitted  information  confirming  that  they  are  no  longer  active  (but  bankruptcy 
proceedings have not yet been completed). In most of these cases, the prospects of recovery 
are limited (insufficient mass to satisfy the bankruptcy claim)48. However, in these cases, we 
can  normally  conclude  that  the  aid  granted  has  no  longer  a  significant  distortive  effect  on 
competition  (amount  of  aid  involved:  €  992  million  excluding  interests).  In  the  11  other 
insolvency  cases,  the  original  beneficiary  of  the  aid  may  still  be  active  or  the  economic 
activity  concerned  is  continued  by  a  successor  company.  The  aid  amount  involved  in  such 
cases  is  € 401 million  (of  which  only  € 19 million  has  already  been  recovered).  These  are 
often very complex cases and require an active follow-up (to ensure that the recovery decision 
is not circumvented). 

In a number of cases, the Commission found that Member States were not taking all measures 
available under national law to execute the decision. In 2004, seven such cases were identified 
and the Commission proposed to initiate Article 88(2) or 228(2) court proceedings against the 
Member State concerned.  

The Commission will seek to achieve a more immediate and effective execution of recovery 
decisions,  which  will  ensure  equality  of  treatment  of  all  beneficiaries.  To  this  effect,  the 
Commission will explore ways to monitor more closely the execution of recovery decisions 
by  Member  States.  Recovery  has  to  be  carried  out  in  accordance  with  national  procedures. 
But where it appears that recovery is not carried out in an immediate and effective manner, 
the  Commission  could  more  actively  pursue  non-compliance  under  Articles  88(2),  226  and 
228 of the Treaty. 

3. 

PART THREE: LEGISLATIVE AND POLICY DEVELOPMENTS  

3.1. 

A modernized State aid policy 

As  announced  in  the  Commission’s  Communication  to  the  Spring  European  Council 
“Working  together  for  growth  and  jobs  –  A  new  start  for  the  Lisbon  agenda”49,  the 

48 

49 

In  these  17  cases,  only  €  4.1  million  has  been  recovered  to  date  (out  of  a  total  aid  amount  of  €  903 
million). 
COM(2005) 24, 2.2.2005. 

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37 

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Commission  will  present  a  consultation  document  on  the  future  of  State  aid  policy  before 
summer 2005. The review process for a series of guidelines and frameworks in the State aid 
field which has already been started will form part of the envisaged reform package.  

3.1.1.  Review of the regional aid guidelines 

The Commission’s approach to regional state aid will be updated for the period 2007-2013, to 
take  account  of  developments  in  the  seven  years  since  the  last  guidelines  were  adopted  in 
1998,  in  particular  enlargement.  The  Commission  will  accordingly  review  the  Community 
guidelines  on  regional  aid  (or  ‘RAG’)  and  integrate  the  Multisectoral  Framework  on 
regional  aid  for  large  investment  projects  into  the  guidelines.  A  final  version  of  the 
guidelines should in principle be adopted by the end of 2005, in order to leave ample time for 
Member States and the Commission to ensure a smooth transition by the end of 2006.  

3.1.2.  Revision of Environmental aid Guidelines 

Environmental  protection  is  essential  in  itself  and  can  also  be  a  source  of  competitive 
advantage for the EU economy. In particular, it can provide opportunities for innovation, new 
markets  and  increased  competitiveness  through  resource  efficiency  and  investment.  An 
important  instrument  to  steer  State  aid  towards  the  protection  of  the  environment  while 
keeping its distortive effects on the market to a minimum, are the Commission guidelines on 
state aid for environmental protection. Their current version will be applicable until the end of 
2007  but  reflections  have  already  started  now  on  how  to  address  better  the  potential  of 
sustainable development.  

3.1.3.  Review of the R&D Framework 

In February 2005, the European Commission relaunched the Lisbon Strategy of 2000 to make 
the  EU  economy  more  competitive50.  Given  that  R&D  is  a  decisive  factor  for  growth  and 
employment  and  finally  the  competitiveness  of  the  European  economy,  it  is  important  to 
achieve a high level of investment in it. The spring European Council of 2004 recognised in 
particular the relative weakness of European private sector investment in R&D51 stressing that 
it  needs  to  be  increased.  To  achieve  this  goal,  the  EU  and  Member  States  have  to  work 
together,  mutually  reinforcing  themselves,  and  strengthen  the  interactions  between  public 
research bodies and industry.  

State aid plays a vital role in the growth of R&D by enabling Member States to target market 
failures  and  provide  right  incentives  to  invest  sufficiently  in  R&D.  Moreover,  public  sector 
investment  should  secure  greater  leverage  of  private  funds.  In  this  context,  the  Community 
Framework for State aid for R&D has to be reviewed before its expiry on 31 December 2005. 
As  reported  in  the  autumn  2004  Scoreboard,  the  Commission  has  launched  a  study52  to 
prepare the review, and a new text should enter into force at the beginning of 2006.  

50 

51 

52 

http://europa.eu.int/growthandjobs/index_en.htm 
EU-15: 56,2%; US: 63,1%; Japan: 73,9% (Source :DG Research; Data: OECD, Eurostat). 
“The impact of R&D state aid and its appraisal on the level of EU research expenditure in the context of 
the Barcelona European Council objectives.” 

EN 

38 

   EN 

 
                                                 
3.1.4.  Communication on State aid to innovation 

In a competitive European economy, a high level of investment in R&D goes hand in hand 
with  strong  innovation.  The  Commission  took  account  of  this  connection  by  adopting  in 
November  2004  a  Vade-mecum  on  Innovation  which  provides  guidance  on  measures 
supporting  innovation53.  Moreover,  the  Commission  intends  to  adopt  a  Communication  on 
State  aid  and  innovation  later  in  2005.  This  consultation  paper  may  provide  in  particular 
suggestions for a more innovation-friendly environment.  

3.1.5. 

Services of General Economic Interest (SGEI) 

In order to increase legal certainty, particularly after the Altmark judgement, and to reduce the 
burden  of  notification  in  the  area,  the  Commission  presented  a  package  on  Services  of 
General Economic Interest and public service compensation in February 2004. The package 
consists  of  a  Commission  Decision  based  on  Article  86  of  the  Treaty,  a  Framework  and  a 
modification of the Transparency Directive. 

The  proposed  Commission  Decision  limits  the  notification  burden  on  Member  States,  by 
exempting  all  public  service  compensation  that  respects  certain  substantive  conditions  (in 
particular the absence of overcompensation) and whose amounts are under a certain threshold. 
Further,  it  completely  exempts  hospitals  and  social  housing  from  notification  without  a 
threshold.  

Where  public  service  compensation  exceeds  the  threshold  foreseen  in  the  Commission 
Decision,  the  notification  obligation  therefore  remains.  For  these  services,  the  Commission 
proposed  a  Community  Framework  which  should  give  guidance  to  the  Member  States  and 
their public authorities on how the Commission will assess their compatibility.  

Finally, the package modifies the existing Transparency Directive to ensure clear separation 
of  the  operators’  public  service  costs  and  costs  for  commercial  services,  to  enable  clear 
assessment of the costs of public services. 

The  Commission  consulted  with  Member  States  in  April  2004,  and  has  received  Opinions 
from both the Committee of Regions and the European Economic and Social Committee in 
2004.  The  European  Parliament  adopted  a  report  on  the  Commission  package  in  February 
2005.  The  Commission  will  take  into  account  the  comments  received  and  adopt  the  final 
package in 2005. 

3.2. 

State aid aspects in the implementation of the Emission Trading Scheme 

The  Commission’s  environmental  policy  comprises  climate  change  including  the  Kyoto 
Protocol which aims at reducing the emission of greenhouse gases and entered into force on 
16 February 2005.  

The  Emission  Trading  Scheme  (ETS)54  plays  a  major  role  to  ensure  compliance  with  the 
Kyoto Protocol by using a market based instrument. It is the first international trading system 
for  CO2  emissions  and  will  cover  more  than  12000  installations  in  the  EU-25  representing 
close to half of Europe’s emissions of CO2.  

53 

54 

http://europa.eu.int/comm/competition/state_aid/others/vademecum/innovation_vademecum.pdf 
Introduced by Directive 2003/87/EC of 13 October 2003 (OJ L 275, 25.10.2003, p. 32). 

EN 

39 

   EN 

 
                                                 
The  National  Allocation  Plans  (NAPs)  are  the  cornerstone  of  the  ETS.  They  establish  the 
allocation of emission allowances and the methods Member States plan to use for the 2005-
2007 trading period. The underlying Emission Trading Directive requires the Commission to 
assess compliance of these plans with the ETS directive including their compliance with State 
aid rules since NAPs could include state aid and constitute distortive practices in the context 
of  allowance  allocation.  One  of  the  most  distortive effects of emission allowance allocation 
would stem from allocating more allowances than needed to cover projected emissions giving 
companies an asset without a sufficient environmental counterpart.  

The  directive  allows  in  the  first  trading  period  to  sell  up  to  a  maximum  of  5%  of  the 
allowances. To the extent that the allowances are not sold at market price or are given for free, 
State aid could be involved. A NAP could also contain State aid where Member States allow 
banking of allowances between trading periods55.  

Until  now,  the  Commission  has  not  taken  any  formal  decision  under  State  aid  rules  but 
screened all NAPs in order to identify if problems of incompatible State aid existed. By the 
end of 2004, the Commission had taken decisions on 21 NAPs56 under the Emission Trading 
Directive.  

3.3. 

State aid to the agricultural sector 

The  new  Commission  Regulation  (EC)  No  1/2004  granting  exemption  for  certain  types  of 
State aid accorded to small and medium-sized agricultural enterprises entered into force on 24 
January  2004.  Member  States  will  no  longer  be  required  to  notify  these  aids  to  the 
Commission in advance to obtain approval. 

Under  Articles  3  and  19  of  the  Regulation,  for  individual  aid  or  an  aid  scheme  to  be 
exempted, Member States must “at the latest 10 working days before the entry into force of an 
aid  scheme,  or  the  granting  of  individual  aid  outside  any  scheme,  exempted  by  this 
Regulation, [……], forward to the Commission, with a view to its publication in the Official 
Journal of the European Union, a summary of the information regarding such aid scheme or 
individual aid in the form laid down in Annex I.” 

In  accordance  with  this  procedure,  Member  States  have  already  communicated  to  the 
Commission services the summaries of 72 different measures in 2004. The Commission has 
published 
address: 
http://europa.eu.int/comm/agriculture/stateaid/exemption/index_en.htm 

summaries 

following 

Internet 

these 

the 

the 

on 

at 

3.4. 

State aid to the fisheries sector 

On 1 November 2004 a new set of rules on state aid to the fisheries sector came into force. 
These  rules  bring  state  aid  policy  into  line  with  the  reformed  Common  Fisheries  Policy, 
adopted in December 2002. The new rules provide for a ‘block exemption’ for certain types 

55 

56 

EN 

To date, all Member States except France excluded banking. 
On  7  July  the  Commission  decided  on  the  NAPs  of  Denmark,  Ireland,  the  Netherlands,  Slovenia, 
Sweden, Austria, Germany and the UK; on 20 October decisions were taken on the NAPs of Belgium, 
Estonia,  Latvia,  Luxembourg,  the  Slovak  Republic,  Portugal,  Finland  and  France ;  in  late  December 
decisions  were  taken  on  the  NAPs  of  Cyprus,  Hungary,  Lithuania,  Malta  and  Spain.  The 
communications  regarding 
themselves  can  be  found  at 
http://www.europa.eu.int/comm/environment/climat/emission_plans.htm 

these  decisions  and 

the  decisions 

40 

   EN 

 
                                                 
of  aid  which  will  no  longer  have  to  be  notified  to  and  approved  by  the  Commission  before 
Member  States  can  implement  them.  State  aid  in  the  fisheries  sector  which  does  not  fall 
within  the  block  exemption  Regulation57  will  still  have  to  be  notified  to  the  Commission. 
Such State aid will be subject to new Guidelines for the examination of State aid to fisheries 
and aquaculture58, which also entered into force on 1 November 2004. 

The measures covered by the block exemption relate to aid unlikely to threaten conservation 
or distort competition in a manner not in line with the EU interest and which therefore have 
never  given  rise  to  investigation  procedures  by  the  Commission.  The  aid  concerned  has  to 
comply strictly with the criteria set out in the block exemption regulation, which are identical 
to  those  governing  the  allocation  of  EU  funds  under  the  Financial  Instrument  for  Fisheries 
Guidance (FIFG). The block exemption will apply to aid granted to small and medium-sized 
enterprises (SMEs) for amounts below € 1 million or to aid designed to finance measures with 
a  maximum  eligible  amount  of  €  2  million.  To  ensure  the  proper  allocation  of  such  aid, 
monitoring will take place through simplified ex-ante information of the Commission on the 
aid  to  be  granted,  published  on  the  internet  and  the  Official  Journal,  and  ex-post  reporting 
obligations.  

In  addition,  on  6  October  2004  the  Commission  adopted  a  Regulation  concerning  “de 
minimis” aid for the agriculture and fisheries sectors59, which entered into force on 1 January 
2005.  The  Regulation  exempts  national  aid  of  up  to  €  3 000  per  farmer  and  fisherman  over 
three  years  from  the  requirement  of  prior  notification.  To  avoid  distortions  of  competition, 
Member  States  granting  such  aid  will  have  to  respect  an  overall  ceiling  equal  to  0.3%  of 
agricultural  or  fisheries  output.  Member  States may  grant  aid  fulfilling  all  the  conditions  of 
the Regulation without prior approval by the Commission. However, they will have to keep 
registers to show that both ceilings have been respected.  

As regards the role of aid to fisheries in the context of reducing overall State aid levels, it is 
worth noting the following: 

–   

–   

the very low absolute amount of State aid in Fisheries (EU-15, € 389 million in 2003); 

the fact that the State aid discipline applies to the Fisheries sector only insofar as the 

Council decides that it applies (Articles 36 and 37 of the EC Treaty);  

–   

the  complete  parallelism  of  eligibility  rules  for  structural  funds  aid  in  the  Fisheries 
Sector  and  State  aid  compatibility,  thus  ensuring  a  coherence  in  the  sectoral  approach 
(which for example does not exist in the manufacturing sectors or agriculture). 

3.5. 

State aid to the transport sector 

De minimis 

57 

58 

59 

Commission Regulation (EC) No 1595/2004 of 8 September 2004 on the application of Articles 87 and 
88  of  the  EC  Treaty  to  State  aid  to  small  and  medium  sized  enterprises  active  in  the  production, 
processing and marketing of fisheries products (OJ L 291, 14.9.2004, p. 3). 
OJ C 229, 14.9.2004, p. 5. 
Commission Regulation (EC) No 1860/2004 of 6 October 2004 on the application of Articles 87 and 88 
of the EC Treaty to de minimis aid in the agriculture and fisheries sectors (OJ L 325, 28.10.2004, p. 4) 

EN 

41 

   EN 

 
                                                 
On 3 March 2004, the Commission adopted a draft regulation proposing to amend Regulation 
(EC)  No  69/2001  of  12  January  2001  on  the  application  of  Articles  87  and  88  of  the  EC 
Treaty to de minimis aid. In the draft regulation, it is proposed to remove, with the exception 
of the acquisition of vehicles by road hauliers, the exclusion of transport from the de minimis 
rule,  except  in  certain  defined  cases,  and  to  exclude  the  coal  sector  from  the  scope  of  this 
regulation. Indeed, in the light of the Commission’s experience in many State aid cases in the 
transport sector over the years, the Commission considers that it can be established that, with 
the exception of the acquisition of vehicles by road hauliers, aid to transport companies not 
exceeding a ceiling of EUR 100 000 over a period of three years is not liable to affect trade 
between Member States and does not distort or threaten to distort competition. With regard to 
the coal sector, which has been covered by the EC Treaty only since 24 July 2002, following 
the  expiry  of  the  ECSC  Treaty,  it  has  been  subject  to  specific  rules  which  prevent  the 
application of other exemption regimes.  

During  2005,  and  in  accordance  with  Council  Regulation  (EC)  No  994/98,  the  Advisory 
Committee on State aid will be consulted twice  on the draft proposal (before publication in 
the OJ and prior to adoption of the final regulation) which is expected to be finally adopted by 
the Commission in autumn 2005. 

Aviation 

In  the  Commission  decision  concerning  advantages  granted  by  the  Walloon  Region  and  the 
publicly-owned Brussels South Charleroi Airport (BSCA) to the airline Ryanair in connection 
with  its  establishment  at  Charleroi,  the  Commission  gave  indications  as  to  the  means  by 
which  public  authorities  may  support  the  opening  of  new  air  links  from  secondary  airports 
and hence make better use of secondary airports providing regional benefits and a reduction 
of  air  congestion.  Following  this  decision  the  Commission  services  have  presented  to  the 
Member States (9 March 2005) a set of draft Community guidelines on financing of airports and 
start-up  aid  to  airlines  departing  from  regional  airports,  which  aim  to  clarify  and  make  more 
transparent  the  different  possibilities  that  are  at  the  disposal  of  regional  airports  to  develop 
themselves  on  the  market  in  total  conformity  with  Community  rules  on  State  aid.  The  final 
text could be expected for adoption by mid-2005. 

Rail 

Revitalising  the  railway  sector  is  one  of  the  main  objectives  of  European  transport  policy. 
Complementary to the gradual opening of the freight railway market, control of State aid will 
play  an  essential  role  in  the  establishment  of  a  railway  industry  which  is  competitive  and 
efficient.  Therefore  the  Commission  is  envisaging  a  framework  concerning  the  public 
financing of railway companies, which will be based on the principles of transparency, non-
discrimination and proportionality, while taking into account the main objectives of European 
transport  policy.  This  framework  should  provide  Member  States  and  third  parties  with  the 
necessary transparency and clarity with regard to the application of the State aid Treaty rules 
to the railway sector and also take into account the ongoing liberalisation of the rail freight 
sector. A proposal for such a framework is envisaged for the end of 2005. 

Maritime 

EN 

42 

   EN 

 
On 17 January 2004 a new set of rules on State aid to maritime transport60 came into force. 
The  main  changes  are  the  introduction  of  a  nationality  requirement  for  seafarers  on  intra-
community passengers traffic, the introduction of an EU-flag requirement for a share of ships 
benefiting from aid and a clarification on how and to which extent the guidelines could apply 
to the towage and dredging activities.  

3.6. 

Enlargement 

In December 2004, the competition chapters of the accession negotiations with Romania and 
Bulgaria  were  closed.  Prior  to  closure,  three  elements  had  to  be  put  in  place:  the  necessary 
legislative framework, an adequate administrative capacity and a credible enforcement record. 
During  the  negotiations,  the  Commission  emphasised  in  particular  the  need  for  the  two 
countries to strengthen their State aid enforcement record, with special attention given in the 
case  of  Romania  to  the  restructuring  of  its  steel  sector.  A  series  of  safeguard  clauses  are 
foreseen  in  the  Accession  Treaty,  in  the  event  the  acceding  countries  fail  to  implement 
commitments undertaken in the context of the accession negotiations, as well as a provision 
for the possible postponement of the date of accession by one year in the event of either state 
being  manifestly  unprepared  to  meet  the  requirements  of  membership.  In  the  case  of 
Romania,  the  Treaty  specifies  that  the  Council  may,  on  the  basis  of  a  Commission 
recommendation  and  after  a  detailed  assessment  in  the  autumn  of  2005,  decide  on  such  a 
postponement, if it finds shortcomings in Romania’s fulfilment of specific conditions in the 
competition area. There will be no list with existing aid measures attached to the Accession 
Treaty  of  Romania  and  no  application  of  the  interim  procedure,  until  the  Commission 
concludes  that  Romania’s  state  aid  enforcement  record  has  reached  a  satisfactory  level. 
Bulgaria is generally meeting the commitments and requirements arising from the accession 
negotiations for the Competition chapter and has not requested any transitional arrangements 
in  the  state  aid  area.  The  Accession  Treaty  with  both  Romania  and  Bulgaria  is  due  to  be 
signed on 25 April 2005. 

The  two  other  candidate  countries,  Croatia  and  Turkey  are  still  waiting  to  open  their 
membership  negotiations.  Article  70  of  the  Stabilisation  and  Association  Agreement  (SAA) 
with  Croatia,  which  entered  into  force  on  1  February  2005  lays  down  the  country’s 
obligations with regards to State aid. The date set by the European Council for the opening of 
negotiations with Turkey is 3 October 2005. 

4. 

ONLINE STATE AID SCOREBOARD, REGISTER AND OTHER REPORTS ON STATE AID 

The online Scoreboard contains electronic versions of this and previous Scoreboards as well 
as a set of key indicators, a wide array of statistical tables and 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/ 

Any  queries  or  requests  for  data  should  be  sent 
Stateaid-Scoreboard@cec.eu.int 

to 

the  scoreboard  mailbox  at 

State aid Register – a second transparency tool 

60 

OJ C 13, 17.1.2004, p. 3. 

EN 

43 

   EN 

 
                                                 
The  Commission’s  State  aid  Register  has  been  online  since  2001.  The  Register  provides 
detailed information on all State aid cases which have been the object of a final Commission 
decision  since  1  January  2000  as  well  as  block  exemption  cases  published  in  the  Official 
Journal.  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/ 

Following an extensive review in the last quarter of 2004, a major revamp of the Register is 
foreseen and should hopefully be largely completed by the end of 2005. 

Annual Competition Report and Competition Policy Newsletter 

The Commission publishes an Annual Report on Competition Policy which summarises the 
most important legal developments and case-law of the year as well as statistical data on the 
Commission’s work during the relevant year. 

http://europa.eu.int/comm/competition/annual_reports/ 

A  Competition  Policy  Newsletter  is  also  published  three  times  a  year  by  the  Competition 
Directorate-General  of  the  European  Commission.  It  aims  at  describing  and  discussing  in 
more detail legislative developments as well as interesting case-law and covers generally the 
preceding four months. 

http://europa.eu.int/comm/competition/publications/cpn/ 

5. 

METHODOLOGICAL NOTES 

The Scoreboard covers State aid as defined under Article 87(1) EC Treaty that is granted by 
the  EU  Member  States  and  has  been  examined  by  the  Commission.  Accordingly,  general 
measures  and  public  subsidies  that  have  no  affect  on  trade  and  do  not  distort  or  threaten  to 
distort  competition  are  not  dealt  with  in  the  Scoreboard  as  they  are  not  subject  to  the 
Commission’s  investigative  powers.  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  1995 
prices but have been re-referenced on the year 2003.  

This  spring  2005  edition  of  the  Scoreboard  focuses  largely  on  the  year  2003.  Data  for  the 
agricultural sector refer to the year 2002 as figures for 2003 are not yet available. In future, 
the Commission and Member States have pledged to reduce this time-lag with the result that 
2004 data should be available in the autumn 2005 edition of the Scoreboard. 

EN 

44 

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As  in  previous  years,  State  aid  data  collected  for  the  Scoreboard  are  grouped  according  to 
primary  objectives  which  may  be  either  horizontal  or  sector-specific.  Information  on  the 
objective of the aid, or, the sector to which the aid is directed, refers to the time the aid was 
approved  and  not  to  the  final  recipients  of  the  aid.  For  example,  the  primary  objective  of  a 
scheme  which,  at  the  time  the  aid  was  approved,  was  exclusively  earmarked  for  SMEs  is 
classified  as  aid  for  ‘SMEs’.  In  contrast,  aid  granted  under,  say,  a  regional  development 
scheme may ultimately be awarded to SMEs, but is not regarded as such if, at the time the aid 
was approved, the scheme was open to all enterprises. A secondary objective is one for which, 
in addition to the primary objective, the aid was exclusively earmarked at the time the aid was 
approved.  For  example,  a  scheme  for  which  the  primary  objective  is  R&D  may  have  as  a 
secondary objective ‘SME’ if it was directed exclusively at SMEs. As a result, the data now 
present  a  more  accurate  picture  of  the  total  amount  of  aid  exclusively  earmarked  for  SMEs 
though it is not possible to determine the total amount of aid that actually went to SMEs. 

The following symbols have been used in the Scoreboard: 

n.a. 
- 
0 

not available 
real zero 
less than half the unit used 

Further information on methodological issues may be found on the online Scoreboard: 

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

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ANNEX I: STATE AID FOR HORIZONTAL OBJECTIVES AND PARTICULAR SECTORS IN THE NEW 

MEMBER STATES, 2000-2003 

CZ

EU-15

New MS

EE CY LV LT HU MT PL

Annual averages
SI
SK
mio € % mio € % % % % % % % % % % %
29.841
5.286
6.868
5.388
377
1.211
918

1.462
116
149
147
14
348
79

100
13
15
10
8
-
-

73
15
16
14
1
2
2

72
16
17
9
-
21
2

29
1
2
1
-
11
2

10
2
2
2
-
1
0

24
2
2
2
0
6
1

31
-
0
3
2
-
-

23
0
1
4
2
-
2

41
2
3
7
-
4
1

28
4
1
1
1
-
-

6
-
-
1
4
-
0

5
1
-
-
2
-
-

631
54
24
9.085

9.977
1.753
903
13
17
6.657
240
1.162
165

1
0
0
23

25
4
2
0
0
17
1
3
0

44
4
1
560

4.608
1.441
105
246
73
1.413
51
1.685
15

1
0
0
9

75
24
2
4
1
23
1
28
0

0
-
-
3

90
10
-
4
2
0
1
80
-

20
-
-
33

-
-
-
-
-
-
-
-
-

11
0
-
4

78
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.
n.a.

-
-
-
25

69
68
-
-
-
-
-
-
0,7

-
-
-
3

95
64
0
-
-
-
31
-
-

1
-
0
24

59
56
-
-
-
2
-
0
0

0
-
-
-

94
89
46
-
-
-
1
-
5

-
-
-
11

83
12
1
5
0
57
1
1,5
-

1
2
-
4

28
20
-
7
-
7
-
-
0

1
-
-
20

72
54
1
22
31
3
8
6
0

39.839

100

6.067

100 2.050

8

315

27

41

769

155 2.403

168

130

Horizontal Objectives
     R&D
     Environment
     SME
     Commerce
     Employment aid
     Training aid
     Heritage conservation, 
cultural aid
     Natural disasters
     Risk capital
     Regional aid

Sectoral aid (1) (2)
     Manufacturing
        of which shipbuilding
        of which steel
        of which motor vehicles
     Coal
     Other Non-manufacturing
     Financial Services
     Other services

Total aid less agriculture, 
fisheries and transport in 
million €

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46 

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ANNEX II: DECISIONS TAKEN BY THE COMMISSION IN THE FIELD OF BROADCASTING SINCE 

THE ADOPTION OF THE BROADCASTING COMMUNICATION 

This  Annex  provides  summaries  of  the  decisions  that  have  been  taken  by  the  Commission  after  the 
adoption of the Broadcasting Communication. Many of these decisions have focused on individual aid 
measures  (ad  hoc  aid)  granted  by  Member  States  to  support  the  public  service  broadcaster.  The 
Commission has focused on the question of checking that the financial support granted through these 
ad hoc measures, on top of the funds deriving from recurrent funding schemes, was proportional to the 
net cost of the PSB. 

Positive decisions 

Belgium  –  N  548/2001  –  State  Aid  to  local  television  stations  in  the  French  Community,  decision 
adopted on 13.2.2002, OJ C 150, 22.06.2002, p. 7 

In the local television stations case, the Government of the French community in Belgium supported 
12  local  television  stations  situated  in  the  French  community  with  €  3.27  million  to  carry  out  their 
public service tasks. The Commission concluded that the compensation of the public service costs of 
the local television stations was compatible with the Treaty.  

United  Kingdom  -  N  631/2001  –  BBC  licence  fee,  decision  adopted  on  22.5.2002,  OJ  C  23, 
30.01.2003, p. 6 

In the BBC licence fee case, the UK Government gave the approval to the BBC to run 9 new digital 
services, including both radio and television, under the public service mission. The total net costs of 
the nine digital services for 2002-2003 were £ 90 million. In the light of the case law at that time61, the 
Commission considered that such compensation did not constitute a  measure disproportionate to the 
net public service costs of BBC, and therefore did not constitute an aid within the meaning of Article 
87(1). However, the Commission also noted that, even if the measure were to be considered as a state 
aid,  the  exception  of  Article  86(2)  would  apply,  on  the  basis  of  which  the  measure  would  be 
compatible with the Treaty.  

Portugal - C 85/2001 - Ad-hoc payments RTP, decision adopted on 15.10.2003, not yet published 

On the top of the annual compensation payments, a number of ad hoc measures were implemented by 
Portugal  for  RTP.  The  Commission  concluded  that  the  measures  amounting  to  PTE 68  006 million 
granted by Portugal to RTP in the form of an agreement with the social security scheme in 1993 (PTE 
1206 million), capital injections in the period 1994-97 (PTE 46 800 million), a loan in 1998 (PTE 20 
000 million) had to be regarded as state aid under Article 87 (1). However, the Commission found that 
the funding of RTP by means of ad-hoc aids was compatible with the common market under Article 
86 (2), as the funding was proportionate to the net costs of well defined and entrusted public service 
obligations.  Therefore,  the  State  funding  did  not  affect  trading  conditions  and  competition  in  the 
Community  to  the  extent,  which  would  be  contrary  to  the  common  interest  under  Article  86  (2).  It 
should  be  stressed  that,  in  order  to  exclude  any  over-compensation,  the  Commission  also  took  into 
account the recurrent financing of the broadcaster in the form of annual compensations.  

61 

C-53/00 Judgment of 22.11.2001, Ferring, Rec.2001, p.I-9067. The Court stated that any compensation 
proportional  to  the  net  costs  incurred  in  the  discharge  of  a  public  service  obligation  was  not  to  be 
considered as a State aid.  

EN 

47 

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Italy - C 62/1999 - Ad-hoc payments RAI, decision adopted on 15.10.2003, OJ L 119, 23.04.2004, 1 

In a case concerning the Italian public broadcaster, the Commission found that over the period 1991 to 
1995  RAI  benefited  from  two  State  aid  measures  on  top  of  the  recurrent  financing  scheme  (licence 
fee). These measures are: a tax exemption on the re-evaluation of RAI assets, which was used to cover 
the losses of 199362 and the capital injection of 1992 amounting to ITL 100 billion. The support that 
Italy granted to RAI by means of these measures and the licence fee mechanisms did not lead to any 
overcompensation of the net-cost of the general service task entrusted to it in this period and therefore 
the  two  measures  constituted  a  compatible  State  aid  within  the  meaning  of  Article  86  (2).  The 
Commission also found that in that period RAI did not undercut advertising prices.  

France - C 60/1999 – Ad-hoc payments France 2 and 3, decision adopted on 10.12.2003, OJ L 361, 
8.12.2004, p. 21 

The financing of France 2 and France 3 is rather complex, consisting of a licence fee and sponsorship. 
In  addition,  during  the  period  1988-1994,  France  2  and  France  3  benefited  from  other  investment 
subsidies  and  France  2  from  capital  injections.  The  subsidies  received  by  France  2  in  the  reference 
period amounted to 886.56 million FRF and by France 3 to 578.5 million FRF. From 1991 to 1994, 
France 2 was supported by capital injections totalling 910 million FRF. In its decision of 10 December 
2003, the Commission concluded that the compensation in the form of grants and capital injections to 
France 2 and 3 constituted State aid under Article 87 (1) and was compatible with the common market 
within the meaning of Article 86 (2), since it did not lead to any overcompensation of the net costs of 
the  public  service  tasks  officially  entrusted  to  France  2  and  France  3.  In  the  period  1988-1994,  the 
public funds granted by the French authorities to France 2 and 3 were lower than the public service 
costs  (taking  into  account  all  the  revenues  of  both  channels)  and  there  was  no  evidence  of  anti-
competitive behaviour of the public channels in the sale of advertising space.  

Denmark - N 313/2004 – Recapitalisation of TV2,63 decision adopted on 6.10.2004, not yet published 

In order to restore the balance sheet of TV2 following the reimbursement of DKK 1 050 million, the 
Danish  authorities  planned  to  inject  capital  into  the  company  amounting  to  DKK  440  million.  The 
capital  was  to  be  granted  directly  from  the  general  State  budget.  In  addition,  other  measures  were 
foreseen  to  restore  the  balance  sheet  of  TV2  following  the  recovery.  The  Danish  authorities  would 
swap  their  current  debt  investment  in  the  company  for  equity  and  the  company  would  raise  new 
commercial loans from private banks. The loans were to be unsecured and granted on market terms. 
The Commission concluded that the envisaged capital injection of DKK 440 million and the debt-for-
equity  swap  were  necessary  to  restore  the  capital  that  TV2  would  need,  in  the  wake  of  the 
incorporation,  to  carry  out  its  public  service  obligations.  Therefore,  to  the  extent  that  these  two 
measures included State aid elements within the meaning of Article 87(1), they were compatible with 
the Common Market under Article 86(2).  

Negative decisions 

Denmark - C 2/2003 - Financing of TV2, decision adopted on 19.05.2004, not yet published 

The Commission calculated whether the State compensation was proportionate to the net cost TV2 had 
to bear in fulfilling its public service obligation and found that amount of aid that TV2/DENMARK 
received  exceeded  the  cost  of  fulfilling  its  public  service  mission  and  that,  during  the  period  1995-
2002,  TV2  had  been  overcompensated  by  DKK  628.2  million  (€  84.4  million).  The  Commission’s 
investigation revealed that the Danish State, as owner of TV2, did not behave like a market investor 
when  it  decided  to  reinvest  the  annual  amounts  of  excess  compensation  into  TV2.  Therefore,  the 

62 

63 

The advantage deriving from this measure has not been quantified in the decision (see paragraph 128). 
This decision follows the decision of reimbursement of illegal state aid (C 2/2003). 

EN 

48 

   EN 

 
                                                 
Commission  concluded  that  the  aid  had  overcompensated  TV2  by  some  DKK  628.2  million  which 
was  not  necessary  for  the  accomplishment  of  TV2's  public  service  mission  under  Article  86  (2). 
Accordingly, the Commission decided that Denmark should take all necessary measures to recover the 
aid.  

The  Commission  also  analysed  TV2's  behaviour  in  the  television  advertising  market.  Although  the 
television advertising prices in Denmark were rather low, the Commission's investigation did not show 
that  TV2  had  chosen  not  to  maximise  its  advertising  revenues.  The  Danish  authorities  informed  the 
Commission  that,  before  recapitalising  TV2,  they  will  comply  with  the  Decision  and  recover  the 
amount  specified  in  the  decision  from  TV2,  with  interests.  In  addition,  the  Danish  authorities  stated 
that  they  will  ex  officio  recover  from  TV2  the  overcompensation  for  2003  with  interests. 
Consequently, the total recovery claim to be executed by the Danish authorities amounted to around 
DKK 1 050 million.  

Existing aid 

In the following four cases (France - C 60/1999 -  Licence payments to France 2 and 3, Spain - NN 
166a/1995  –  RTVE,  Italy  -  C  62/1999  –  Licence  fee  to  RAI,  and  Portugal  -  NN  85a/2001,  NN 
94a/1999,  N  133a/2001  –  RTP)  the  Commission  concluded  that  the  annual  financing  of  public 
broadcasters  constitutes  existing  aid.  Accordingly,  the  national  authorities  were  required  to  take 
appropriate  measures  to  ensure  that  these  schemes  contain  safeguards  against  any  possible  over-
compensation.  In  general  terms,  the  Commission  recommended  to  the  Member  States  the 
implementation  of  the  following  measures:  (a)  separation  of  accounts,  (b)  introduction  of  a  legal 
mechanism to prevent over-compensation (c) ensure the commercial exploitation of public service in 
line  with  market  terms  and  conditions  and  (d)  establishment  of  a  competent  independent  authority 
which  should  check  the  compliance  of  these  rules.  Italy,  France  and  Spain  agreed  to  implement  the 
Commission recommendations, while the procedure is still underway for Portugal. 

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