Invitation to submit comments on the draft Commission Regulation on the application of Articles 87 and 88 of the EC Treaty to de minimis aid (Amendments concerning transport and the coal industry)
Date: 2005-06-14
Institutions: European Commission
Subjects: State aid, coal industry, competition policy, transport company, transport market

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Invitation to submit comments on the draft Commission Regulation on the application of Articles
87 and 88 of the EC Treaty to de minimis aid

(Amendments concerning transport and the coal industry)

(2005/C 144/02)

Interested parties may submit their comments within one month of the date of publication of this draft
Regulation to:

European Commission
Directorate-General for Energy and Transport
Unit A4
Office DM 28 06/109
B-1049 Brussels
Fax (32-2) 296 41 04
E-mail: TREN STATE-AID@cec.eu.int

Draft Regulation amending Commission Regulation (EC) No 69/2001 of 12 January on the applica-
tion of Articles 87 and 88 of the EC Treaty to de minimis aid

(Amendments concerning transport and the coal industry)

EXPLANATORY MEMORANDUM

1. INTRODUCTION

1.1. General legal framework concerning de minimis aid

Council Regulation (EC) No 994/98 authorises the Commission, by means of a regulation, to set a ceiling
below which aid measures are deemed not meet all the criteria of Article 87(1) of the Treaty. Among the
four criteria set out in that paragraph it is more especially the criterion concerning distortion of competi-
tion affecting trade which is deemed not to be met. Such aid measures do not therefore fall under the noti-
fication requirement of Article 88(3).

That regulation provides for a ceiling of EUR 100 000 over three years per company below which Article
87(1) can be deemed not to apply. It also indicates that the de minimis aid in no way affects the possibility
of undertakings obtaining, for the same project, State aid authorised by the Commission or covered by a
category exemption regulation having the effect of possibly fairly generous cumulations of aid.

1.2. Situation of the transport sector

When it was drawn up, it was agreed to continue to exclude the transport sector from the scope of Regu-
lation (EC) No 69/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC Treaty to
de minimis aid, as was the case with the previous legal framework (1) — together with fisheries and agri-
culture. The main reason for this special status was that, given the specific rules applicable and on account
of the economic features of this sector, even a small amount of aid could distort competition between
transport companies and could therefore meet the criteria of Article 87(1) of the Treaty.

1.3. Situation of the coal sector

The coal sector has been covered by the EC Treaty only since 24 July 2002, following the expiry of the
ECSC Treaty. Since then, the sector has been subject to specific rules (2) which prevent the application of
other exemption regimes (3).

(1) Commission notice on the de minimis rules for State aid (OJ C 68 of 6 March 1996, p. 9) and the Community guide-
lines on State aid for small and medium-sized enterprises (OJ C 213 of 23 July 1996, p. 4) also excluded the trans-
port sector.

(2) Regulation (EC) No 1407/2002 on State aid to the coal industry (OJ L 205 of 2 August 2002, p. 1).
(3) Article 3(1) of Regulation (EC) No 1407/2002.

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2. MOTIVATION

2.1. Situation of the transport sector

The approach chosen in 2001 is now regarded as being obsolete for the following reasons:

2.1.1. Economic context

Firstly, the gradual and (compared to other sectors of the economy) recent liberalisation of the transport
market, and the structural problems in certain sectors thereof, only allowed for the application of specific
rules in the beginning. The Commission finds nonetheless that the economic context has developed in
such a way that the threat of State aid causing significant distortion of competition is less serious given
that the process of opening up the transport markets has now been successfully completed and the struc-
ture of the markets has stabilised, allowing a marked improvement in the financial soundness of undertak-
ings. Consequently, the public authorities are no longer now subject to such strong pressure to come to
the help of undertakings in difficulty or confer undue advantages on them.

However, excluding the transport sector does not entail exemption from the notification procedure and
therefore the State aid procedure applies to all the amounts granted. In addition, the Member States are
making increasing use of across-the-board State aid measures, including the de minimis regulation, which
clearly corresponds to a competition policy requirement not to grant ad hoc or sectoral aid. None of the
general frameworks applicable to State aid, whether applying to communications (1) or the exemption regu-
lations other than the de minimis regulation (2), include exemption clauses for transport. To improve this
situation and increase legal certainty with regard to Member States which wish to apply general schemes,
thought should be given to how to reconcile the application of the State aid rules in the transport sector
with the exemption accorded to other sectors of the economy.

In addition, it should be noted that the small amounts of aid notified to the Commission in recent years —
including the authorisation of transport elements of de minimis general schemes (3) — have for the most
part been deemed compatible with the provisions of the Treaty without major difficulty. On the contrary,
their objectives were in accordance with Community policies: application of equipment modernisation
plans going further than the Community standards (4), promotion of the use of combined transport, imple-
mentation of environmental provisions (5) and the acquisition of less-polluting vehicles (6). Other similar
cases are being examined (7). On the other hand, the Commission has always regarded the acquisition of
vehicles by road haulage companies other than on environmental and safety grounds as being incompatible
with the Treaty since such aid is likely to have a damaging effect on inter-company competition (8).

(1) E.g. the guidelines on national regional aid (OJ C 74 of 10 March 1998, p. 9), and the Community guidelines on

State aid for environmental protection (OJ C 37 of 3 February 2001, p. 3).

(2) Commission Regulation (EC) No 68/2001 of 12 January 2001 on the application of Articles 87 and 88 of the EC
Treaty to training aid (OJ L 10 of 13 January 2001, p. 20), Commission Regulation (EC) No 70/2001 of 12 January
2001 on the application of Articles 87 and 88 of the EC Treaty to State aid to small and medium-sized enterprises
(OJ L 10 of 13 January 2001, p. 10), Commission Regulation (EC) No 2204/2002 of 12 December 2002 on the
application of Articles 87 and 88 of the EC Treaty to State aid for employment (OJ L 337 of 13 December 2002, p.
3) and procedural Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules on the appli-
cation of Article 93 of the EC Treaty (OJ L 83 of 27 March 1999, p. 1).

(3) E.g. the Decision of 16 October 2002 concerning Case N 600b/2001 – Spain (Employment aid in the transport

sector), etc.

(4) E.g. the ‘Lorenz’ decision of 9 June 2001 concerning Case N 409/2001 – Spain (ARTE/PYME programme).
(5) E.g. the Decision of 5 March 2003 concerning Case N 353/2001 – France (ADEME aid scheme in the transport

sector).

(6) E.g. Decision of 22 May 2002 concerning Case N 100/2001 – Denmark (Aid to road hauliers).
(7) E.g. Case N 202/2003 – Sweden (Reduction of SME employers' social contributions).
(8) The Commission decisions referred to as ‘RENOVE’: State aid decision C 20/1996 No 98/693/EC of 1 July 1998
(scheme for the period 1994 – 1996) and State aid decision C 65/1998 No 2001/605/EC (extension of the scheme
in 1997); the Commission decisions referred to as ‘tax credits’: State aid decision C 32/92 No 93/496/EEC of 9
June 1993 (the 1992 scheme) and State aid decision C 45/95 No 96/3078 of 22 October 1996 (the scheme for the
period 1993-1994).

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2.1.2. Effects of the current regime

Until the Renove judgements, the Commission had held that the exemption applied to all transport sectors.
In effect, the Court of Justice ruled in its ‘RENOVE’ judgments of 26 September 2002 (C-351/98) (1) and
13 February 2003 (C-409/00) concerning road transport (2), that the exemption to the de minimis rule
could not be applied to non-commercial transport, contrary to the Commission's approach, which was to
regard a grant for the acquisition of lorries as being incompatible, without making a distinction between
the different forms of organisation of transport activity. There is therefore a difference of treatment
between two categories of undertaking. On the one hand, those whose principal activity is haulage cannot
benefit from aid schemes with specific (regional, environmental, SME, etc.) objectives and which require
authorisation by the Commission even for amounts below the ceiling. On the other, undertakings not
belonging to the sector as such but nevertheless carrying out own-account transport activities (3) enjoy the
benefit of the de minimis regulation without restrictions and without prior Commission authorisation.

2.1.3. The treatment of mobile assets

it

is appropriate to evaluate the potential

As regards the treatment of mobile assets of transport companies (purchase of vehicles, vessels and aero-
planes),
impact on competition of aid amounting to
EUR 100 000 per undertaking over three years. Given the cost of aeroplanes and ships and inland
waterway vessels, the impact on the structure of those sectors may be regarded as insignificant. However,
in the road transport sector aid amounting to EUR 100 000 over three years may be regarded as signifi-
cant. Given the exceptional structure of this sector, the large number of small hauliers (particularly in
certain Member States) (4), and the cost of vehicles (5), it should be considered that such amounts can affect
trade and distort competition between Member States. To the extent that the investment subsidised would
result in a significant reduction in vehicle replacement costs, such aid could constitute operating aid. It
could also increase the road vehicle fleet, which in a market which is already very competitive might
reduce profit margins even further. In consequence, it is regarded as desirable to maintain an exception
with regard to the acquisition of vehicles (purchase of a lorry) in the road sector.

There is still, nevertheless, the risk that such an exemption could, on account of differentiated treatment
between transport for third parties and own-account transport (6), distort competition to a greater extent
between these two segments of transport activity. The Commission undertakes to monitor this develop-
ment and its effect on the road transport market.

(1) Case C-351/98, Spain v Commission, Judgment of 26 September 2002, Renove I, ECR I-8031.
(2) Case C-409/00, Spain v Commission, Judgment of 13 February 2003, Renove II , ECR I-1487.
(3) In these cases, the Court confirmed that while the own-account transport sector is not part of the transport sector
envisaged in the rules concerning de minimis aid, that sector remains in direct competition with the commercial trans-
port sector in the case of aid exceeding the de minimis threshold. However the Court nevertheless found that the
Commission cannot refuse to apply the de minimis rule to aid granted to undertakings in sectors which are not
excluded from the application of that rule by the various texts applicable.

(4) Considerable road transport segments in particular are made up of many small companies. For these micro-enter-
prises, aid below the ceiling set could represent a proportionally significant contribution to their activity. In 2000,
there were 130 141 freight transport undertakings in Spain, 112 173 IN Italy, 32 885 in Germany, 36 819 in the
United Kingdom and 10 290 in the Netherlands (Source: Eurostat). Analysis of the average turnover by undertaking
in 2000 indicates a very low average in Spain and Italy, which is indicative of a large number of undertakings: EUR
160 000 in Spain, EUR 280 000 in Italy, and EUR 1 350 000 in the Netherlands and EUR 710 000 in Germany. It
should be noted that these are average figures (large enterprises and SMEs taken together). Close analysis of the
sector would certainly indicate turnover for the (very many) family firms much lower than the national averages. The
number of persons employed by undertaking also illustrates the size of haulage companies. At EU level, on average
they employ five or six people (fewer than three in Italy and Spain). Since these are average values, this result gives
rise to the conclusion that there are many one-wage companies.

(5) EUR 90 000—120 000 for a 40-tonne lorry.
(6) In addition, since relations between undertakings in this sector are very fluid, it would seem probable that the struc-
ture of the market would react promptly to such financial contributions in a manner contrary to the general interest.

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2.1.4. Use of Commission resources

Lastly, it should be recalled that, taking into account the necessarily limited human resources available to
the Commission for its State aid activities, it would be worthwhile focusing Community action on aid the
amount and scope of which are least likely to result in serious distortions of competition. It is all the more
appropriate as the Commission, confronted with an increase in notifications of State aid cases and enlarge-
ment of the European Union to 25 Member States, needs to target the cases that are most damaging for
competition.

2.1.5. Conclusion

In the light of the Commission's experience in many State aid cases in the transport sector over the years
of non-application of the de minimis rule, 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 does not affect trade between Member States and does not distort or threaten to
distort competition. The Commission therefore proposes to rectify the situation by removing the exclusion
of transport from the de minimis rule, except in certain clearly defined cases (see point 2.1.3).

2.2. Situation of the coal sector

The coal sector has been subject to the EC Treaty only since 24 July 2002, following the expiry of the
ECSC Treaty. Since then, this sector is subject to specific rules (1) which prevent the application of other
exemption rules (2). They specify that the Commission's authorising power must be exercised on the basis of
precise and full knowledge of the measures which governments plan to take. Member States should therefore provide
the Commission with a consolidation report showing the full details of the direct or indirect aid which they plan to
grant to the coal industry. Consequently, all the aid may potentially meet the criteria of Article 87(1). Appli-
cation of the de minimis regulation does not, however, seem permissible.

(1) Regulation (EC) No 1407/2002 on State aid to the coal industry (OJ L 205 of 2 August 2002, p. 1).
(2) Article 3(1) of Regulation (EC) No 1407/2002.

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Commission Regulation amending Commission 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

Draft

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 994/98 of 7 May 1998 on the application of Articles 92 and
93 of the Treaty establishing the European Community to certain categories of horizontal State aid (1), and
in particular Article 2 thereof,

Having published a draft of this Regulation,

Having consulted the Advisory Committee on State aid,

Whereas:

(1)

(2)

(3)

(4)

(5)

Regulation (EC) No 994/98 empowers the Commission to set out in a regulation a threshold under
which aid measures are deemed not to meet all the criteria of Article 87(1) of the Treaty and there-
fore do not fall under the notification procedure provided for in Article 88(3) of the Treaty.

in
The Commission has applied Articles 87 and 88 of the Treaty and in particular clarified,
numerous decisions, the concept of aid within the meaning of Article 87(1) of the Treaty. The
Commission has also stated its policy with regard to a de minimis ceiling, under which Article 87(1)
could be considered not to apply, most recently in Commission Regulation (EC) No 69/2001 on the
application of Articles 87 and 88 of the EC Treaty to de minimis aid (2).

Having regard to the specific rules applicable in the agriculture, fisheries, aquaculture and transport
sectors and the risk that, in those sectors, even small amounts of aid may meet the criteria of Article
87(1), of the Treaty, the Commission at the time excluded those sectors from the scope of Regu-
lation (EC) No 69/2001. The gradual and (compared to other sectors of the economy) recent liberali-
sation of the transport market, and structural problems in certain segments thereof, only allowed for
the application of specific rules from the beginning.

Furthermore, the judgments of the Court of Justice of 26 September 2002 (C-351/98) (3) and 13
February 2003 (C-409/00) (4) in the ‘Renove I et II’ cases concerning road transport ruled that the de
minimis rule applies to support for own-account carriers. The Court ruled that while the transport
sector is explicitly excluded from the scope of the de minimis rule, that exception should be inter-
preted strictly. Consequently, it cannot be applied to non-commercial transport (5). Accordingly, the
Court ruled that the Commission cannot refuse to apply the de minimis rule to aid granted to under-
takings in sectors which are not excluded from the application of that rule by the various texts
applicable (6). Until the Renove judgement, the Commission had held that the exemption applied to
all transport sectors.

Given the restructuring of the transport market carried out since liberalisation the risk of distortion
of competition, contrary to the common interest, by de minimis aid is in principle now less immi-
nent. There is still however a need to improve transparency and to strengthen equal treatment in all
sectors of the economy including transport.

(1) OJ L 142, 14.5.1998, p. 1.
(2) OJ L 10, 13.1.2001, p. 30.
(3) ECR I -8031.
(4) ECR I-1487.
(5) Case C-409/00, Judgment of 13 February 2003, Renove II, point 70, ECR I-1487.
(6) Case C-351/98, Judgment of 26 September 2002, Renove I, point 53, ECR I -8031.

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(6)

(7)

(8)

(9)

in general Member States establish horizontal aid
In addition, the Commission observes that
schemes applicable across all sectors of the economy,
including the transport sector, with aid
amounts remaining under the de minimis threshold. However, as a result of the exclusion of the
transport sector from the regulation, all schemes have to be notified to the Commission, which
considerably reduces their usefulness.

In the light of the Commission's experience in many State aid cases in the transport sector over the
years of non-application of the de minimis rule, it can be established that, with the exception of the
acquisition of vehicles by road hauliers, aid for transport companies not exceeding a ceiling of
EUR 100 000 over a period of three years does not affect trade between Member States and does
not distort or threaten to distort competition.

Given the exceptional structure of the road transport sector, the large number of small hauliers
(particularly in certain Member States), and the cost of vehicles being close to the de minimis
threshold, it should be considered that such amounts of aid can affect trade and distort competition
between Member States to the detriment of the common interest. Consequently, it is regarded as
desirable to maintain an exception with regard to the acquisition of vehicles in the road sector.

The coal sector has been subject to the EC Treaty only since 24 July 2002, following the expiry of
the ECSC Treaty. Since then, this sector is subject to specific rules (1) which prevent the application
of other exemption rules (2) and specify that ‘the Commission's authorising power must be exercised on the
basis of precise and full knowledge of the measures which governments plan to take. Member States should
therefore provide the Commission with a consolidation report showing the full details of the direct or indirect
aid which they plan to grant to the coal industry, specifying the reasons for and scope of the proposed aid and
its relationship with the plan for accessing coal reserves and, where appropriate, any closure plan submitted’.

(10)

For the sake of legal certainty, it is appropriate to clarify the effect of the Regulation on aid granted
before its entry into force,

HAS ADOPTED THIS REGULATION:

Regulation (EC) No 69/2001 shall be amended as follows:

Article 1

1. In Article 1(a) ‘the transport sector’ shall be replaced by ‘the coal sector as defined in Regulation (EC)

No 1407/2002 of 23 July 2002 on State aid to the coal industry (3)’.

2. In the first Article the following shall be added: ‘(d) aid towards the purchase of vehicles by road trans-

port companies’.

In Article 4 the following shall be added after paragraph (1): ‘2. This Regulation shall also apply to aid
granted before its entry into force, if it fulfils all the conditions laid down in Articles 1 and 2 of this
Regulation. Any aid which does not fulfil those conditions shall be assessed by the Commission in
accordance with the relevant frameworks, guidelines, communications and notices.’

In Article 4 paragraph (2) will become paragraph (3).

This Regulation shall enter into force on the twentieth day following its publication in the Official Journal of
the European Union.

Article 2

(1) Regulation (EC) No 1407/2002 on State aid to the coal industry (OJ L 205, 2.8.2002, p. 1).
(2) Article 3(1) of Regulation (EC) No 1407/2002.
(3) OJ L 205, 2.8.2002, p. 1.