European Parliament resolution on State aid reform 2005-2009 (2005/2165(INI))
Date: 2006-02-14
Institutions: Committee on Economic and Monetary Affairs, European Parliament
Subjects: State aid, aid policy, competition policy, control of State aid, environmental protection, financial aid, governance, regional aid, research and development, services of general interest

29.11.2006

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TEXT PROPOSED
BY THE COMMISSION

Tuesday 14 February 2006

AMENDMENTS
BY PARLIAMENT

Amendment 40
Annex V, point (c)

(c)

the practical aspects of the handling of chickens, including
catching and transport;

(c)

the practical aspects of
chickens, including catching and transport;

the compassionate handling of

(d) emergency care for chickens, emergency killing and culling

(d)

the recognition of signs of common diseases and the
appropriate remedies emergency care for chickens, emerg-
ency killing and culling.

Amendment 41
Annex V, point (d)

P6_TA(2006)0054

State aid reform

European Parliament resolution on State aid reform 2005-2009 (2005/2165(INI))

The European Parliament,

— having regard to the Commission consultation document,

‘State Aid Action Plan — less and better

targeted State aid: a roadmap for State aid reform 2005-2009’ (SAAP) (COM(2005)0107),

— having regard to the Commission Communication, ‘Consultation Document on State aid for Innovation’

(COM(2005)0436),

— having regard to Commission Decision 2005/842/EC of 28 November 2005 on the application of
Article 86(2) of the Treaty to State aid in the form of public service compensation granted to certain
undertakings entrusted with the operation of services of general economic interest (1),

— having regard to Commission Directive 2005/81/EC of 28 November 2005 amending Directive
80/723/EEC on the transparency of financial relations between Member States and public undertakings
as well as on financial transparency within certain undertakings (2),

— having regard to the Commission's working paper on a Community framework for State aid in the
form of public service compensation, in the version as forwarded to the Parliament for an opinion on
8 September 2004,

— having regard to the Commission's draft communication of 21 December 2005,

National Regional Aid for 2007-2013’,

‘Guidelines on

— having regard to the objectives of the Lisbon Strategy,

— having regard to the Presidency conclusions of the Barcelona European Council of 15 and 16 March
2002 and the Gothenburg European Council of 15 and 16 June 2001, and in particular the provisions
under which the Member States agreed to reduce the level of State aid in the EU and to redirect it
towards horizontal objectives of common interest,

— having regard to Articles 2, 5, 16, 73, 86, 87 and 88 of the EC Treaty,

(1) OJ L 312, 29.11.2005, p. 67.
(2) OJ L 312, 29.11.2005, p. 47.

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— having regard to its previous resolutions on services of general

in particular to that of
17 December 1997 on the Commission communication on services of general interest in Europe (1),
that of 18 May 2000 on the draft directive amending Commission Directive 80/723/EEC on the trans-
parency of financial relations between Member States and public undertakings (2), that of 13 November
2001 on the Commission communication ‘Services of General Interest in Europe’ (3), that of 14 January
2004 on the Green Paper on services of general interest (4), and that of 22 February 2005 on State aid
in the form of public service compensation (5),

interest,

— having regard to 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 (6),

— having regard to Articles I-3, I-5, II-96, III-122, III-166, III-167 and III-238 of the Treaty establishing a

Constitution for Europe, as signed by Member States in Rome on 29 October 2004,

— having regard to the case law of the Court of Justice of the European Communities relating to services
of general interest, and in particular to its judgment of 24 July 2003 in Case C-280/00, Altmark Trans
GmbH and Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft Altmark GmbH (7),

— having regard to Rule 45 of its Rules of Procedure,

— having regard to the report of the Committee on Economic and Monetary Affairs and the opinion of

the Committee on Regional Development (A6-0009/2006),

A. whereas State aid provisions should be simple, transparent and effective,

B. whereas the market economy is the most efficient way of allocating limited resources; whereas State aid

should therefore be an instrument of last resort,

C. whereas State aid should always have clearly defined objectives, be proportionate and, in particular, be

granted on a temporary basis,

D. whereas State aid can be necessary in pursuing the objectives of European competitiveness or tech-
nological independence in the context of projects of common European interest under Article 87(3)(b)
of the EC Treaty,

E. whereas the total amount of State aid granted each year in the EU is the equivalent of more than 50 %
of the EU's annual budget even by the most conservative estimates; whereas the amount of State aid, as
a proportion of GDP, varies substantially between Member States — and ranged from 0,10 % to 2,76 %
in 2003 — potentially causing considerable market distortion,

F. whereas State aid is funded by taxpayers and must therefore be spent responsibly, providing high cost-

effectiveness,

G. whereas the justification for granting State aid should be reviewed at regular and appropriate intervals;
whereas the task of regularly monitoring and auditing the use of State aid should not be delegated to
the national audit offices of the Member States,

H. whereas effective and stringent controls over the grant of State aid are required in order to ensure fair

competition and transparency and in order to avoid discrimination,

(1) OJ C 14, 19.1.1998, p. 74.
(2) OJ C 59, 23.2.2001, p. 238.
(3) OJ C 140 E, 13.6.2002, p. 153.
(4) OJ C 92 E, 16.4.2004, p. 294.
(5) OJ C 304 E, 1.12.2005, p. 117.
(6) OJ L 10, 13.1.2001, p. 30.
(7)

[2003] ECR I-7747.

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I. whereas, when applying the principles of subsidiarity and proportionality, the Commission should focus
on infringements with a significant impact on the internal market, because State aid is incompatible
with the common market pursuant to Article 87 of the Treaty only in so far as it affects trade between
Member States,

J. whereas State aid which does not distort competition is a permissible means of promoting economic
development and can thus be one means to promote the Lisbon agenda for economic growth and jobs,
alongside other tools including Community funding such as the Structural Funds,

K. whereas the effectiveness of State aid control policy depends on better information regarding its impli-

cations for the parties concerned,

L. whereas the benefits of State aid can considerably exceed its costs when aid is used rationally and when

thorough cost-benefit analyses are conducted,

M. whereas no monitoring mechanism comparable to Community-level aid supervision exists within the

Member States,

N. whereas the Parliament, in its previous resolutions on State aid and in its regular debates with Com-
mission representatives within the Committee on Economic and Monetary Affairs, has repeatedly
insisted on measures to ensure more transparency.

General

1. Welcomes the Commission's intention, outlined in the SAAP, to modernise the practices and pro-
in particular by increasing legal certainty, refining the economic approach,
cedures regarding State aid,
increasing transparency by consulting stakeholders and enhancing the adjudication process;

2.

Agrees with the Commission that there is a real need for a comprehensive reform of State aid policy;

3.
Notes that State aid policy is an integral part of competition policy and that State aid control reflects
the need to maintain a level playing field for all undertakings carrying out activities in the single European
market; stresses, however, that, in accordance with Article 87 of the Treaty, State aid can also help to achieve
other EU objectives, in particular those referred to in Article 2 of the Treaty;

4.
Notes that Articles 86 and 87 of the Treaty expressly authorises certain exceptions to the general
prohibition of State aid, when the aid regimes proposed have clearly defined beneficial effects for the popu-
lation and the environment and the aid does not harm the general activities of the EU; considers it essential,
therefore, that when assessing whether State aid is compatible with the Treaty, the right balance is struck
between the negative effects of State aid on competition and its positive effects on the common Community
interest;

5.
Stresses that, in order to remove legal uncertainty, the Commission's decisions should be closely in
line with relevant judgments of the Court of Justice; considers that the SAAP should be accompanied, where
necessary, by legislative initiatives aiming to reform State aid along the lines called for by the EU and to
enhance legal certainty;

6.
Suggests that the Commission should publish, as consistently as possible, interpretative guidelines on
Court of Justice judgments on State aid rules, whether these are based on Treaty provisions or on provisions
contained in secondary legislation;

7.
Stresses the need to draw the consequences both of the unsuccessful grant of State aid in the past and
of those cases in which this has proved to be an effective instrument for achieving the objectives pursued;
stresses that State aid that distorts competition should be abolished;

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Expresses the wish that the Commission publish an annual report addressed to the Parliament and the

8.
Council on State aid granted in the Member States;

Asks the Commission, in this context, to apply stringent reporting rules, covering Member State as
9.
well as beneficiaries; asks the Commission, furthermore, to modify the State Aid Scoreboard with this in
mind;

Considers that in today's global economy it is essential that rules laid down at Community level

10.
should take into account the conditions of international competition;

11.
Calls on the Commission to check whether the maximum aid rates of up to 50 %, which are possible
in principle, do not appear too high from the point of view of the market economy, since with such high
aid rates a company can be set up without its own capital, which is contrary to the principle of entrepre-
neurial responsibility in a market economy;

12. Welcomes the Commission's statement in the SAAP that the key objectives of the Community
include a high level of employment, sustainable growth and economic and social cohesion;

Stronger economic approach

13. Welcomes the Commission's aim of refining its economic approach to State aid proceedings and
focusing its resources on cases that are likely to create the most serious distortions to competition and
trade, with regard to the objectives of the Lisbon and Gothenburg strategies;

14.
Calls for the Commission's economic approach to be defined strictly, in order to increase legal cer-
tainty for the parties involved; considers, therefore, that the Commission's economic analysis should be
based on defined criteria derived from the procedures in force in other areas of competition law, while
ensuring that the procedures are not too cumbersome;

15.
Urges the Commission to subject both criteria for assessing illegal aid, as provided in Article 87(1) of
the Treaty — the distortion or threat of distortion of competition on the one hand, and the effects on trade
between Member States on the other — to economic analysis in all its decisions; asks the Commission to
confirm and specify its approach for both criteria in specific guidelines;

Suggests that the Commission provide both a more detailed definition of the concept of ‘market
16.
failure’ including an explanation of when the concept is applicable and a coherent methodology; insists
that the concept should be workable, allowing Member States and beneficiaries to apply and benefit from
it in practice; insists that the new concept must also be subject to shorter procedures; asks the Commission
to clarify the limits of the concept of market failure and the interaction of the concept with the constituent
elements of the prohibition of State aid in Article 87 of the Treaty;

17.
Notes the initiative by Commission Vice-President Siim Kallas to introduce more transparency into
the procedure for granting agricultural subsidies, which would require Member States to publish the identity
of beneficiaries and the amount of aid granted on the Internet; recommends that that scheme be extended
to all State subsidies; also recommends that Member States require companies to publish details of aid
received in order to enable shareholders better to evaluate the real performance of the company, in particu-
lar in the event that the aid may subsequently be cut;

18. Warns against the potentially harmful role of both national and European State aid in motivating the
relocation of potential beneficiary undertakings between Member States, due to ‘subsidy-shopping’ by enter-
prises, without any real benefit to the common goals of the EU;

Innovation and R&D

Stresses the high importance of innovation and R&D to the future competitiveness of the EU in a

19.
global economy;

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20.
Stresses that State aid for R&D should be evaluated in the light of the Lisbon objectives and that such
aid can enable Member States both to target market failures and to draw up measures giving industry an
incentive to invest more in R&D; underlines, nevertheless, that aid for R&D must not give rise to aid that
distorts competition, especially by favouring established market players; stresses in this context the need to
overcome regulatory and fiscal barriers in Member States that hamper the development of young and
innovative businesses;

21.
Notes that the development of environmental technologies in the EU, notably in the energy sector,
has been hampered by significant State aids for fossil fuels and nuclear power; strongly believes in the
principle that external costs should be included in the price of energy from different sources and that this
principle should be a basis for the revision of the EU's State aid guidelines;

Is very supportive of State aid flexibility concerning the creation and promotion of innovative ideas
22.
in public sector research bodies and universities, as well as clear and simple rules on how to transfer such
ideas and expertise to businesses;
in this regard, supports the generation of further innovation through
public-private collaboration and partnerships;

Stresses the principle that aid for R&D should not favour individual undertakings; urges the Com-

23.
mission to aim aid for R&D at innovation clusters;

Supports the Commission's intention to make the State aid system more flexible with a view to

24.
supporting innovation processes in a way that is proportionate to their remoteness from the market;

Risk capital

25.
Considers that, due to regulatory insufficiencies and incentive-poor tax systems in some Member
States, the provision of risk capital, in particular to small businesses, is not optimal; welcomes, therefore,
the Commission's ongoing revision of its communication on State aid and risk capital (1), which is due to
expire in August 2006;

Underlines the need to foster the development of start-ups and young, innovative SMEs, inter alia

26.
through the use of appropriate tax incentives;

Stresses the need for faster and less burdensome approval procedures; favours in this context block

27.
exemptions for small-scale aid to SMEs;

Services of General Economic Interest

Calls on the Commission finally to ensure legal clarity as regards aid for services of general economic

28.
interest;

29.
Considers that the element of overcompensation is the most fundamental criterion and that, there-
fore, the financing of services of general economic interest constitutes State aid only in those cases in which
the criterion of justifiable compensation is not and cannot be shown to be fulfilled;

30.
Regrets that there are still great differences between how the Commission intends to interpret the test
in the Court of Justice's Altmark judgment in practice; calls on the Commission to issue a clear and precise
interpretative communication on the fourth criterion set out in the Altmark judgment, which takes account
of the specificity of different sectors;

31.
Asks the Commission, given the increasing importance of public-private partnerships for building
infrastructures in less developed regions, to pay particular attention to the issue of State aid provision for
such partnerships and, thereby, to provide legal guidance on all issues regarding the applicability of State aid
rules in this context and calls,
in particular, for appropriate rules to simplify the use of public-private
partnerships; submits that special care should be taken in this connection to ensure that transparency is
maintained;

(1) OJ C 235, 21.8.2001, p. 3.

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32.
Notes the exemption of smaller public service companies from the application of the State aid rules;
wonders, however, whether the distinction between smaller and larger undertakings in the assessment of
State aid rules is adequate; pleads, therefore, for the Commission's assessment to be based on the effects of
State aid measures on the relevant market rather than on the size of the public service company involved;

Block exemptions

33.
Supports the adoption of a general block exemption regulation by the Commission in order to
simplify and consolidate the existing block exemptions, notably on training, SMEs and employment, and
to integrate a broader range of exemptions, notably as regards State aid to support SMEs and R&D, so long
as cross-subsidisation from small to large enterprises is monitored and prohibited as appropriate; agrees
with the Commission's aim of focusing its resources on tackling the most distortional aids; considers that
the notification procedures and delays inherent therein should be proportionate to the risk of distortion of
competition arising from the grant of aid in question; opines that a single legal
instrument could also
facilitate future extensions of the block exemption concept, such that smaller amounts of each type of aid
need no longer be notified;

34.
Stresses the need to ensure that a general block exemption regulation leads to a true simplification of
the procedure, with clear, detailed and unambiguous provisions, which do not compromise the overriding
aim of a general reduction in State aid;

35. Welcomes the proposal to raise the de minimis threshold; suggests that the figure be doubled, to
EUR 200 000; asks the Commission in this context to address the problem of cumulation control;

Regional aid

36. Welcomes the Commission's Guidelines on National Regional Aid for 2007-2013 (1); stresses that
regional aid policy should give greater consideration to territorial criteria so as to distinguish geographical
areas of the EU with a strong economy from areas experiencing industrial conversion difficulties and areas
with permanent natural handicaps; views cohesion and State aid policies as complementary because State
aid policies have proved to be an effective instrument on the road towards the genuine convergence of
incomes across the EU;

Considers that State aid should be permitted only where the aid both adds value that no other
37.
political measure can achieve and is for the benefit of a region; therefore, supports a more efficient
approach to the grant of regional aid, with a focus on investments in infrastructure and horizontal aid in
disadvantaged or the least developed regions of the EU, including the introduction of advantageous tax
conditions for transitional periods not exceeding five years; in this connection, highlights the need to main-
tain appropriate support measures for ‘statistical effect’ regions;

Considers that there should be a review of the reductions in State aid to the ‘statistical effect’ regions,
38.
which have benefited from a relative increase in income as a result of enlargement but which have not
achieved real growth or convergence and which suffer a high unemployment rate;

39.
Calls on the Commission, in view of the EU's objectives as well as its cohesion policy, which is
designed to achieve economic and social convergence through measures aimed at redressing imbalances
between the EU's regions, to ensure that neither national nor European State aid results in a distortion of
competition between Member States' regions and does not finance intra-EU relocation, leading, in particular,
to jobs being lost in one region for the benefit of another;

Encourages the Commission, in line with the Lisbon and Gothenburg strategies, to assess in greater
40.
depth and detail the different types of State aid and their effectiveness so that it can indicate whether certain
forms of aid are more advantageous than others as regards any lasting, positive impact they may have on
regional development;

(1) Not yet published in OJ.

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41.
Asks the Commission to apply the principles outlined in the SAAP also to the specific rules appli-
cable to certain sectors, such as agriculture, fisheries, coal production and transport, which are often con-
centrated in areas eligible for structural funds, and to make more suggestions focused on reforming these
specific rules;

Tuesday 14 February 2006

Environmental aid

42.
Considers that environmental State aid, where fair and transparent in its application, can play a
crucial role in achieving the goal of sustainable development in the EU, particularly by stimulating invest-
ment in technology over the long term and by the patenting of such technology in the EU, in line with the
objective of stabilising greenhouse gas emissions laid down in the UN Framework Convention on Climate
Change;

43.
Endorses the Commission's view that the current guidelines on State aid for environmental protec-
tion are ‘not properly adapted to the increasing sophistication of investments in environmental technologies,
nor to new forms of public/private partnership’ (1);

44.
Calls on the Commission and the Member States to speed up the introduction of measures to reduce
environmentally damaging State aid and ultimately to eliminate it altogether; notes that the size of this State
aid is considerable; and calls on the European Environment Agency to draw up a list of subsidies which
directly or indirectly promote polluting production and consumption, thereby creating unfair competition
for cleaner technologies;

45. Welcomes, therefore, the start of the stakeholder process with a view to revising these guidelines,
which are set to expire by the end of 2007;

Better governance

Considers that the current practices and procedures of State aid policy have certain shortcomings and

46.
are too bureaucratic;

47. Welcomes, therefore, the introduction of best practice guidelines on State aid procedures for speedier
and more efficient notification procedures; questions, in this context, whether a regulation would not be
more appropriate than guidelines to achieve this aim;

48.
Strongly supports the idea of forming a closer network of supervisory authorities, such as courts of
auditors, in the Member States, which could facilitate the objective of consistency in the application of the
State aid rules;

49.
Stresses that any decentralisation of competence in favour of national authorities requires rigorous
monitoring and coordination to ensure that the rules are applied consistently in all Member States; con-
siders that decentralisation could risk resulting in the inconsistent enforcement of State aid rules, in particu-
lar given the varying structures and levels of experience and expertise of Member States' competent auth-
orities; underlines the importance of a functioning network between the competent authorities in the
Member States;

50.

Urges the Commission to set clear time limits for State aid proceedings, including compliance;

51.
Expresses its discontent that sanctions for non-notification are currently enforced only against bene-
ficiaries and not against Member States; supports the Commission, therefore, in exploring new deterrent
mechanisms with a view to addressing the incorrect implementation of the State aid rules by Member States,
and invites the Commission to provide for appropriate sanctions in this regard;

(1) Commission Communication,

‘Stimulating Technologies for Sustainable Development: An Environmental Techno-

logies Action Plan for the European Union’ of 28 January 2004 (COM(2004)0038, at paragraph 4.2.3).

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Renews its call for the codecision procedure to be introduced for all competition policy matters

52.
which the Council decides by qualified majority;

53.

Instructs its President to forward this resolution to the Council and the Commission.

*

*

*

P6_TA(2006)0055

Globalisation and the internal market

European Paliament resolution on the effects of globalisation on the internal market (2004/2225
(INI))

The European Parliament,

— having regard to Rule 45 of its Rules of Procedure,

— having regard to the report of the Committee on the Internal Market and Consumer Protection and the

opinion of the Committee on International Trade (A6-0021/2006),

A. whereas globalisation, defined as ‘the increased global sourcing of goods, services, labour and capital
flows, strengthened by the information revolution’, has been perceived as posing fundamental chal-
lenges to traditional European social, cultural, decision-making and economic models as well as its
economic system, and in particular to the EU internal market,

B. whereas the development of the EU internal market and of the world economy is closely interlinked,
and whereas, thanks to technological progress and the removal of political and technical barriers to
trade, globalisation facilitates international commerce in goods and services,

C. whereas statistical data suggest that, over the past years, the EU has been facing challenges concerning
the retention of its leading position in key areas such as economic growth, labour market performance,
research and innovation, as stated in the midterm review of the Lisbon process (Communication to the
Spring European Council: Working together for growth and jobs — A new start for the Lisbon Strategy
(COM(2005)0024) and Communication from the Commission to the Council and the European Parlia-
ment: Common Actions for Growth and Employment: The Community Lisbon Programme (COM
(2005)0330)),

D. whereas the aim of the Lisbon Strategy, as confirmed in the midterm review, is to build a competitive
Europe in a global environment; whereas the Lisbon Strategy has set as its central goal the construction
by 2010 of the world's most dynamic and competitive knowledge-based economy, with more and
better jobs, higher environmental aims and enhanced social cohesion,

E. whereas global competition has been affected by the emergence of large, fast-growing economies, par-
ticularly in Asia, competing in the production and trade of goods and, increasingly, of services, which
can lead to inadvertent consequences within the EU, in particular by threatening the rights laid down in
the acquis communautaire,

F. whereas globalisation should not be considered exclusively as a negative factor leading to social frag-
mentation, but rather as a framework, on the one hand providing new opportunities in the form of
access to the worldwide market, but also, on the other, posing the threat of EU dependency on the
development of worldwide trade, which is why political management should support positive and
eliminate negative influences on the internal market,