Report from the Commission - State aid scoreboard - Spring 2008 update
Date: 2008-05-21
Institutions: European Commission
Subjects: EU Member State, State aid, control of State aid, report

EN 

EN 

   EN 

 
 
COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 21.5.2008 
COM(2008) 304 final 

REPORT FROM THE COMMISSION 

State Aid Scoreboard 
- Spring 2008 Update - 

EN 

   EN 

 
 
 
  
TABLE OF CONTENTS 

Executive summary .................................................................................................................... 3 

Introduction ................................................................................................................................ 7 

1 

1.1 

1.2 

1.3 

1.4 

1.5 

1.6 

1.7 

1.8 

2 

2.1 

2.2 

2.3 

2.4 

3 

4 

4.1 

4.2 

5 

5.1 

5.2 

5.3 

5.4 

Part One: Special focus on State aid for environmental protection...................... 8 

The European Union fight against climate change ...................................................... 8 

Various means to support environmental objectives ................................................... 9 

Examples of market-based instruments ..................................................................... 10 

Environmental measures: When do they constitute State aid? When are they 
compatible with the Internal Market? ........................................................................ 11 

State aid decisions on environmental protection........................................................ 13 

Environmental aid measures qualifying as compatible State aid: Case studies......... 14 

State aid expenditure on environmental protection.................................................... 17 

The new guidelines on State aid for environmental protection.................................. 21 

Part Two: State aid in Bulgaria and Romania ...................................................... 24 

State aid in absolute and relative terms...................................................................... 24 

Sectoral distribution of aid ......................................................................................... 25 

State aid by objective ................................................................................................. 26 

State aid instruments in the industry and services ..................................................... 27 

Part Three: Recovery Of unlawful Aid.................................................................. 29 

Part Four: Legislative and Policy Developments .................................................. 33 

New legislation .......................................................................................................... 33 

Draft legislation.......................................................................................................... 36 

Part Five: State aid control procedures ................................................................. 38 

Registered Aid Cases ................................................................................................. 38 

Commission Decisions............................................................................................... 38 

Aid awarded under the State aid block exemption regulations.................................. 39 

Duration of State aid procedures................................................................................ 43 

Online State aid scoreboard, register and other reports on state aid ........................................ 45 

Methodological Notes .............................................................................................................. 46 

Annex I: Comparison of 2001 and 2008 community guidelines on state aid for environmental 
protection ................................................................................................................... 47 

Annex II: Statistical tables ....................................................................................................... 51 

Annex III: Pending recovery decisions (1 January 2008) ........................................................ 54 

EN 

2 

   EN 

 
Annex IV: The pending recovery cases for which the Commission has decided to bring the 

case before the Court of Justice and for which the illegal and incompatible aid is not 
yet recovered .............................................................................................................. 57 

EXECUTIVE SUMMARY 

Environmental and energy aid 

1) Environmental aid measures need to be examined by the Commission to ensure that 
the benefits they bring about outweigh any distortion of competition. 

The  EU  is  at  the  forefront  of  international  efforts  to  combat  climate  change  -  one  of  the 
greatest  environmental,  social  and  economic  threats  facing  the  planet.  The  EU  has  played  a 
key  role  in  the  development  of  the  two  major  treaties  addressing  the  issue,  the  1992  UN 
Framework  Convention  on  Climate  Change  and  its  Kyoto  Protocol,  agreed  in  1997. 
Moreover, the EU has been taking serious steps to address its own greenhouse gas emissions 
since the early 1990s. An integrated EU energy policy that gives substantial weight to energy 
efficiency and renewable energy is the EU's response to volatile oil and gas prices, the fear of 
energy supply disruption and the impact on climate change of the high use of fossil energies. 

Within this broad context, the Commission has recently revised the role that State aid plays in 
supporting  the  EU  environmental  and  energy  policy  objectives,  by  adopting  a  new  set  of 
guidelines  as  part  of  the  climate  change  package  that  the  European  Commission  adopted  in 
January 2008. 

Member  States  resort  to  a  wide  range  of  national  environmental  policy  measures  to  protect 
their  environment:  to  limit  pollution  of  air,  water  and  soil,  to  protect  natural  resources,  to 
promote renewable energy sources and energy savings, to manage waste, etc. Many of these 
objectives are targeted through general measures, i.e. applied throughout a particular country 
without  regional  or  sectoral  selectivity,  or  are  addressed  through  market-based  instruments, 
such as the Emission Trading Scheme and the Energy Taxation Directive, which don't entail 
State aid. 

However, there are also environmental measures or exemptions from general measures (e.g. 
environmental tax relief) which favour certain companies or the production of certain goods. 
Such measures may distort competition between companies and it is therefore important that 
the benefits they bring about are carefully balanced against the distortion of competition they 
cause. The adoption of the new Guidelines on State aid for environmental protection, in the 
context of the energy and climate change package, opens up new opportunities for Member 
States in this field that are worth exploring. 

As well as describing the key elements in the new guidelines, this Scoreboard takes a look at 
the  extent  to  which  Member  States  have  used  the  previous  guidelines  on  State  aid  for 
environmental protection adopted in 2001. 

2) Over the last 7 years, 98 % of the 350 environmental aid measures examined by the 
Commission were found to be compatible with the internal market. 

In the seven years that these guidelines have been in force, the Commission has taken around 
350 decisions. Drawing on these decisions, the Scoreboard provides clear examples of when 
environmental targeted measures constitute State aid and when this aid can be considered as 
compatible  with  the  common  market.  The  majority  of  examples  are  chosen  among  cases 
recently approved by the Commission and constitute either typical or innovative cases in the 
different  sub-areas  where  environmental  aid  can  be  granted  (i.e.  renewable  energy,  energy 

EN 

3 

   EN 

 
saving, waste management, etc.). In the vast majority of environmental aid cases (98 %), the 
Commission  found  them  to  be  compatible.  It  is  however  worth  noting  that  this  high  figure 
includes  cases  in  which  the  Commission  may  have  identified  certain  issues  related  to  the 
compatibility. Such issues can often be resolved within the scope of the notification procedure 
through a change in the measure. 

3) Increasing use of environmental aid guidelines but considerable variations from one 
Member State to another. 

As  the  case  studies  in  section  1.6  show,  environmental  aid  encompasses  a  wide  range  of 
objectives, 
including  support  measures  for  renewable  energy,  energy-saving,  waste 
management,  rehabilitation  of  polluted  industrial  sites  and  improvement  of  production 
processes. For these types of measures, aid granted by Member States pursues a direct benefit 
to the environment. State aid expenditure data for such cases can therefore be taken as a proxy 
measure for the intended environmental benefit, regardless of the form in which the aid may 
be awarded (grant, tax exemption,  guarantee, etc.). This  represented approximately  47  % of 
total environmental aid expenditure in 2006 (around €6.7 billion). 

A second category of State aid measures assessed under the environmental aid guidelines are 
reductions or exemptions from environmental taxes. Here, the environmental objective of the 
measure is pursued by the tax itself. Any reduction or exemption from environmental taxes, 
i.e.,  the  part  of  the  measure  constituting  aid,  has  an  indirect  environmental  objective  by 
facilitating the introduction or modification of such taxes (going beyond the minima imposed 
by European Directives for example). Expenditure data currently available for this category of 
aid  schemes  indicate  the  amount  of  tax  revenue  foregone  and  can  therefore  not  serve  as  a 
proxy  measure  for  the  environmental  benefit  the  taxes  themselves  have  brought.  In  2006, 
some 53 % of total expenditure (around €7.5 billion) fe ll under this category. 

Any analysis of State aid expenditure for environmental purposes must therefore take account 
of the fact that a large proportion of aid comprises tax exemptions from environmental taxes, 
usually benefiting energy intensive industries including sometimes big polluters, that had to 
be  accepted  in  order  to  allow  for  certain  types  of  environmental  taxes  to  be  introduced. 
Although the tax exemptions from environmental taxes do not by themselves aim directly at 
reaching higher environmental standards, such exemptions are only allowed where the taxes 
themselves are intended to make a significant contribution to protecting the environment and 
where the exemptions do not undermine the general objectives pursued. For this reason, the 
new  State  aid  guidelines  for  environmental  protection  require  that  where  companies  do  not 
pay  at  least  the  Community  minimum  or  where  the  tax  in  question  is  not  subject  to 
Community-wide  harmonisation,,  long  term  derogations  from  environmental  taxes  remain 
only possible when Member States can demonstrate that they are necessary and proportionate. 

Although  the  number  of  new  environmental  aid  measures has  remained relatively stable for 
the  majority  of  Member  States  since  2001,  total  expenditure  for  environmental  purposes 
illion. In relative terms, environmental aid 
doubled between 2001 and 2006 from € 7 to € 14 b
amounted to 0,12 %.of EU-27 GDP in the period 2004 - 2006 compared with 0.08 % in the 
period  2001  –  2003.  This  average  hides  significant  disparities  between  Member  States.  The 
largest  aid  grantors  in  2004  -  2006  were  Sweden  (0.77 %  of  GDP),  Denmark  (0.35 %), 
Germany (0,32 %.) followed by Austria, the Netherlands and Finland each of which granted 
aid  above  the  EU  average.  Environmental  aid  expenditure  in  the  United  Kingdom  stood  at 
half  the  EU-27  average,  while  all  other  Member  States,  including  Spain,  France  and  Italy, 
granted aid amounting to less than one quarter of the EU-27 average in terms of GDP. The 
overall level of expenditure in environmental aid measures in the EU is strongly influenced by 

EN 

4 

   EN 

 
the  largest  aid  grantors,  Germany  and  Sweden,  in  which  tax  exemptions  account  for  over 
90 % of total environmental aid in each country. A CO2 tax reduction for industry and a tax 
exemption from the energy tax on electricity led to a remarkable rise in aid expenditure for 
Sweden  from  2003  onwards.  In  Germany,  expenditure  has  risen  steadily  following  the 
approval in 2002 of a measure that prolonged several tax exemptions from the German energy 
taxation on electricity and mineral oils. 

Data  show  that,  leaving  aside  aid  in  the  form  of  tax  exemptions,  the  trend  in  the  level  of 
environmental aid remains stable. 

New Member States: Bulgaria and Romania 

4) Romania responds to call for less aid but has a relatively low share of 'better targeted' 
aid. 

In  2006,  total  State  aid  for  industry  and  services  for  the  two  new  Member  States  was  €  31 
million for Bulgaria and € 545 million for Romania  (EU-27 total was € 49 billion). In relative 
terms, total aid represented 0.12 % of Bulgarian GDP which was significantly lower than the 
EU-12  average  (0.51 %)  and  the  EU-27  average  (0.42  %).  In  Romania,  the  share  of  aid  to 
GDP  was  significantly  higher,  representing  0.56 %  of  GDP.  When  aid  is  expressed  in  per 
capita terms, a different picture emerges with regard to the relative position of Romania: 51 
PPS1 per person was around half the EU-27 average (99 PPS per person) while Bulgaria's 11 
PPS per person was the lowest in the EU. 

Following  relatively  high  awards  of  aid  for  restructuring  and  privatisation  earlier  in  the 
decade, the trend in both new Member States for the period immediately prior to accession is 
clearly downward. As to the response for better targeted aid, Bulgaria granted 79 % of total 
aid  in  2006  for  horizontal  objectives  while  Romania  awarded  only  19 %  (EU-27  average  is 
84 %). Bulgaria and Romania will be fully integrated into the autumn 2008 Scoreboard. 

Cutting red tape  

5)  Remarkable  rise  in  the  use  made  of  block  exemption  regulations  …  but  significant 
variations among Member States remain. 
In 2007, there were 777 cases2 notified by Member States. While the number of notifications 
is lower than the exceptionally high level in 2006 (922 notifications), it remains significantly 
above  the  level  in  2004  and  2005.  Moreover,  the  decrease  is  in  line  with  the  Commission's 
commitment to facilitate the granting of aid through block exemptions and focus its scrutiny 
on the most distortive types of aid.  

In  2007,  Member  States  were  able  to  introduce  more  than  1100  measures  without  prior 
notification to the Commission. This compares with 410 block exempted measures in 2006. 
The reasons for this significant increase are threefold: the beginning of a new programming 
period for EU Structural Funds, a high take-up rate for the new block exemption on regional 
investment aid (189 measures in 2007, many of which would have been notified in the past) 
and a sharp increase, following new recent legislation, in the number of measures exempted in 
the agricultural sector (496 which is four times more than 2006). There were also significant 
increases  in  the  number  of  measures  for  aid  to  SMEs  primarily  active  in  the  industry  and 

1 
2 

Purchasing Power Standards are used to take account of differences in price levels between countries. 
This includes industry, services, transport, coal, agriculture and fisheries. 

EN 

5 

   EN 

 
                                                 
services sectors (from 183 in 2006 to 303 in 2007), for training aid (57 to 108) as well as a 
stable picture for employment aid (31 in 2007). 

6) Over the last five years, DG Competition has managed to reduce by 1.4 months the 
average length of the preliminary examination procedure for notified aid cases. 

The State Aid Action Plan (SAAP) acknowledged the existence of shortcomings in the length 
and  predictability  of  State  aid  procedures  and  called  for  actions  to  modernise  them.  The 
Commission has since made efforts to improve its internal practice and increase efficiency in 
the  State  aid  field.  It  has  recently  started  a  dialogue  with  Member  States  on  how  to  further 
improve  the  efficiency  of  State  aid  procedures  and  has  adopted  internal  measures  to  reduce 
the time required to treat state aid notifications. Thanks to these measures, the average length 
of the preliminary examination procedure for a notified case fell by 1,4 months over the last 
five years. The average duration is now around 5 months. As to the proportion of cases closed 
within a certain period of time, the results show that 46 % were closed within 4 months and 
70 % were closed within 6 months.  

The Commission will continue its efforts to reduce the time required to treat cases. However, 
any  further  reduction  would  seem  possible  only  if  Member  States  also  contribute  to  the 
process  by  improving  the  quality  and  the  completeness  of  the  information  submitted  to  the 
Commission.  Improving  State  aid  rules  and  practices  is  indeed  a  shared  responsibility 
between  the  Commission  and  the  Member  States,  and  the  Commission  will  continue  the 
dialogue  with  Member  States  to  see  what  each  party  can  do  to  further  improve  State  aid 
procedures and practice. 

7)  By  end  of  2007,  the  Commission  had  enforced  recovery  of  € 7  billion  of  illegal  and 
incompatible aid. 

The purpose of recovery of unlawful and incompatible aid is to re-establish the situation that 
existed  on  the  market  prior  to  the  granting  of  the  aid.  This  is  necessary  to  ensure  that  the 
level-playing field in the internal market is maintained. In line with the SAAP, recent efforts 
have resulted in a marked improvement in the execution of recovery decisions, leading to an 
increase in the amount of incompatible aid recovered and a decrease in the backlog of pending 
cases. At the end of 2007, there with 49 pending recovery decisions compared to 93 at the end 
of 2004 and 60 at the end of 2006.  

The total amount of aid to be recovered on the basis of decisions adopted between 2000 and 
2007 is at least € 9 billion. Of this figure, some  € 7 billion of illegal and incompatible aid had 
been  effectively  recovered  by  31  December  2007  together  with  a  further  € 2.4  billion  of 
interest. Recovery is effected in accordance with the applicable national procedures provided 
they  allow  for  immediate  and  effective  execution  of  the  Commission  decision.  As  a  result, 
illegal aid is returned to the aid granting authority. Bearing in mind the important differences 
between State aid recovery and cartel fines, it can be noted that between 2003 and 2007, the 
fines 
€ 7 
Commission 
(http://ec.europa.eu/comm/competition/cartels/statistics/statistics.pdf).

imposed 

billions 

around 

cartel 

in 

EN 

6 

   EN 

 
INTRODUCTION 

The  spring  2008  update  of  the  State  aid  Scoreboard  aims  to  present  State  aid  for 
environmental protection in the context of the European Union's fight against climate change. 
It  provides  an  overview  of  how  Member  States  use  the  possibilities  to  grant  aid  under  the 
environmental aid guidelines and of available expenditure data on environmental aid. 
This update of the Scoreboard3 is divided into five main parts. Part One focuses on State aid 
for  environmental  protection.  Part  Two  presents  the  State  aid  situation  in  Bulgaria  and 
Romania  in  the  period  prior  to  their  accession.  The  main  aim  is  to  assess  their  progress 
towards meeting the Lisbon objectives and response to successive European Councils calls for 
“less and better targeted aid”. This overview complements the data and analysis provided in 
the  autumn  2007  Scoreboard  which  covered  the  same  time  period  for  the  EU-25  Member 
States. 

Parts Three and Four focus on ongoing efforts to recover unlawful aid and summarise ongoing 
work to modernise State aid control through legislative and policy means.  

Part Five provides an overview of State aid procedures in 2007 including statistics on State 
aid measures falling under the six block exemption regulations (block exemptions for aid to 
SME,  training  aid,  employment  aid,  regional  aid,  aid  to  SME  in  the  agricultural  sector  and 
certain  types  of  aid  in  the  fisheries  sector).  It  also  reports  on  the  progress  made  by  the 
Commission with regard to shortening the time required to treat State aid notifications. 

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 
Competition Directorate General’s Internet site, under the following address: 

http://ec.europa.eu/competition/state_aid/studies_reports/studies_reports.cfm. 

The  autumn  2008  Scoreboard  will  cover  State  aid  awarded  in  EU-27  for  the  year  2007.

3 

The scoreboard does not take into account coordination aid envisaged in Article 73 which may include 
intended positive effects on the environment. 

EN 

7 

   EN 

 
                                                 
1. 

PART ONE: SPECIAL FOCUS ON STATE AID FOR ENVIRONMENTAL PROTECTION 

1.1. 

The European Union fight against climate change 

Climate change is one of the greatest environmental, social and economic threats facing the 
planet.4 The EU is at the forefront of international efforts to combat climate change and has 
played a key role in the development of the two major treaties addressing the issue, the 1992 
United Nations Framework Convention on Climate Change and its Kyoto Protocol, agreed in 
1997.  Moreover,  the  EU  has  been  taking  serious  steps  to  address  its  own  greenhouse  gas 
emissions since the early 1990s. 

An  integrated  EU  energy  policy  that  gives  substantial  weight  to  energy  efficiency  and 
renewable energy is the EU's response to volatile oil and gas prices, the fear of energy supply 
disruption and the impact on climate change of the high use of fossil energies. 

Sustainable development, security of supply and competitiveness are precisely the objectives 
of the Green Paper on a European Energy Strategy5 which was adopted by the Commission 
early 2006. By October the same year, the Commission proposed an Action Plan6 to reduce 
energy  use,  followed  in  early  2007  by  a  Commission  proposal  for  an  integrated  energy  and 
climate  change  package7  with  significant  reduction  targets  in  greenhouse  gas  emissions  by 
2020.  Most  of  these  proposals  were  endorsed  by  the  2007  Spring  European  Council.8 
Agreement  was  reached  on  an  integrated  climate  and  energy  policy,  including  a  number  of 
headline political targets and a detailed action plan on how to realise them: 

–  On  climate  change,  the  Spring  Council  agreed  on  an  independent  EU  commitment  to 
reduce  greenhouse  gases  by  at  least  20  %  by  2020,  compared  to  1990  levels,  plus  a 
commitment to extend this reduction to 30 % if other developed countries were to commit 
themselves  to  comparable  emissions  reductions  and  economically  more  advanced 
developing  countries  contribute  adequately  according  to  their  responsibilities  and 
respective capabilities. 

–  On  the  internal  market  for  gas  and  electricity,  the  Spring  Council  stated  the  need  for 

effective unbundling of supply and production activities from network activities. 

–  On renewable energies, the Spring Council agreed on a binding target of 20 % of total EU 
energy consumption by 2020 with a minimum of 10 % for the share of biofuels in overall 
EU transport petrol and diesel consumption. 

In  response  to  the  above-mentioned  Council  conclusions  the  Commission  presented,  on  23 
January 2008, its proposal for an energy and climate change package9 which included: 
–  Proposal amending the EU emissions trading Directive.10 

4 
5 

6 
7 

8 

9 

http://ec.europa.eu/environment/climat/home_en.htm. 
A European Strategy for Sustainable, Competitive and Secure Energy, COM(2006)105 final of 8 March 
2006.  
Action Plan for Energy Efficiency: Realising the Potential, COM(2006)545 final of 19 October 2006. 
An  Energy  Policy  for  Europe,  COM(2007)1  final  of  10  January  2007  and  Limiting  Global  Climate 
Change to 2degrees Celsius – The way ahead for 2020 and beyond, COM(2007)2 final of 10 January 
2007. 
Brussels  European  Council  8/9  March  2007  –  Presidency  Conclusions  –  7224/1/07  Rev  1  of  2  May 
2007. 
20 20 by 2020 – Europe's climate change opportunity, COM(2008)30 final of 23 January 2008. 

EN 

8 

   EN 

 
                                                 
–  Proposal  relating  to  the  sharing  of  efforts  to  meet  the  Community's  independent 
greenhouse  gas  reduction  commitment  in  sectors  not  covered  by  the  Emission  Trading 
System (hereinafter, ETS).11 

–  Proposal for a Directive promoting renewable energy.12 
–  Proposal for a legal framework on carbon capture and storage.13 

–  New guidelines on State aid for environmental protection (hereinafter Environmental Aid 

Guidelines). 

The  revised  Environmental  aid  Guidelines  are  an  important  part  of  the  Energy  and  Climate 
Change package aiming to provide the right incentives for Member States and for industry to 
increase  their  efforts  for  the  environment.  They  aim  to  strike  the  right  balance  between 
generous  support  mechanisms  for  well  targeted  environmental  aid  and  the  preservation  of 
competition  which  is  necessary  for  the  well-functioning  of  the  market  based  instruments 
introduced  by  the  package.  The  guidelines  are  the  only  part  of  the  package  that  will 
immediately enter into force. 

1.2. 

Various means to support environmental objectives 

One of the main tools with which Member States can address environmental concerns is the 
correct application of the "polluter pays principle" (hereinafter, PPP). This principle aims to 
ensure that the cost of environmental protection is internalised by the companies and reflected 
in the final price of their products and that competition is not distorted by public intervention 
relieving undertakings from these costs. Nevertheless, environmental costs have for too long 
been hidden costs, which means that, in many cases, economic activities do not fully account 
for  their  impact  on  the  environment.  But  the  use  of  market-based  instruments  (hereinafter, 
MBI) could change this tendency. If pollution becomes a real economic cost, companies will 
tend to maximize their profits by reducing this cost component and therefore reducing at the 
same  time  pollution.  In  addition,  if  polluting  goods  are  more  expensive,  demand  will  be 
automatically  re-oriented  towards  less  polluting  sectors  offering  cheaper  and  more 
environmentally friendly goods. This, in turn, will stimulate growth and jobs14 since it has the 
potential to boost the creation and development of new eco-industries.  

The EU has increasingly favoured MBIs (such as taxes, charges or tradable permit schemes) 
because they provide flexible and cost-effective means to correct certain market failures and 
to  reach  certain  policy  objectives  avoiding,  at  the  same  time,  distortions  in  the  Internal 
Market.15 

10 

11 

12 

13 

14 

15 

For further details see "Questions and answers on Commission's proposal to revise the EU Emissions 
Trading System", MEMO/08/35 of 23 January 2008. 
For  further  details  see  "Questions  and  answers  on  the  Commission's  proposal  for  effort  sharing", 
MEMO/08/34 of 23 January 2008. 
For further details see "Memo on renewable energy and climate change package", MEMO/08/33 of 23 
January 2007. 
For further details see "Questions and answers on the proposal for a directive on the geological storage 
of carbon dioxide", MEMO/08/36 of 23 January 2008. 
Each  new  reporting  cycle  for  the  Lisbon  Strategy  shows  that  Member  States  increasingly  accept  that 
resource efficiency and climate change are closely linked to growth and jobs. See the Strategic Report 
on the renewed Lisbon Strategy for growth and jobs: launching the new cycle (2008-2010) – Keeping 
up the pace for change, COM(2007)803 final of 11 December 2007. 
See  the  Green  Paper  on  market-based  instruments  for  environment  and  related  policy  purposes, 
COM(2007)140  final  of  28  March  2007.  See  also  Using  the  market  for  cost-effective  environmental 
policy - Market-based instruments in Europe, European Environment Agency Report, No.1/2006. 

EN 

9 

   EN 

 
                                                                                                                                                         
However, if market based instruments are to bring about these changes, it is essential that the 
markets in which they operate are not distorted. And this is where competition and State aid 
control  policy  play  a  significant  role.  According  to  the  State  aid  Action  Plan  (hereinafter, 
SAAP) of 7 June 2005, "State aid policy safeguards competition in the Single Market and it is 
closely  linked  to  many  objectives  of  common  interest,  like  services  of  general  economic 
interest, regional and social cohesion, … environmental protection …. It must contribute by 
itself and by reinforcing other policies to making Europe a more attractive place to invest and 
work, building up knowledge and innovation for growth and creating more and better jobs".16 

Reaching these objectives requires a strict application of the State aid control policy which is 
able to identify which State measures involve aid and which among them are to be considered 
as  compatible  with  the  Internal  Market  after  a  careful  analysis  of  the  positive  and  negative 
effects involved ("balancing test"). 

1.3. 

Examples of market-based instruments 

One  of  the  most  well-known  market-based  instruments  is  the  ETS.  Based  on  a  European 
Directive,17  the  world’s  first  and  biggest  international  emissions  trading  scheme  began 
operating  on  1  January  2005.  The  ETS  requires  Member  States'  governments  to  draw  up 
national  allocation  plans  (hereinafter  NAPs)  for  each  trading  period.  NAPs  fix  the  total 
amount  of  CO2  that  can  be  emitted  by  all  the  installations  in  each  country  covered  by  the 
scheme as well as the number of emission allowances allocated to each individual installation. 
An installation that emits more CO2 than it has allowances for would need to buy additional 
allowances  in  the  market,  while  one  that  emits  less  has  the  possibility  to  sell  its  surplus 
allowances.  
The Commission scrutinises the plans18 and has the power to require changes if it finds a plan 
incompatible with the agreed criteria. Early in 2006 the first compliance cycle of the EU ETS 
ended and over 10 000 energy-intensive installations – representing almost half of EU's CO2 
emissions  –  had  to  report  their  emissions  for  2005.  Data  showed  lower  emissions  than 
expected resulting in a surplus of allowances which made the price drop. Mid-2006 Member 
States had to notify their NAPs for the second trading period (2008 to 2012), explaining how 
they  intended  to  allocate  emission  allowances  for  that  period,  in  which  the  average  total 
emissions from EU ETS sectors are capped at an average of around 6.5 % below 2005 total 
emissions levels within the system. NAPs for the first trading  period could  not  be based  on 
verified  emission  data.  The  Commission  based  its  assessment  of  the  NAPs  for  the  second 
trading period on 2005 verified emissions and used a formula in a systematic way to ensure 
effectiveness of the scheme and equal treatment of Member States. 

16 
17 

18 

See point 15 SAAP. 
Directive 2003/87/EC of the European Parliament and of the Council, of 13 October 2003, establishing 
a scheme for greenhouse gas emission allowance trading within the Community and amending Council 
Directive 96/61/EC, OJ L 275 of 25 October 2003, p.32. 
The  Commission's  task  is  to  scrutinise  Member  States'  proposed  NAPs  against  12  allocation  criteria 
listed in the Emissions Trading Directive. The criteria seek, among other things, to ensure that plans are 
consistent  with  reaching  the  EU's  and  Member  States'  Kyoto  commitments,  with  actual  verified 
emissions  reported  in  the  Commission's  annual  progress  reports  and  with  technological  potential  to 
reduce  emissions.  Criterion  5  provides  that  allocation  must  not  discriminate  between  companies  or 
sectors  in  such  a  way  as  to  unduly  favour  certain  undertakings  or  activities,  in  accordance  with  the 
requirements  of  the  Treaty,  in  particular  Articles  87  and  88  EC  thereof.  The  Commission  decisions 
approving,  in  part  or  in  full,  the  different  NAPs  can  be  found  in  DG  Environment's  web-site: 
http://ec.europa.eu/environment/climat/2nd_phase_ep.htm 

EN 

10 

   EN 

 
                                                 
The  climate  change  package  adopted  by  the  Commission  on  23  January  2008  includes  a 
proposal to revise this mechanism. According to the proposal, there will be one EU-wide cap 
on the number of emission allowances instead of national caps which decreases along a linear 
trend-line also beyond 2020, a much larger share of allowances will be auctioned instead of 
allocated for free and harmonised rules governing the free allocation will be introduced. The 
scope of the system is proposed to be widened so that a number of new industries will also be 
included. Finally, Member States will be allowed to exclude small installations from the scope 
of the system, provided that they are subject to equivalent emission reduction measures. 
Another  good  example  is  the  Energy  Taxation  Directive19  covering  taxes  levied  on  energy 
consumption.  Among  other  things  the  Directive  introduces  minimum  tax  levels  for  all 
competing sources of energy. The Directive has the following main objectives: 

–  Reduce existing  distortions of  competition between operators of different  Member States 

as a result of divergent energy tax approaches. 

–  Reduce distortions of competition between different energy products as only mineral oils 
were  subject  to  Community  tax  legislation  before  the  Energy  Taxation  Directive  entered 
into force. 

–  Increase  the  incentive  to  make  a  more  efficient  use  of  energy,  thereby  reducing 

dependency on imports and levels of emissions. 

Member  States  have,  of  course,  the  possibility  to  strengthen  the  positive  effects  by 
introducing  higher  taxation  levels  than  the  minima  imposed  by  the  Directive  (see  box  on 
environmental taxation). 

1.4. 

Environmental  measures:  When  do  they  constitute  State  aid?  When  are  they 
compatible with the Internal Market?20 

Member  States  resort  to  a  wide  range  of  national  environmental  policy  measures  to  protect 
their  environment:  to  limit  pollution  of  air,  water  and  soil,  to  protect  natural  resources,  to 
promote renewable energy sources and energy savings, to manage waste, etc. Many of these 
objectives are targeted through general measures, i.e. applied throughout a particular country 
without  regional  or  sectoral  selectivity.  However,  there  are  also  environmental  measures  or 
exemptions  from  general  measures  (e.g.  environmental  tax  relief)  which  favour  certain 
companies  or  the  production  of  certain  goods.  Such  measures  may  distort  competition 
between  companies  and  it  is  therefore  important  that  the  benefits  they  bring  about  are 
carefully balanced against the distortion of competition they cause.  

The EC Treaty gives the European Commission the monopoly in carrying out this balancing 
test. To this end, Member States are required to notify to the Commission all planned State 
aid  measures  before  putting  them  into  effect.  Then  the  Commission  carries  out  a  two  steps 
analysis: (1) whether the measure constitutes State aid within the meaning of Article 87(1) of 
the EC Treaty, and, if yes, (2) whether such potential distortion of competition is justified and 
balanced against the positive effects of the measure. If the aid is justified and the distortion of 
competition  is  marginal,  it  will  be  considered  as  compatible  with  the  common  market  and 
approved by the Commission. Only then is the Member State free to put it into place. 

19 

20 

Council  Directive  2003/96/EC,  of  27  October  2003,  restructuring  the  Community  framework  for  the 
taxation of energy products and electricity, OJ L 283 of 31 October 2003, p. 51. 
For further details on this issue see State aid Scoreboard – Autumn 2005 update, COM (2005) 624 final 
of 9 December 2005. 

EN 

11 

   EN 

 
                                                 
As  with  any  measure,  an  environmental  support  measure  qualifies  as  State  aid  as  defined 
under Article 87(1) of the EC Treaty if it fulfils all the following four criteria: 

–  Financed through State resources (transfer of State resources and imputable to the State) 

–  Advantage for the undertaking 

–  Selectivity 

–  Distortion to competition and effect on trade between Member States. 

In  some  cases,  the  interpretation  as  to  whether  one  or  other  criteria  is  fulfilled  and  thus 
whether  or  not  the  measure  constitutes  State  aid  is  difficult  and  complex.  Some  examples 
relevant for environmental measures are given below.  

Financing  through  State  resources  includes  grants  from  the  central,  regional  or  local 
government’s budget, revenue forgone i.e. environmental tax relief, or government authorities 
selling (buying) environment related goods and services or land below (above) market price. 
State  resources  are  also  transferred  where  a  fund  is  set  up  by  the  State  and  is  financed  by 
contributions  imposed  and  managed  by  the  State.21  For  instance,  in  Austria22  there  is  an 
obligation  to  purchase  renewable  energy  and  energy  produced  by  co-generation  of  heat  and 
power to prices fixed above the market price ('feed-in tariffs'). The feed-in tariffs are financed 
from  the  eco-balance  group  (Ökobilanzgruppe),  whose  representatives  are  mainly  or  fully 
owned  by  the  State.  The  group  is  controlled  by  the  State,  for  example  by  State  approval  of 
important decisions and control of national auditors. The obligation, as well as the calculation 
of the feed-in tariff, is set out by the law. Although the costs of the administering body are in 
the end, according to law, partly borne by the final electricity consumers, partly by electricity 
traders,  the  Commission  took  the  view  that  the  fact  that  the  money  is  in  the  control  of  the 
State makes the measure financed by State resources. This is in line with the statement of the 
Court of Justice in the Stardust Marine case23 that no distinction is to be drawn between cases 
where the aid is granted directly by the State and those where it is granted by public or private 
bodies which the State establishes or designates with a view to administering the aid. In the 
PreussenElektra  case,24  the  Court  of  Justice  decided  that  to  the  extent  that  the  German  law 
imposed  on  private  electricity  distributors  to  pay  a  higher  feed-in  price  for  electricity 
generated  from  renewable  sources,  it  does  not  involve  transfer  of  State  resources.  Most 
environmental support measures constitute an advantage for the undertaking, but in some 
cases the Commission has found that there is no economic advantage.25  

21 

22 

23 
24 
25 

This was recently confirmed in the opinion of Advocate-General Mengozi of 24 January 2008 in case 
C-206/06 Essent Netwerk Noord and others. 
Joint cases NN 162/A/2003 and N 317/A/2006 (renewable energy) and joint cases NN 162/B/2003 and 
N 317/B/2006 (co-generation of heat and power), OJ C 221 of 14 September 2006. 
ECJ judgement of 16 May 2002 on case C-482/99 Stardust Marine case. 
ECJ judgement of 13 March 2001 on case C-379/98 Preussen Elektra AG v Schleswag AG. 
For  instance,  in  the  Netherlands  case  Waste  disposal  system  for  car  wrecks  (C  11/2001,  OJ  L  68,  12 
March  2002),  the  Commission  found  that  there  is  no  economic  advantage  for  the  companies  and, 
therefore,  no  State  aid.  The  aim  of  the  waste  management  system  is  to  ensure  that  companies  that 
produce  and  sell  cars  also  take  the  responsibility  for  a  high  degree  of  recycling  of  car  wrecks.  This 
measure  corresponds  to  the  polluter  pays  principle.  The  Dutch  government  has  declared  that  all  car 
producers  and  importers  have  to  pay  charge  for  each  car  which  is  registered  in  the  Netherlands.  The 
resources  are  paid  to  car  dismantling  companies.  As  the  charge  for  car  producers  and  importers  and 
premiums to the dismantling companies correspond to the cost of recycling, the Commission found that 
there is no advantage and consequently no State aid for car producers or for car dismantling companies. 

EN 

12 

   EN 

 
                                                 
If  discrimination  and  selectivity  in  State  support  measures  can  be  avoided,  they  can  be 
considered as general measures which do not constitute State aid. However, there are many 
examples of the contrary, see for example the Adria-Wien Pipeline GmbH case26 concerning 
an Austrian legislative measure, which provides tax exemptions from energy taxes on natural 
gas  and  electricity.  Although  the  exemptions  were  based  on  objective  automatic  criteria 
without  the  administrative  authorities  having  any  discretionary  power  in  selecting  the 
beneficiaries,  and  the  measure  gave  benefits  for  a  very  large  number  of  undertakings,  the 
Court  of  Justice  found  that  the  measure  is  selective.  One  of  the  main  reasons  for  this 
conclusion  was  that  the  tax  exemption  is  applied  only  for  undertakings  whose  activity  is 
mainly in the manufacturing sector. The Court stated that undertakings in the services sector 
may,  just  like  undertakings  in  the  manufacturing  sector,  be  major  consumers  of  energy  and 
incur  high  level  of  energy  taxes  and  therefore  they  are  in  disadvantaged  position.  Based  on 
these arguments the Court of Justice regarded these measures to be selective and to be State 
aid. On the contrary, in the British Aggregates case27
 there was an exemption of certain types 
of aggregates from the scope of the United Kingdom aggregates levy. The plaintiffs claimed 
that this constituted unlawful State aid. The Court of First Instance disagreed and confirmed 
that a tax levy applicable on virgin aggregates but not on waste aggregates was not selective, 
as  the  scope  of  the  levy  was  justified  by  the  logic  and  nature  of  the  tax  system  (namely  to 
promote  the  environment  by  discouraging  new  quarrying  and  by  encouraging  waste 
recycling). 

1.5. 

State aid decisions on environmental protection 

Use  of  environmental  guidelines  on  State  aid  varies  considerably  from  one  Member 
State to another. 

In  the  seven  years  since  their  adoption  in  2001,  the  Commission  has  taken  around  350 
decisions on the basis of the environmental guidelines (out of a total of 2825 decisions taken 
over  this  period  in  the  area  of  industry  and  services).  From  2001-2004,  the  number  of 
decisions was around 40 per year. This figure increased to 52 in 2005, 64 in 2006 and peaked 
at 70 in 2007. The upward trend is largely the result of the EU-10 accession coupled with a 
significant rise in the number of Swedish measures. 

Over  the  period  2001-2007,  Italy,  the  Netherlands,  the  United  Kingdom  and  Germany  each 
introduced around 40-45 measures. For a second group of Member States, Austria, Sweden, 
Spain, Denmark, the Czech Republic and France, the Commission took decisions on around 
20-25 measures. In all other Member States, the number of measures was no more than 12. 

Up to 98 % of environmental aid measures were found to be compatible with the State 
aid rules. 

In  the  vast  majority  of  environmental  aid  cases,  the  Commission  approved  the  measures 
without  a  formal  investigation,  concluding  that  the  examined  aid  was  compatible  with  the 
State  aid  rules  (84  %  of  all  decisions  on  environmental  aid)  or  did  not  constitute  State  aid 
(8 %).  It  is  however  worth  noting  that  this  high  figure  includes  cases  in  which  the 
Commission may have identified certain issues related to the compatibility. Such issues can 
often  be  resolved  within  the  scope  of  the  notification  procedure  through  a  change  in  the 
measure. For the remainder, the Commission carried out a formal investigation after which it 
approved  the  aid  (6 %)  or  took  a  negative  decision  (2 %).  These  figures  are  broadly  in  line 

26 
27 

ECJ judgment of 8 November 2001 on case C-143/99 Adria-Wien Pipeline GmbH. 
CFI judgment of 13 September 2006 on case T-210/02 British Aggregates. 

EN 

13 

   EN 

 
                                                 
with those for all other objectives though the share of incompatible environmental aid (2 %) is 
lower than the average for total aid over the same period (6 %) while there are also more no 
aid decisions in the environmental area. See Figure 1. 

Figure 1: Decisions on aid measures 2001-2007 

Decisions on all aid measures 2001-2007

Decisions on environmental aid measures 2001-2007

Negative 
decision
6%

No aid decision
6%

Positive 
decision after 
formal 
investgation
6%

Negative 
decision
2%

No aid decision
8%

Positive decision 
after formal 
investgation
6%

Decision not to 
raise objections
82%

Decision not to 
raise objections
84%

Note: Decisions in the field of industry and services only. Source: DG Competition 

1.6. 

Environmental aid measures qualifying as compatible State aid: case studies 

The Commission has examined and approved a wide range of environmental aid measures on 
the basis of the environmental aid guidelines. As the examples below show, support measures 
for renewable energy, energy-saving, waste management, rehabilitation of polluted industrial 
sites and improvement of production processes are normally considered to be in the interest of 
the Community and therefore compatible with the Internal market provided that the benefits 
outweigh  the  distortion  of  competition.  Relief  from  environmental  taxes  can  also  be  of 
Community interest, since such taxes may not be introduced to the same extent, in particular 
on energy-intensive companies, if no relief is allowed. The Commission also approved certain 
aid to the road transport sector with a positive impact on environmental protection.28  

Renewable energy 

In,  for  example,  the  Netherlands  the  production  of  energy  from  renewable  energy  sources  and 
combined  heat  and  power  production  (CHP)  is  supported  by the State.  In  February 2007,  the  Dutch 
Government decided on a new target for the reduction of CO2 emissions: 30 % reduction by 2020. One 
of  the  instruments  to  reach  this  target  is  the  modification  and  prolongation  of  existing  schemes  for 
renewable energy and CHP transforming them into a new scheme. The modification also widened the 
scheme  to  include  support  to  production  of  biogas.  The  subsidies  for  electricity  produced  from 
renewable  energy  compensate  for  the  difference  between  production  costs  of  the  electricity  from 
renewable  energy  sources  and  the  market  price  of  conventional  electricity,  and  the  subsidies  are 
annually  corrected  on  the  basis  of  the  realised  energy  prices  for  that  year.  The  subsidy  is  financed 
through a compulsory contribution by electricity consumers imposed by legislation. The total budget 
of the 10 duration period of the scheme is € 2  503 million (of which € 2 221  million is support for 
renewable sources and the remaining part concerns CHP). The Commission approved the scheme in 
December 2007.29 It considered that the  measure  constitutes State  aid within the  meaning of Article 
87(1) of the EC Treaty. As the objective of the measure clearly is in the interest of the Community and 
there  is  no  over-compensation,  the  measure  was  found  to  be  in  line  with  the  Environmental  aid 
guidelines (in particular point 59) and compatible with the common market in accordance with Article 
87(3)(c). 

28 
29 

N 649/2006, OJ C 139, 23.6.2007, p. 13 and N 607/2006, OJ C 307, 18.12.2007, p. 10 
N 478/2007, OJ C 39 of 13 February 2008, p. 3. 

EN 

14 

   EN 

 
 
                                                 
Another example of aid for renewable energy sources is a German measure, which was last approved 
by the Commission in 2006, supporting the use of renewable energies with investment aid.30 The aid 
may  be  provided  for  solar  collector  installations,  biomass  installations  for  heating  or  CHP,  electric 
heat  pump  installations  for  water  and/or  room  heating,  energy  conservation  measures  for  buildings, 
geothermic installations, photovoltaic installations and small hydroelectric plants (up to 500 kW). For 
2006, the budget of the scheme was € 180 million. While  some of the support was considered to fall 
outside Article 87(1) since it benefited aid to schools and public bodies, the part of the scheme relating 
to  undertakings  fall  within  the  scope  of  State  aid  provisions.  However,  since  the  maximum  aid 
intensity  is  limited  to  40  %  and  the  programme  meets  the  conditions  in  point  30,  31  and  32  of  the 
Environmental aid guidelines, it was approved by the Commission under Article 87(3)(c). 

Energy-saving 

In 2005, Sweden introduced a scheme to stimulate owners of public premises to carry out investments 
in  energy  efficiency,  energy  savings  measures  and  conversion  into  renewable  energy  sources.31  The 
investments  will  contribute  to  the  fulfilment  of  targets  in  the  energy  and  climate  policies  and  could 
constitute  a  positive  example  for  other  parts  of  the  construction  and  property  sector.  For  the  energy 
saving  measures,  support  can  be  provided  by  30 %  of  the  eligible  costs  for  measures  such  as 
connection  to  district  cooling,  installation  of  electricity  efficient  lighting,  ventilation,  motors  and 
heating systems and, under certain conditions, other energy saving measures such as climate shell or 
heat  recycling  of  buildings.  Support  is  given  for  labour  costs  and  material  for  investments  in  land, 
buildings  and  equipment,  but  will  not  cover  the  development  and  manufacturing  of  machines  and 
transports.  The  expected  total  budget  is  approximately  € 210  million  for  the  4  year  period  of  the 
scheme. As the majority of the beneficiaries would be either public or private undertakings carrying 
out management and renting out properties, the Commission found that activities were of an economic 
nature  falling  within  Article  87(1).  The  Commission  assessed  the  compatibility  of  the  aid  under 
Article 87(3)(c) and the Environmental aid guidelines, in particular section E.1.3 on rules applicable to 
investment in energy, and found that the energy saving measures could be approved. 

Waste management 

In 2002, the French government introduced an aid scheme for the elimination of dangerous waste for 
water.32 The objective of the scheme is to preserve water resources by promoting the elimination of 
waste  that  can  pollute  the  subsurface  and  surface  water  or  disturb  the  functioning  of  municipal 
purification  plants.  In  order  to  achieve  that  objective,  the  scheme  aims  at  orienting  the  waste 
pollutants, which are normally put in a disposal, in the relevant elimination procedures, successful at 
the  technical  level  and  optimal  at  the  environmental  level.  The  aid  is  provided  to  enterprises  that 
produce  the  waste  when  these  enterprises  treat  the  waste  in  appropriate  procedures  in  order  to 
significantly  reduce  the  potential  pollutant.  Grants  are  calculated  on  the  basis  of  the  difference 
between the cost to treat waste in the dedicated procedure and the cost of disposal for the same waste. 
Each beneficiary can benefit from the aid for a maximum of 5 years, either as a fixed level of 50 % 
during that period or at an aid level which is degressive in a linear manner from 100 % to 0 % during 
the  5  year  period.  The  scheme  was  found  to  constitute  State  aid  which  is  in  line  with  the 
Environmental  aid  guidelines  (particularly  points  42  to  46).  Since  the  scheme  is  covered  by  the 
guidelines and does not lead to over-compensation, the Commission approved the scheme on the basis 
of Article 87(3)(c). 

Rehabilitation of polluted industrial sites 

In February 2005, the Dutch government notified the Commission of a prolongation of an existing aid 
scheme subsidising parts of the costs of rehabilitation of sites that continue to be used for industrial 

30 

31 

32 

N 458/2006, OJ C 9 of 13 January 2007, p.1. The scheme was originally authorised under the number 
N 668/1999 (OJ C 362 of 16 December 2000, p. 9) and has later been later amended and prolonged. 
The original scheme, N 524/2004 (OJ C 226 of 15 September 2005, p. 6), was slightly  modified and 
approved by the Commission in its decision on N 312/2006, OJ C 219 of 12 September 2006, p. 3. 
N 496/2002, OJ C 108 of 7 May 2003, p. 5. 

EN 

15 

   EN 

 
                                                 
purposes.33 The Soil Protection Agreement is a covenant between a number of national and regional 
bodies which agreed on a scheme to partly support the rehabilitation of Dutch polluted industrial sites, 
in  cases  where  no  private  party  can  be  held  liable  for  the  pollution.  For  different  classes  of 
beneficiaries,  depending  on  their  involvement  in  the  pollution  and  the  date  when  the  property  was 
acquired, aid intensities vary from 60 % to 15 %, with a bonus of 10 % for SMEs. The total budget 
since the introduction of the original scheme in 2002 is € 1 130 million for the period up to the end of 
2007.  The  scheme  was  found  to  constitute  State  aid  but  as  it  is  in  line  with  point  38  of  the 
Environmental aid guidelines, the Commission approved it under Article 87(3)(c). 

Investment aid to improve production processes 

In 2005, the Italian authorities notified support for the plant of CIBA Specialty Chemicals S.p.A. in 
Sasso  Marconi34.  The  plant  is  mainly  dedicated  to  the  production  of  plastics  additives,  which  are 
substances  used  to  delay  the  aging  and  rusting  effect.  The  notified  project  consisted  of  eleven 
interventions in the production process aiming at reducing the environmental impact of the factory in 
Sasso Marconi. They aimed at, inter alia, reducing the use of washing waters, reducing the amount of 
chlorine acids and liquid waste. The interventions started in 2006 and the investment will be effective 
as of 2010. The total costs of the investment are € 5.4 millions. The Italian State proposed to support 
CIBA with a grant of € 883 250, and thus the intensity of the aid was of 25 %. 

The  Italian  authorities  provided  evidences  for  each  of  the  eleven  interventions  that  this  project  goes 
beyond  the  best  available  techniques  that  were  recently  drafted  in  the  BAT  Reference  Document 
(BREF)  for  organic  fine  chemicals  of  December  2005  and  the  BREF  for  common  waste  water  and 
waste gas treatment and management systems in the chemical sector of February 2003. Aid was, thus, 
only provided for investments that led to improvements beyond this conversion. Consequently, it was 
considered  to  be  in  line  with  point  29  of  the  Environmental  aid  guidelines,  whereby  investment  aid 
may  be  authorised  for  investments  improving  on  the  applicable  Community standards.  Accordingly, 
the Commission decided not to raise objections against it. 

Relief from environmental taxes 

In  Denmark  an  electricity  tax  was  introduced  in  1977,  an  electricity  distribution  charge  was 
implemented  in  1999  and  a  CO2  tax  was  introduced  in  1992.  All  VAT  registered  companies  in 
Denmark  (except  liberal  professions)  can  benefit  from  exemptions  from  the  electricity  tax  and  the 
electricity  distribution  charge.  In  addition,  energy-intensive  business  (with  or  without  voluntary 
agreements)  is  partly  relieved  from  the  CO2  tax.35  The  tax  levels  are  well  above  the  Community 
minimum tax levels. For example, in 2004 the total amount of these taxes for electricity was some 24 
times higher than the minimum levels. When the measure was notified in 2004, the total amount for 
the refunds from the concerned taxes was approximately € 268 million. The Commission considered 
the tax measures to constitute State aid under Article 87 (1), as the companies who receive the relief 
have an advantage compared to other undertakings. The Commission approved the relief since it was 
in  line  with  the  rules  on  operating  aid  in  the  form  of  tax  reductions  or  tax  exemptions  in 
Environmental  aid  guidelines  as  well  as  with  the  Energy  Taxation  Directive.36  According  to  the 
guidelines, non-degressive tax exemptions covering a 10-year period from environmental taxes can in 
certain cases be justified when the tax levels in a Member State exceeds that laid down by Community 
legislation.  An  assessment  of  the  Danish  case  showed  that  i)  the  taxes  have  an  appreciable  positive 
impact on environmental protection, ii) the derogations had been decided when the tax was adopted, 
iii)  the  taxes  resulted  in  beneficiaries  paying  an  amount  higher  than  the  Community  minimum  tax 

33 

34 
35 
36 

N 85/2005, OJ C 228 of 17 September 2005, p. 9. The original scheme was N 520/2001, OJ C 146 of 
19 June 2002, p. 8. 
N 506/2005, OJ C 276 of 14 November 2006, p. 16. 
NN 75/2004, OJ C 275 of 8 November 2005, p. 4. 
Council  Directive  2003/96/EC  of  27  October  2003  restructuring  the  Community  framework  for  the 
taxation of energy products and electricity, OJ L 283 of 31 October 2003, p. 51. 

EN 

16 

   EN 

 
                                                 
level  and  iv)  the  Danish  authorities  committed  themselves  to  re-notifying  the  scheme  if  it  were  to 
exceed 10 years. The tax relief could therefore be approved on the basis of Article 87(3)(c). 
Energy-intensive  companies  that  enter  into  voluntary  agreements  pay  a  lower  rate  of  the  CO2  tax.37 
Companies  with  heavy  processes,  such  as  melting,  concentration  and  dying  related  to  cement 
production, condensed milk and sugar, can sign agreements with the Ministry of Energy to implement 
energy-saving investments in order to benefit from further reduction of the CO2 tax. The obligations 
are  considered  to  replace  the  steering  effect  of  the  energy  tax  on  electricity  used  in  the  production 
processes  of  the  undertakings.  The  fact  that  energy  costs  constitute  an  important  part  of  these 
companies’  total  costs  is  an  additional  incentive  for  the  companies  to  implement  energy-saving 
measures.  The  scheme  and  modifications  thereof  has  been  notified  many  times  to  the  Commission, 
each time with a budget relating only to the modification in question. The scheme was found to be in 
line with the conditions of the Environmental guidelines (in particular point 51.1(a)) and the Energy 
Taxation Directive, and authorised by the Commission authorised on the basis of Article 87(3)(c). 

1.7. 

State aid expenditure on environmental protection 

As the case studies above show, environmental aid encompasses a wide range of objectives, 
including  support  measures  for  renewable  energy,  energy-saving,  waste  management, 
rehabilitation of polluted industrial sites and improvement of production processes. For these 
types of measures, aid granted by Member States pursues a direct benefit to the environment. 
State  aid  expenditure  data  for  such  cases  can  therefore  be  taken  as  a  proxy  measure  for  the 
intended  environmental  benefit,  regardless  of  the  form  in  which  the  aid  may  be  awarded 
(grant,  tax  exemption,  guarantee,  etc.).  This  represented  approximately  47  %  of  total 
environmental aid expenditure in 2006 (around €6.7 billion). 

A second category of State aid measures assessed under the environmental aid guidelines are 
reductions or exemptions from environmental taxes. Here, the environmental objective of the 
measure is pursued by the tax itself. Any reduction or exemption from environmental taxes, 
i.e.,  the  part  of  the  measure  constituting  aid,  has  an  indirect  environmental  objective  by 
facilitating  the  introduction  or  modification  of  such  taxes.  Expenditure  data  currently 
available  for  this  category  of  aid  schemes  indicate  the  amount  of  tax  revenue  foregone  and 
can therefore not serve as a proxy measure of the environmental benefit the taxes themselves 
have  brought.  In  2006,  some  53  %  of  total  expenditure  (around  €7.5  billion)  fell  under  this 
category. 

Any analysis of State aid expenditure for environmental purposes must therefore take account 
of the fact that a large proportion of aid comprises tax exemptions from environmental taxes, 
usually benefiting energy intensive  industries including sometimes big polluters, that had to 
be  accepted  in  order  to  allow  for  certain  types  of  environmental  taxes  (going  beyond  the 
minima  imposed  by  European  Directives  for  example)  to  be  introduced.  That  share  of  tax 
exemptions  is  strongly  influenced  by  the  largest  environmental  aid  grantors,  Germany  and 
Sweden.38 

Such  exemptions  are  only  allowed  where  the  taxes  themselves  are  intended  to  make  a 
significant  contribution  to  protecting  the  environment  and  where  the  exemptions  do  not 
undermine  the  general  objectives  pursued.  For  this  reason,  the  new  State  aid  guidelines  for 
environmental  protection  require  that  where  companies  do  not  pay  at  least  the  Community 
minimum or where the tax in question is not subject to Community-wide harmonisation, long 

37 

38 

N 459/1995, OJ C 324 of 5 December 1995; N 61/1996, OJ C 300 of 10 October 1996; N 272/1997, OJ 
C 377 of 12 December 1997; N 840/A/2000, OJ C 358 of 15 December 2001, p. 4; N 540/2002, OJ C 
78 of 1 April 2003, p. 3, and N 317/A/2004, OJ C 226 of 15 September 2005, p. 6. 
See explanatory note to table 1. 

EN 

17 

   EN 

 
                                                 
term  derogations  from  environmental  taxes  remain  only  possible  when  Member  States  can 
demonstrate that they are necessary and proportionate. 

EU-wide,  aid  in  the  form  of  grants  represents  around  17  %  of  total  environmental  aid 
although the proportion is higher, for example, in the Netherlands which awards a significant 
proportion  of  its  aid  in  the  form  of  subsidies  for  the  production  of  energy  from  renewable 
energy sources and combined heat and power production (CHP). 

Looking at the share of each aid instrument in terms  of  number  of  measures  paints  a  rather 
different  picture:  aid  in  the  form  of  grants  account  for  70  %  of  the  total  number  of 
environmental aid measures while tax exemptions make up less than 20 % of the total (Figure 
2). 

Figure  2:  Environmental  aid  instruments  (in  terms  of  expenditure  and  number  of 
measures) 

Environm ental aid expenditure by aid instrum ent, EU-
27, 2006

Number of environmental aid measures by aid 
instrument, EU-27, 2006

Others
0,2%

Grants
16,8%

Others
10,7%

Tax exemption
18,9%

Other tax 
exemptions 
(revenue 
foregone)
53,0%

Tax 
exemptions 
pursuing 
direct 
environmental 
benefit
30,0%

Grant
70,5%

Source 2: DG Competition. Note: Data refer to all environmental aid measures for which there may be ongoing 
expenditure.  

The amount of environmental aid doubled between 2001 and 2006 

In 2006, the EU-27 Member States awarded 14 billion of State aid under the environmental 
aid guidelines compared with € 7 billion in 20 01. The largest environmental aid grantors in 
absolute  terms,  which  together  granted  more  than  90  %  of  total  environmental  aid,  were 
Germany  (€  8  billion),  Sweden  (€  2.5  billio n),  the  United  Kingdom  (€  1  billion),  the 
Netherlands  (€  860  million)  and  Denmark  (€  600  million).  In  more  than  half  the  Member 
States, expenditure did not exceed € 20 million in 2006. 

Large  disparities  between  Member  States  in  the  share  of  environmental  aid  as  a 
percentage of GDP 

In relative terms, environmental aid amounted to 0.12 % of EU-27 Gross Domestic Product 
(GDP)  in  the  period  2004-2006.  This  average  hides  significant  disparities  between  Member 
States.  The  largest  aid  grantors  in  relative  terms  were  Sweden  (0.77  %  of  GDP),  Denmark 
(0.35  %)  and  Germany  (0.32  %),  followed  by  Austria,  the Netherlands  and  Finland each of 
which  granted  aid  above  the  EU  average.  Environmental  aid  expenditure  in  the  United 
Kingdom  stood  at  half  the  EU-27  average,  while  all  other  Member  States,  including  Spain, 
France  and  Italy,  granted  aid  amounting  to  less  than  one  quarter  of  the  EU-27  average  in 
terms of GDP (see Table 1). It is worth noting that even if tax exemptions are excluded from 
the figures, the ranking of Member States is broadly similar. 

EN 

18 

   EN 

 
 
Leaving aside aid in the form of tax exemptions, the trend in the level of environmental 
aid is stable. 

EU-wide, total environmental aid as a percentage of GDP has increased from 0.08 % in the 
period 2002 - 2004 to 0.12 % in the period 2004 - 2006. However, this upward trend is largely 
the  result  of  significant  increases  in  the  use  of  tax  exemptions:  their  share  in  total 
environmental aid has increased from 69 % in 2001 to 83 % in 2006. As regards aid in the 
form of grants or other State aid instruments with a direct impact on the environment, there 
has been no significant increase in the overall expenditure. 

Box: Environmental taxation 

Significant differences between Member States in the level of environmental taxation … 
though  indicator  does  not  necessarily  reflect  a  country's  policy  on  environmental 
protection.39 

Data on the share of environmental taxes to total taxation indicate that roughly one Euro out 
of every fifteen in revenue derives from environmental taxes. Environmental tax revenues in 
the last five years have been on the decline, at least in the EU-15. In contrast, in the EU-12 
Member States, which originally levied low environmental taxes, revenues from this kind of 
taxes  have  shown  a  strong  progression  over  time,  so  that  by  now  there  is  practically  no 
difference vis-à-vis the EU-15 in this respect. 

Looking at the ratio of environmental tax-to-GDP most Member States tend to fall in a band 
ranging from 2 % to 3 % of GDP, or slightly higher. At 5.8 % in 2005, Denmark displayed by 
far the highest level of "green" taxes followed by the Netherlands (4 %).  

A  high  share  of  environmental  tax  revenue  as  such  does  not  necessarily  represent  an 
indication of a high priority being attributed to environmental protection. Energy taxes were 
originally  used  purely  as  revenue  raising  instruments,  without  environmental  purposes. 
Furthermore,  the  level  of  this  indicator  also  says  nothing  about  the  achievement  of 
environmental policy goals, as revenue increases could conceivably result from changes in the 
economy towards production and consumption patterns that are resource intensive and lead to 
even higher pollution. Moreover, if green taxes act as an efficient disincentive, they will over 
time  reduce  the  recourse  to  environmentally  harmful  goods  and  thereby  erode  the  tax  base, 
leading  to  a  gradual  fall  in  revenue.  In  addition,  if  tax  breaks  on  environmentally  friendly 
products or processes are granted, the same objective -protecting the environment- results in 
lower  tax  revenues.  In  either  case  we  would  witness  a  falling  tax-to-GDP  ratio  for 
environmental taxes despite an increase in environmental protection. 

Vast majority of environmental aid awarded through schemes  

Over the period 2001-2007, around 12 % of environmental aid decisions involved individual 
awards  of  aid  to  companies  as  opposed  to  aid  schemes.  However,  in  terms  of  expenditure, 
individual aid amounted to only 2 % of total environmental aid. 

Table 1: Trend in the share of environmental aid, 2001-2006 

39 

For  further  information  on  this  issue,  see  "Taxation  trends  in  the  European  Union",  2007  Edition, 
Eurostat Statistical Books or the Commission Staff Working Document accompanying the Green Paper 
on market-based instruments for environment and energy related policy purposes, SEC (2007) 388 of 
28 March 2007. 

EN 

19 

   EN 

 
                                                 
Member  
State  

Average annual 
expenditure on 
environmental 
aid, 2001-2003 
(mio) 

Average annual 
expenditure on 
environmental 
aid, 2004-2006 
(mio) 

Environmental 
aid as % of GDP, 
2004-2006 

Trend in 
environmental aid as a 
% of GDP between 
2001-2003 and 2004-
2006, percentage point 
difference 

Sweden 

Denmark 

Germany 

Austria 

Netherlands 

Finland 
EU-27 

United Kingdom 

Slovenia 

Belgium 

Czech Republic 

Lithuania 

Spain 

Hungary 

Greece 

Cyprus 

Luxembourg 

France 

Romania 

Italy 

Latvia 

Poland 

Estonia 

Ireland 

Portugal 

Slovakia 

Bulgaria 

Malta 

400 

701 

5213 

160 

460 

131 
8453 

890 

35 

15 

49 

- 

60 

28 

5 

2 

0 

172 

12 

67 

- 

50 

1 

3 

1 

- 

3 

- 

2286 

749 

7294 

361 

742 

216 
13365 

1203 

16 

87 

25 

4 

151 

8 

17 

1 

2 

102 

9 

72 

1 

10 

0 

6 

1 

0 

0 

- 

0,77% 

0,35% 

0,32% 

0,14% 

0,14% 

0,13% 
0,12% 

0,06% 

0,05% 

0,03% 

0,02% 

0,02% 

0,02% 

0,01% 

0,01% 

0,01% 

0,01% 

0,01% 

0,01% 

0,00% 

0,00% 

0,00% 

0,00% 

0,00% 

0,00% 

0,00% 

0,00% 

- 

+ 0,62 

0,00 

+ 0,08 

+ 0,08 

+ 0,05 

+ 0,05 
+ 0,04 

+ 0,02 

- 0,08 

+ 0,02 

- 0,03 

+ 0,02 

+ 0,01 

- 0,03 

+ 0,01 

- 0,01 

+ 0,01 

0,00 

0,00 

0,00 

0,00 

- 0,02 

- 0,01 

0,00 

0,00 

0,00 

- 0,01 

- 

Note:  Member  States  are  ranked  in  descending  order  according  to  their  level  of  environmental  aid  as  a 
percentage  of  GDP  Data  for  Romania  and  Bulgaria  in  the  first  column  refer  to  the  period  2002  -  2003.  In 
Germany and Sweden, tax exemptions account for over 90 % of total environmental aid in each country. A CO2 
tax reduction for industry and a tax exemption from the energy tax on electricity (C 42/2003 OJ L 165 of 25 June 
2005, N 156/2004, OJ C 137 of 4 June 2005, N 588/2005, OJ C 72 of 24 March 2006) led to a remarkable rise in 
aid  expenditure  for  Sweden  from  2003  onwards.  In  Germany,  expenditure  has  risen  steadily  following  the 
approval  in  2002  of  a  measure  that  prolonged  several  tax  exemptions  from  the  German  energy  taxation  on 
electricity and mineral oils (N 449/2001, OJ C 137 of 8 June 2002). 

EN 

20 

   EN 

 
1.8. 

The new guidelines on State aid for environmental protection 

In  the  SAAP  the  Commission  announced  that,  in  view  of  the  necessary  revision  of  the 
Community Guidelines on State aid for environmental protection, "In 2005, the Commission 
will start reflecting on ways and means to better address the challenges and opportunities that 
sustainable  development  creates,  as  set  out  in  the  Lisbon  and  Sustainable  Development 
Strategies, especially with the aim of ensuring a full internalisation of environmental costs. In 
particular,  the  Commission  will  attempt  to  encourage  eco-innovation  and  improvements  in 
productivity through eco-efficiency in line with the Environmental Technologies Action Plan 
(ETAP). Certain measures might also be exempted under the general block exemption from 
the obligation to notify the aid".40 

This  reflection  process  was  finalised  on  23  January  2008  with  the  adoption  by  the 
Commission of the new guidelines, which will enter into force the day after their publication 
in the Official Journal41 (hereinafter, OJ). The guidelines will be applicable until 31 December 
2014. 

The main idea behind the revised guidelines is that Member States should not use State aid as 
the  main  tool  to  address  environmental  concerns.  As  shown  in  section  1.2  above,  Member 
States  have  several  other  means  at  hand  (such  as  regulatory  measures,  market-based 
mechanism,  etc.)  that  should  be  used  for  this  purpose  in  the  first  place.  State  aid  should 
remain  a  fallback  option  to  be  used  only  when  it  can  be  proved  that  the  targeted  objective 
cannot be reached by other means.  

But, in certain cases, granting State aid may be justified to give private firms an incentive to 
invest  more  in  environmental  protection  or  to  relieve  some  firms  from  a  relatively  high 
financial  burden  in  order  to  enforce  a  stricter  environmental  policy  overall.  However,  it 
should not be possible to grant badly targeted or excessive State aid which not only distorts 
competition but is also counterproductive for meeting environmental objectives. 

The new Environmental aid Guidelines make sure that competition is not unduly distorted by 
support  mechanisms  –  e.g.  subsidies,  tax  exemptions  –  that  Member  States  develop  for  the 
environment.  They  ensure  that  State  aid  measures  are  better  targeted  and  that  the  positive 
effects outweigh the negative effects in terms of distortions of competition. Furthermore, they 
guarantee that, at the same time, businesses receive sufficient – but not more – incentive to 
make  more  environmentally  friendly  investments  or  to  use,  for  example,  more  renewable 
energy.  These  new  rules  introduce  more  economic  analysis,  focus  on  the  most  distortive 
measures and define clear rules for tax exemptions and ETS. 

Compared  to  the  previous  guidelines,  the  revised  version  brings  about  improvements  in  the 
following areas.42 

–  Introduction  of  a  clearer  and  more  user-friendly  definition  of  eligible  costs  based  on  the 
concept of "extra investment costs" (see box below). Indeed, the allowable aid amount is 
calculated in relation to the extra investment cost that is necessary to achieve the level of 
environmental  protection  compared  to  either  an  installation  fulfilling  the  mandatory 
standard  or,  in  the  absence  of  standards,  a  method  of  production  which  is  less 

40 
41 
42 

See point 46 SAAP. 
Community guidelines on State aid for environmental protection , OJ C 82 of 1 April 2008. 
For  further  details  see  "State  aid:  guidelines  on  State  aid  for  the  environment  –  frequently  asked 
questions", MEMO/08/31 of 23 January 2008. 

EN 

21 

   EN 

 
                                                 
environmentally friendly. This is so because only State aid which has an additional effect 
on the environment should be authorised. 

–  Increased aid intensities which, in certain cases, can go up to 100 % of the eligible costs. 
This  is  allowed,  for  example,  when  State  aid  is  linked  to  a  bidding  (thus,  competitive) 
process  or  to  support  the  production  of  renewable  energy  and  cogeneration  where 
operating  aid  maybe  granted  in  addition  to  investment  aid  in  order  to  cover  the  full 
difference  between  the  cost  of  producing  the  energy  and  the  market  price  for  the  energy 
concerned. 

–  Clarification  of  the  treatment  of  tax  reductions/exemptions.  The  possibility  for  long  term 
derogations from environmental taxes is maintained by the new guidelines provided that, 
after  the  reduction,  the  companies  concerned  still  have  to  pay,  at  least,  the  Community 
minimum.  In  all  other  cases,  including  non-harmonised  taxes,  Member  States  must 
demonstrate that such derogations are both necessary and proportionate.  

–  New provisions on aid for early adaptation to standards, aid for environmental studies, aid 
for  district  heating,  aid  for  waste  management,  including  recycling,  and  aid  involved  in 
tradable permit schemes. 

–  Introduction  of  a  detailed  assessment  method  for  cases  involving  large  aid  amounts  to 
individual beneficiaries, which have greater potential to distort competition and trade. All 
other cases will be subject to a standard assessment and, most likely, some of them will be 
even  block-exempted  once  the  Commission  adopts  the  future  General  Block  Exemption 
Regulation  (hereinafter,  GBER).43  As  a  consequence,  Member  States  would  be  relieved 
from the notification obligation and would be able to use a simplified method to calculate 
the  aid  amount  involved  in  measures  falling  under  the  scope  of  the  GBER.  The  result 
would  be  a  considerable  reduction  of  the  administrative  burden  in  the  field  of 
environmental aid. 

Annex  I  provides  a  comparison  of  the  2001  and  2008  guidelines  on  State  aid  for 
environmental protection. 

Concept of Extra Costs 

When it comes to investment aid, extra costs are calculated either by clearly identifying the 
part of the investment improving the environmental protection (e.g. a filter) or by comparing 
the total investment costs with a reference investment that does not achieve the same higher 
level of environmental protection. The appropriate reference investment has to be decided on 
a case by case basis and must be an investment which would be a credible alternative without 
the  aid.  For  example,  for  an  investment  in  renewable  energy,  the  reference  investment  is 
normally  a  conventional  power  plant,  while  for  an  investment  in  co-generation  of  heat  and 
power, the reference investment is normally an investment in separate production of heat or 
power.  

For  operating  aid,  extra  costs  are  defined  as  the  difference  between  production  costs 
(including  investment  costs  and  a  normal  return  on  capital)  and  the  market  price.  Only 
investment  costs  which  have  actually  been  borne  by  the  undertaking  can  be  included  in  the 
extra costs. 

Summing up, the new guidelines on State aid for environmental protection provide a series of 
measures that complement and support the achievement of greater environmental protection 

43 

The adoption of the GBER is foreseen for before the summer break. 

EN 

22 

   EN 

 
                                                 
in  cases  where  the  PPP  cannot  be  properly  implemented  and  the  production  costs  are  not 
properly  accounted  for  by  industry.  In  such  market  failure  situations,  State  aid  can  be  an 
appropriate  tool.  It  may  also  enable  individual  undertakings  to  change  their  behaviour  and 
adopt  more  environmentally  friendly  processes  or  invest  in  greener  technologies.  Finally,  it 
may  encourage  Member  States  to  move  beyond  Community  standards  and  to  efficiently 
support the production of renewable energy and energy cogeneration. The new guidelines aim 
to facilitate the ease with which Member States may award environmental aid provided that 
the  state  aid  measures  are  well-targeted  and  that  the  positive  effects  outweigh  the  negative 
effects  in  terms  of  distortions  of  competition.  While  cases  involving  large  aid  amounts  to 
individual beneficiaries will now be subject to a detailed assessment method, the introduction 
of  a  future  GBER  would  mean  that  Member  States  will  be  relieved  from  the  notification 
obligation for a number of other cases, thereby reducing the administrative burden in the field 
of environmental aid. 

EN 

23 

   EN 

 
2. 

PART TWO: STATE AID IN BULGARIA AND ROMANIA 

The fifth enlargement of the EU which started in 2004 with the accession of ten new Member 
States  was  completed  by  the  accession  of  Bulgaria  and  Romania  in  2007.  This  chapter 
provides  an  overview  of  State  aid  expenditure  for  industry  and  services  in  these  two  new 
Member States in the period prior to accession. 
Figures are presented in relation to both the EU-27 and EU-1244 averages. The main purpose 
is  to  measure  the  extent  to  which  these  two  Member  States  have  met  the  call  for  less  and 
better targeted aid. Figures presented in this chapter are based on the first reports provided by 
Bulgaria  and  Romania  as  Member  States  although  they  cover  the  period  prior  to  accession, 
from 2002 to 2006. This overview complements the data and analysis provided in the autumn 
2007 Scoreboard which covered the same period for the EU-25 Member States. Bulgaria and 
Romania will be fully integrated into the next update of the Scoreboard in autumn 2008. 

2.1. 

State aid in absolute and relative terms 

In  2006,  total  State  aid  for  industry  and  services  granted  by  all  current  27  Member  States 
stood at € 48.7 billion. For the same period, total  State aid granted is estimated at € 31 million 
for Bulgaria and € 545 million for Romania. 

Table 2: State aid in Bulgaria, Romania and other 5th enlargement countries, 2006 

Total State aid for 
industry and services 
in million € 

State aid as 
percentage of GDP 
(%) 

Population (million) 

State aid per capita 
(PPS) 

EU 27 
EU 12 
Bulgaria 
Romania 
Czech Republic 
Estonia 
Cyprus 
Latvia 
Lithuania 
Hungary 
Malta 
Poland 
Slovenia 
Slovakia 

Source: DG Competition 

48 747.5 
3817.2 
31.4 
544.8 
583.7 
10.7 
70.0 
24.5 
53.5 
832.9 
88.9 
1230.5 
146.9 
199.3 

0.42 
0.51 
0.12 
0.56 
0.51 
0.08 
0.48 
0.15 
0.23 
0.93 
1.77 
0.45 
0.48 
0.45 

491.1 
103.4 
7.7 
21.6 
10.3 
1.3 
0.8 
2.3 
3.4 
10.1 
0.4 
38.1 
2.0 
5.4 

99 
64 
11 
51 
95 
13 
104 
19 
30 
141 
318 
56 
100 
67 

In  relative  terms,  State  aid  may  be  expressed  as  a  percentage  of  GDP  or  as  a  per  capita 
measure.  Total  State  aid  for  industry  and  services  represented  0.12 %  of  Bulgarian  GDP 
which  was  significantly  lower  than  the  average  for  EU-12  (0.51 %)  and  the  EU-27  average 
(0.42 %). In Romania, total State aid was significantly higher, representing 0.56 % of GDP. 

When  aid  is  expressed  in  per  capita  terms,  a  different  picture  emerges  with  regard  to 
Romanian's relative position. When purchasing power standards (PPS)45 are used, the level of 

44 
45 

The ten Member States which acceded in 2004 plus Bulgaria and Romania. 
State  aid  per  capita  is  expressed  in  terms  of  Purchasing  Power  Standards  (PPS)  and  therefore  take 
account  of  differences  in  price  levels  between  countries.  In  general,  when  PPS  are  used  instead  of 
exchange rates, the gap between high-income and low-income countries narrows as price levels in low 
income countries tend to be low compared to richer countries. 

EN 

24 

   EN 

 
 
                                                 
aid awarded in Romania in 2006 was around half the EU-27 average (51 PPS per person as 
against 99 PPS per person) and significantly below the EU-12 average of 64 PPS per person. 
Bulgaria also granted much less: its level of 11 PPS per capita is the lowest in the EU. 

An analysis of the trend in aid as a percentage of GDP over the last five years shows that only 
once, in 2003, did the level of aid granted in Bulgaria exceed the EU-27 average. Since that 
year, there has been a stable, downward trend (See: Figure 3). For Romania, the share of aid 
to GDP during this period always exceeded the EU average. It peaked in 2004 but since then, 
the level of aid has reduced significantly. The trend in Romania is thus comparable to that of 
other EU-12 Member States prior to accession, i.e. the level of aid is significantly higher in 
the years before joining the EU due largely to the processes of restructuring and privatisation. 

Figure 3: State aid in Bulgaria and Romania as % of GDP in comparison to the EU 
averages, 2002-2006 

2,5

2

1,5

1

0,5

0

Bulgaria
Romania
EU-27
EU-12

2002

2003

2004

2005

2006

Source: DG Competition. A full set of data for this graph can be found in Table 1 in Annex II 

Sectoral distribution of aid 

2.2. 
Over the period 2002-2006, Bulgaria granted 75 % of its total State aid to manufacturing,46 
7 % to coal and 18 % to other non-manufacturing47 which largely consisted of aid for district 
heating companies and the mining industry. Over the same period, Romania granted around 
70 %  of  its  aid  to  manufacturing,  followed  by  aid  to  non-manufacturing  21 %  (largely  for 
mining) and coal 8 %. 

46 

47 

For the purposes of the Scoreboard, aid to the manufacturing 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 sector is not always known. As a result, data on aid to manufacturing may be overestimated. 
Other  non-manufacturing  includes  sector  such  as  electricity,  gas  and  water  supply,  mining  and 
quarrying, oil and gas extraction, Real estate, renting and business activities etc.  

EN 

25 

   EN 

 
 
                                                 
Table 3: Sectoral distribution of State aid for industry and services, 2002-2006  

% of total 

Manufac- 
turing  

Coal 

Financial 
Services 

Other  
Services 

74 
58 
75 
70 

12 
20 
7 
8 

7 
15 
- 
0 

5 
3 
- 
1 

Other Non 
Manufac- 
turing 

2 
4 
18 
21 

mio € 

Total 

257 956 
31 960 
320 
4 957 

EU-27 
EU-12 
Bulgaria 
Romania 

Source: DG Competition 

2.3. 

State aid by objective 

Aid  to  support  specific  sectors  is  likely  to  distort  competition  more  than  aid  for  horizontal 
objectives such as R&D, safeguarding the environment, regional development and support to 
SMEs 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, which is inevitable 
in transition from planned to market economies and in case of privatisation of companies in 
difficulty.  Table  4:  State  aid  for  horizontal  objectives  and  particular  sectors  in  Romania, 
Bulgaria and the EU, 2002-2006 

EN 

26 

   EN 

 
 
 
Table 4: State aid for horizontal objectives and particular sectors in Romania, Bulgaria 
and the EU, 2002-2006 

Annual averages 
Bulgaria 

mio € 

% 

Romania 
% 

mio € 

EU-27 
% 

EU-12 
% 

Horizontal objectives 
Environment and energy saving 
Regional development (1) 
Research and development 
SME 
Training 
Employment aid 
Other  horizontal  objectives  (e.g.  commerce, 
culture,  natural  disasters, 
risk  capital, 
innovation and social aid)  

Sectoral aid (2) 
Manufacturing 

of which shipbuilding 
of which steel 
of which motor vehicle 

Coal 
Other Non-manufacturing 
Financial services 
Other services 

34.5 
1.3 
21.1 
0.3 
0.2 
- 
9.4 

2.1 

29.6 
13.8 
- 
4.5 
0.2 
4.5 
11.2 
- 
0.0 

54 
2 
33 
1 
0 
- 
15 

3 

46 
22 
- 
7 
0 
7 
18 
- 
0 

162.9. 
10.3 
95.6 
12.7 
15.6 
0.0 
9.2 

19.5 

828.5 
540.3 
8.5 
99.7 
35.2 
76.0 
207.6 
- 
4.6 

16 
1 
10 
1 
2 
0 
1 

2 

84 
55 
1 
10 
4 
8 
21 
- 
0 

73 
23 
18 
12 
11 
2 
4 

4 

27 
6 
 1 
 1 
 0 
12 
1 
7 
1 

33 
2 
14 
3 
4 
1 
6 

2 

67 
27 
 2 
 5 
3  
20 
4 
15 
1 

Total aid for industry and services 

64.0 

100 

991.4 

100 

100 

100 

Note: All figures are expressed in euros at 2006 constant prices so that the effect of inflation is removed; (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. 

During  the  period  2002-2006,  Bulgaria  granted  54 %  of  total  State  aid  for  horizontal 
objectives while Romania granted only 16 %. These shares of horizontal aid are rather low in 
comparison to the EU-27 average (73 %) though they are more in line with the EU-12 average 
of  33 %.  The  disparity  with  the  EU-15  Member  States  (79 %)  can  be  explained  in  part  by 
relatively  strong  support  for  several  industries  (e.g.,  coal,  mining,  steel  and  other 
manufacturing industries) before accession in the context of privatisation or restructuring. 

Looking  at  the  situation  in  2006,  the  share  of  horizontal  objectives  in  Bulgaria  increased  to 
79 %. The largest share of horizontal aid was granted for regional development (72 % of total 
State aid) and R&D (6 %). In the same year, Romania granted only 19 % of total State aid for 
horizontal objectives – mainly for regional development (10 %) and R&D (4 %). 

2.4. 

State aid instruments in the industry and services 

All State aid represents a cost or a loss of revenue to the public authorities and a benefit to 
recipients.  However,  in  some  cases  the  actual  aid  element  may  differ  from  the  nominal 
amount as in the case of a subsidised loan or guarantee. 

EN 

27 

   EN 

 
  
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Table 5: Share of each aid instrument in total aid to industry and services, 2004-2006 

Grants 

Tax 
exemptions 

Equity 
participation 

Soft 
loans 

Tax 
deferrals 

Guarantees 

EU-27 

EU-12 

Bulgaria 

Romania 

49 

45 

15 

25 

43 

41 

75 

28 

Source: DG Competition 

1 

1 

- 

1 

3 

2 

2 

1 

2 

9 

2 

44 

2 

3 

6 

0 

In  Bulgaria,  during  the  period  2004-2006,  the  most  widely-used  aid  instruments  were  tax 
exemptions  (75 %)  followed  by  grants  (15 %).  Other  instruments  such  as  guarantees,  tax 
deferrals and soft loans were scarcely used, amounting to less than 10 % of total State aid. In 
Romania  during  this  period,  the  majority  of  aid  was  awarded  in  the  form  of  tax  deferrals 
(44 %) followed by tax exemptions (28 %) and grants (25 %). 

EN 

28 

   EN 

 
  
PART THREE: RECOVERY OF UNLAWFUL AID 

3. 
Article 14 (1) of the Procedural Regulation48 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".49 This article establishes 
an obligation on the Commission to order recovery of unlawful and incompatible aid unless 
this would be contrary to a general principle of law. The purpose of recovery, as held by the 
ECJ on several occasions, is to re-establish the situation that existed on the market prior to the 
granting  of  the  aid.  This  is  necessary  to  ensure  that  the  level-playing  field  in  the  internal 
market is maintained, in accordance with Article 3 g) of the EC Treaty. According to the ECJ, 
the  “re-establishment  of  the  previously  existing  situation  is  obtained  once  the  unlawful  and 
incompatible  aid  is  repaid  by  the  recipient  who  thereby  forfeits  the  advantage  which  he 
enjoyed over his competitors in the market, and the situation as it existed prior to the granting 
of the aid is restored".50 In order to eliminate any financial advantages incidental to unlawful 
aid,  interest  is  to  be  recovered  on  the  sums  unlawfully  granted.  Such  interest  must  be 
equivalent  to  the  financial  advantage  arising  from  the  availability  of  the  funds  in  question, 
free of charge, over a given period.51 

According  to  Article  14(3)  of  the  Procedural  Regulation,  the  recovery  of  unlawful  and 
incompatible  aid  "shall  be  effected  without  delay  and  in  accordance  with  the  national 
procedures under the national law of the Member State concerned, provided that they allow 
for the immediate and effective execution of the Commission decision". Community law does 
not  prescribe  which  body  in  each  Member  State  should  be  in  charge  of  the  practical 
implementation  of  a  recovery  decision.  It  is  for  the  domestic  legal  system  of  each  Member 
State to designate the bodies that will be responsible for the implementation of the recovery 
decision.  Recovery  is  in  principle  effected  by  the  authority  that  granted  the  aid.  This  might 
lead  to  the  involvement  of  a  variety  of  central,  regional  and  local  bodies,  as  well  as  public 
entities, in the recovery process. The state resources are, therefore, returned to the authority 
granting the aid. 

The Commission, in its State Aid Action Plan (SAAP), underlined that the effectiveness and 
credibility  of  state  aid  control  presupposes  a  proper  enforcement  of  the  Commission’s 
decisions.  The  Commission  therefore  announced  in  the  SAAP  that  it  will  seek  to  achieve  a 
more effective and immediate execution of the recovery decisions, which will ensure equality 
of treatment of all beneficiaries. To this end, the Commission will monitor more closely the 
execution of recovery decisions by Member States. 

In  2007  the  Commission  continued  its  efforts  to  achieve  more  effective  and  immediate 
execution of recovery decisions. Significant progress towards recovery was made during that 
period. As of 31 December 2007, there were 49 pending recovery decisions (see complete list 
in  Annex  III),  compared  to  93  on  31  December  2004  and  60  on  31  December  2006.  In  the 
second half of 2007, six pending recovery cases were closed, whilst four recovery decisions 
were taken and one case is re-opened (see Table 6). The geographical distribution of pending 

48 
49 

50 
51 

Council Regulation No 659/1999 of 22 March 1999, OJ L 83/1, 27.March.1999, p. 1-9 
When  state  aid  is  granted  without  respecting  Art.  88.3,  the  state  aid  becomes  unlawful.  The 
Commission  must  assess  the  compatibility  of  the  state  aid  granted  with  the  EC  Treaty  and  other 
applicable legislation. 
Case C-348/93, Commission v Italy [1995] ECR I-673, paragraph 27 
Case T-459/93, Siemens v Commission [1995] ECR II-1675, paragraph 97 to 101 

EN 

29 

   EN 

 
                                                 
recovery cases is the following: Spain has the highest number (14), which represents 29 % of 
the EU total. Nine of the Spanish pending cases refer to Basque fiscal schemes. 

Taken together, Germany, Italy and France account for a further 49 % of all pending recovery 
cases. Germany has reduced its share in the total number of pending cases from 47 % in 2004 
to  14 %  in  December  2007  (mainly  as  a  result  of  the  closure  of  a  large  number  of  old 
insolvency  cases).  It  should  also  be  noted  that  there  are  no  pending  cases  in  16  of  the  27 
Member States. 

Table 6: Pending recovery cases by Member State, second semester 2007 

Situation 01.07.2007 

New cases 
01.07.-31.12.2007 

Cases closed 
01.07.- 31.12.2007 

Situation 31.12.2007 

Spain 
Italy 
Germany 
France 
Netherlands 
Portugal 
Greece 
Belgium 
Ireland 
Poland 
Finland 
Slovakia 
Total 

15
10
9
6
2
2
1
1
1
1
1
1
50

0
1
0
0
1
0
1
0
0
2
0
0
5

1 
0 
2 
0 
0 
0 
0 
1 
0 
2 
0 
0 
6 

14
11
7
6
3
2
2
0
1
1
1
1
49

Source: DG Competition 

Table 7 provides data on the amounts of aid to be recovered under the 119 recovery decisions 
adopted since 2000.52 For 114 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 1 January 2000 and 31 December 2007 is at least 
€ 9 billion. 53 

52 

53 

On  30  June  2007,  there  were  still  further  six  recovery  decisions  pending  that  were  adopted  before 
1 January 2000. 
The autumn 2005 State aid Scoreboard (COM(2005)624 final of 9 December 2005) reported a total of 
€ 9.4 billion. This discrepancy is due to the fact that some Member States submitted a revised estimate 
of the amounts to be recovered under some schemes. 

EN 

30 

   EN 

 
 
                                                 
Table 7: Trend in the number of recovery decisions and amounts to be recovered (1) 
2000- 2007 (state of play – 31.12.2007) 

Date of Decision 

2000 

2001 

2002 

2003 

2004 

2005 

2006 

2007  Total 

16 

20

23

10

23

12

6 

9 

119

247.0  1146.8 1206.1 1015.0 4854.5

218.1  1125.4 1510.6 1230.3 6369.5

29.2

21.2

280.8 

189.0  8968.5

151.8 

2.2 10629.0

17.1 

962.1 1061.9

894.6 3960.9

14.2

94.5 

2.2  7007.5

201.0 

15.6 
28.9 

76.3
87.0

16.9
108.4

29.0
419.7

0.0
115,2

0.7

870.9
335.0 1537.7

133.8
119,7

0.0
22,7

0.0
7.0

7.5
15

45.0 
12.3 

0.0 
141,3 

0.0  1222.9
0.0  2398.7

0.0 
186,8 

173.8
738,1

12 % 

9 % 10 % 12 % 1 % 51 % 50 % 

99 % 

8 %

No. of decisions adopted 
Total aid known to be 
recovered (in mio €)  
amounts recovered (in mio €) 

Of which: 
(a) Principal 
reimbursed/or in 
blocked account 
(b) Aid lost in 

bankruptcy 

(c) Interest 

Aid registered in bankruptcy 

Amount outstanding (3) 
% still pending to be 
recovered (2) 

Notes: (1) Only for decisions for which the aid amount is known. (2) Amount excluding interest. (3) Total aid 
known to be recovered less principal reimbursed and aid lost in bankruptcy. Source: DG Competition 

For 5 of  the recovery decisions adopted  since 2000, the Member States concerned have not 
yet  submitted  reliable  information  on  the  aid  amount  involved.  Most  of  these  decisions 
concern  aid  schemes.  Of  the  €  9 billion  aid 
to  be  recovered  under  decisions  adopted  since 
2000, some € 7 billion of illegal  and incompatible  aid had been  effectively recovered by 31 
December  2007  (this  compares  to  € 2.3 billion  of  aid  reported  as  recovered  in  December 
2004).54 Besides, a further € 2.4 billion of interest  was recovered. In addition to the amounts 
effectively  recovered,  a  further  € 1.2 billion  of  unlawful  and  in compatible  aid  was  “lost”  in 
bankruptcy  proceedings55  and  € 173 million  of  illegal  and  incompatible  aid  has  been 
registered  in  ongoing  bankruptcy  proceedings.  This  leaves  € 0.73 billion  of  illegal  and 
incompatible aid still to be recovered (i.e. 8 % of the total). 

Recovery  of  illegal  incompatible  State  aid  is  still  a  lengthy  process:  Of  the  49  pending 
recovery  cases,  21  were  adopted  more  than  four  years  ago,  and  five  even  more  than  eight 
years ago. Of the 119 decisions adopted between 2000 and 2007, only 75 have been closed by 
the December 2007 (see Table 8). 

54 

55 

Total amount recovered (including interest and aid lost in bankruptcy reported in December 2004 was 
€ 3.1 billion, and in December 2005 € 8.2 billion). 
In  insolvency  cases,  the  recovery  claim  is  normally  only  partially  satisfied.  The  remainder  is  “lost”. 
From a competition perspective, however, it is considered that the distortion of competition is removed 
with the liquidation of the beneficiary (provided that its assets are transferred on market terms).  

EN 

31 

   EN 

 
 
  
  
 
  
 
 
 
 
 
  
  
 
 
 
 
  
                                                 
Table 8: Trend in the closure of recovery cases (state of play – 31.12.2007) 

2000

2001

2002

Date of the Decision 
2004
2003

2005 

2006 

2007 Total

No of recovery decisions adopted 

No of recovery cases that are closed on 
30.06.07 

16

14

20

10

23

18

10

6

23

17

12 

6 

6 

2 

9

2

119

75

Another important step towards better execution of recovery decisions in the future has been 
the adoption in October 2007 of the Notice on the Implementation of recovery decisions. The 
Notice  emphasises  that  improving  the  enforcement  of  State  aid  decisions  is  a  shared 
responsibility  between  the  Commission  and  the  Member  States.  It  recalls  the  principles 
applying to the recovery of State aid as confirmed by the Community Courts and defines the 
respective role of the Commission and the Member States in the recovery procedures. 

The Commission is monitoring more closely the execution of recovery decisions by Member 
States. Where Member States do not take all measures available to implement such decisions, 
the Commission has taken a strict line and systematically initiated infringement proceedings 
against the Member State concerned in accordance with Articles 88(2), 226 and 228(2) of the 
EC Treaty. See list of cases in Annex IV. 

EN 

32 

   EN 

 
 
  
  
4. 

PART FOUR: LEGISLATIVE AND POLICY DEVELOPMENTS 

State Aid Action Plan 

The  Commission  continues  to  implement  various  aspects  of  the  State  aid  Action  Plan 
(SAAP),56 which set out in June 2005 the guiding principles for a comprehensive reform of 
State  aid  rules  and  procedures  over  the  next  five  years.  Since  the  last  Scoreboard  was 
published in the autumn, the Commission has adopted the following final or draft legislative 
texts.57 

4.1. 

New legislation 

New method for setting reference and discount rates 

On  12  December  2007,  the  Commission  adopted  a  new  method  for  setting  reference  and 
discount rates used in the analysis of State aid cases for calculating the grant equivalent of aid 
and the aid element resulting from interest subsidy schemes.58 

The new methodology is based on the one-year inter-bank offered rate (IBOR) increased by 
margins  ranging  from  60  to  1000  basis  points,  depending  on  the  creditworthiness  of  the 
company  and  the  level  of  collateral  offered.  This  approach  is  in  line  with  the  revised 
international  capital  framework  introduced  by  the  latest  recommendations  of  the  Basel 
Committee on banking supervision (the Basel II Accords) and should be more in conformity 
with the market than the current methodology. The new method will enter into force on 1 July 
2008,  in  order  to  give  financial  institutions  and  other  stakeholders  the  necessary  time  to 
adjust. 

Improved procedural rules 

The Commission clarified, on 30 January 200859, its rules on the notification of State aids and 
ensured  faster  procedures  by  amending  the  Regulation  which  establishes  complementary 
procedural  provisions  for  the  application  of  the  EC  Treaty  State  aid  rules  (the  so-called 
"Implementing  Regulation").60  The  modifications  will  inter  alia  introduce  additional 
notification forms and require the compulsory use of an electronic notification system and a 
secured  e-mail  system  by  1  July  2008.  Moreover,  the  new  general  notification  form  will 
provide  additional  information  to  the  Commission  allowing  quicker  decision-making 
procedures.  The  new  Regulation  takes  account  of  comments  received  from  a  public 
consultation in the course of 2007.61 

The new Regulation provides for information to be gathered through the general information 
notification form on outstanding recovery orders and on aid granting authorities. It will also 
require the publication of the full text of approved aid schemes on the internet. The method 

56 
57 

58 
59 

60 
61 

COM(2005)107 final of 7 June 2005. 
All  State  aid  legislation  developments  including  adopted  legislation  and  proposed  drafts  can  be 
followed on DG Competition's website: State aid legislation, State aid reform. 
OJ C 14 of 19 January 2008, p. 6. 
This  regulation  was  already  adopted  in  principle  by  the  Commission  on  12  December  2007;  see 
IP/07/1911 
OJ L 82 of 25 March 2008, p. 1 
DG Competition's public consultations web page. 

EN 

33 

   EN 

 
                                                 
for the calculation of interest rates for the recovery of unlawful aid is also modified in order to 
reflect the changes in the methodology of setting the reference and discount rates. 

New State aid guidelines for environmental protection  

In  December  2007,  the  Commission  prolonged  the  validity  of  the  2001  environmental  aid 
guidelines, which were to expire at the end of 2007, till the end of April 2008 or the adoption 
of new guidelines.62 

As part of the Energy and Climate Change package, the Commission adopted on 23 January 
2008 the new Guidelines on State aid for environmental protection.63 For further details, see 
Part One of this Scoreboard. 

New notice on State aid in the form of guarantees 

Following two rounds of public consultations,64 the Commission adopted in May 2008 a new 
Notice on State aid in the form of guarantees. 65 The main aim of revising the 2000 Notice66 
was to set out clear and transparent methodologies to calculate the aid element in a guarantee 
and to provide simplified possibilities allowing for the development of SMEs.  

The  new  Notice  confirms  that  this  assessment  should  be  based  on  the  Market  Economy 
Investor  Principle.  As  a  consequence,  the  methodologies  primarily  rely  on  proper  risk 
assessment through rating. However, this rating does not have to be provided by one of the 
international  rating  agencies,  but  can  also  be  the  internal  rating  of  the  lending  bank,  which 
normally has to rate companies when issuing a loan. 

Guarantees  are  of  particular  importance  for  SMEs,  as  they  are  often  confronted  with  low 
equity and a lack of stable resources. Therefore, the new Notice sets out also particular rules 
for SMEs which will allow them to assess the aid element of a guarantee in a simple way. In 
particular,  the  Commission  provides  SMEs  and  Member  States  with  optional  tools  such  as 
safe harbours predetermining, for a given company and on the basis of its financial rating, the 
minimum margin that should be charged for a State guarantee in order to be deemed as not 
constituting aid. 

Regulation on de minimis aid in the agricultural production sector 

On  20  December  2007,  the  Commission  adopted  a  Regulation  on  de  minimis  aid  in  the 
agricultural  production  sector.67  The  decision  follows  public  consultation  conducted  in  the 
second  half  of  2007.68  The  Regulation  raises  the  ceiling  for  small  amounts  of  aid  (“de 
minimis”  aid)  in  the  agriculture  sector  to  € 7 5 00  per  beneficiary  over  any  period  of  three 
years and the maximum total per Member State to 0.75 % of the value of agricultural output. 

62 
63 
64 
65 
66 
67 
68 

OJ C 316 of 28 December 2007, p. 58. 
OJ C 82 of 1 April 2008, p. 1 
DG Competition's public consultations web page. 
DG Competition's State aid reform web page 
OJ C 71 of 11 March 2000, p. 14–18. 
OJ L 337 of 21 December 2007, p. 35. 
OJ C 151 of 5 July 2007, p. 16. 

EN 

34 

   EN 

 
                                                 
The Regulation also sets out a clearer definition of the scope of such aid. It gives the Member 
States greater room for manoeuvre in granting aid without distorting competition.  

Guidelines for the examination of State aid to fisheries and aquaculture 

On 11 March 2008, the Commission adopted the new Guidelines for the examination of State 
aid to fisheries and aquaculture.69 

These new Guidelines have been drawn up in order to take into account, in particular, Council 
Regulation (EC) No 1198/2006 of 27 July 2006 on the European Fisheries Fund.70 The new 
rules  will  allow  Member  States  to  grant  state  aid  for  most  of  the  measures  included  in  the 
EFF. However, due to their specific character, aid for the replacement of engines and fishing 
gear aid and aid for the sustainable development of fisheries areas have not been included. In 
addition  to  EFF  aid,  the  new  guidelines  will  allow  Member  States  to  grant  state  aid  for 
compensation  for  damages  caused  by  natural  disasters,  exceptional  occurrences  or  bad 
weather events. The guidelines will also, under certain conditions, allow state aid in the form 
of  tax  relief  and  labour  related  costs  for  EU  vessels  fishing  for  tuna  and  tuna-like  species 
outside EU waters and beyond 200 nautical miles. This last measure is designed to discourage 
EU  operators  registering  their  fishing  vessels  in  third  countries  which  do  not  ensure  proper 
control over the activities of their fishing fleet, especially in terms of illegal, unreported and 
unregulated fishing. Finally, the new rules provide the conditions regarding state aid for the 
marketing of fisheries products from the EU's outermost regions and, following the statement 
of 14 June 2006 by Council and Commission, for state aid related to the development of the 
fishing fleet in the outermost regions.  

The  new  Guidelines  will  be  used  by  the  Commission  with  effect  from  1  April  2008  for  the 
assessment of all State aid notified or intended to be applied on or after that date. 

Regulation on public passenger transport services  

The legislative framework for PSO currently in force dates from 1969 and was last amended 
in 1991. In view of the evolving European market for public passenger transport services and 
in order to provide legal certainty to both operators and public authorities involved in public 
transport  new  legislation  had  to  be  developed.  In  parallel  to  the  3rd  railway  package 
Regulation  (EC)  No  1370/2007  of  the  European  Parliament  and  of  the  Council  on  public 
passenger  transport  services  by  rail  and  by  road  and  repealing  Regulations  (EEC)  n° 
1191/69 and 1107/70 has been adopted and published.71 

The Regulation will enter into force on 3 December 2009 with a 10 year transition period for 
the  way  contracts  are  being  awarded.  The  main  provisions  of  the  Regulation  are  the 
following: 

-  An  obligation  for  competent  authorities  to  conclude  Public  Service  Contracts  with  a 
maximum duration when they grant exclusive rights and/or financial compensation in return 
for the discharge of public service obligations.  

- A general obligation to respect competitive tender for the selection of the undertakings that 
will  provide  the  transport  services.  However,  the  Regulation  provides  for  the  cases  when 
contracts  may  be  awarded  directly:  self-production  or  in-house  operation,  transport  by  rail, 
thresholds – 2 million euros/year for SME and emergency contracts.- Compensations granted 

69 
70 
71 

OJ C 84 of 3 April 2008, p.10. 
OJ L 223 of 15 August 2006, p. 1 
OJ L 315 of 3 December 2007, p. 1. 

EN 

35 

   EN 

 
                                                 
respecting the Regulation are compatible aid and exonerated of notification under art 88 of the 
Treaty." 

Guidelines on State aid to railway undertakings  

In  April  2008,  the  Commission  adopted  Guidelines  on  State  Aid  to  railway  undertakings 
which  provide  guidance  on  the  compatibility  of  the  State  aid  rules  regarding  railway 
undertakings.72  They  include  sector  specific  provisions  (notably  related  debt  write-off, 
purchase of rolling stock for regional passenger transport, restructuring of freight branch) that 
take account of the railway sector's specificities in order to encourage the process of market 
opening as well as to strengthen its competitiveness. 

4.2. 

Draft legislation 

Third draft of General Block Exemption Regulation 

In  March  2008,  the  Commission  invited  interested  parties  to  submit  comments  on  the  new 
draft general block exemption Regulation (GBER) in the State aid area.73 It is a third draft that 
includes changes following previous public consultations. 

The  new  GBER  aims  at  simplifying  and  consolidating  into  one  text  the  four  existing  block 
exemptions  for  aid  to  SMEs  including  R&D  aid  in  favour  of  SMEs,  aid  for  employment, 
training  aid  and  regional  aid.  In  addition,  the  new  Regulation  would  also  allow  the  block 
exemption  of  three  new  types  of  aid:  environmental  aid,  aid  in  the  form  of  risk  capital  and 
exempting R&D also in favour of large enterprises. Subsidies which fulfilled the conditions 
laid  down  in  the  new  Regulation  would  be  considered  as  compatible  with  State  aid  rules 
without  requiring  prior  notification  to  the  Commission.  Following  this  consultation,  the 
Commission intends to adopt the final version of this Regulation before the summer of 2008. 

Review of the Framework on State Aid to Shipbuilding 
In  March  2008,  the  Commission  invited,  in  a  form  of  public  consultation,74  Member  States 
and other interested parties to express their views on the proposed review of the Framework 
on State Aid to Shipbuilding. The Framework75 entered into effect on 1 January 2004, to be 
applied initially for period of three years, until 31 December 2006. On 28 October 2006, the 
Commission  took  a  decision  to  continue  to  apply  this  Framework  for  a  further  two-year 
period,  until  31  December  2008.76  The  Commission  is  now  considering  to  prolong  the 
Framework  for  a  further  three  years,  until  31  December  2011  to  have  more  time  for  the 
assessment of current sector-specific instruments for State aid to shipbuilding. 

Draft Block Exemption Regulation for fisheries 

In October 2007, the Commission invited interested parties to submit comments on the new 
block exemption regulation for the fisheries sector.77 

This  new  fisheries  block  exemption  regulation  follows  the  same  approach  as  the  previous 
fisheries  block  exemption  regulation,  Regulation  (EC)  No.  1595/2004,78  which  ceased  to 
apply from 31 December 2006, but has been aligned with the new conditions for structural aid 

72 
73 
74 
75 
76 
77 
78 

DG Energy and Transport' State aid web page. 
DG Competition's public consultations web page. 
DG Competition's public consultations web page. 
OJ C 317 of 30 December 2003, p. 11. 
OJ C 260 of 28 October 2006, p.7. 
OJ C 248 of 23 October2007, p. 13. 
OJ L 291 of 14 September 2004, p. 3. 

EN 

36 

   EN 

 
                                                 
to the fisheries sector, introduced by Council Regulation (EC) No 1198/2006 of 27 July 2006 
on the European Fisheries Fund.79  

79 

OJ L 223 of 15 August 2006, p. 1. 

EN 

37 

   EN 

 
                                                 
5. 

PART FIVE: STATE AID CONTROL PROCEDURES 

5.1. 

Registered Aid Cases 

The Commission controls the Member States’ granting of State aid by means of a formal and 
transparent procedure. According to the Procedural Regulation,80 "any plans to grant new aid 
shall  be  notified  to  the  Commission  in  sufficient  time  by  the  Member  State  concerned".  In 
around 8 % of registered aid cases, it was not the Member State but the Commission who had 
to  initiate  the  control  procedure  after  finding  out  about  the  existence  aid  following,  for 
example, a complaint.81 
In  2007,  there  were  859  State  aid  cases82  registered  by  the  Commission:  777  cases  were 
notified  by  Member  States,  78  were  non-notified  cases  initiated  by  the  Commission  and  4 
were cases examining existing aid (Table 9). While the number of notifications is lower than 
the exceptionally high level in 2006 (922), this figure remains significantly above the level in 
2004  and  2005.  Moreover,  the  decrease  is  in  line  with  the  Commission's  commitment  to 
facilitate the granting of aid through block exemptions and focus policy on the most distortive 
types of aid. In 2007, Member States were able to introduce more than 1100 measures without 
prior  notification  to  the  Commission.  This  compares  with  410  block  exempted  measures  in 
2006. See section 5.3. 

Of  the  777  notifications,  53 %  concerned  largely  the  industry  and  services  sectors,  33 % 
agriculture,  8 %  transport  and  6 %  fisheries.  Italy  submitted  the  largest  number  (119) 
accounting for 15 % of the total, followed by Germany 12 %, Spain 12 %, France 9 % and the 
United Kingdom for 6 %.  

Table 9: Number of registered aid cases in 2007 

Sector 

Notified aid 
cases 

Non-notified 
aid cases 

Existing aid 
cases 

Total 

Agriculture 
Manufacturing and services 
Fisheries 
Transport and coal 
Total 

254 
415 
45 
63 
777 

15 
32 
5 
26 
78 

- 
4 
- 
- 
4 

269
451
50
89
859

Source: DG Competition, DG Maritime and Fisheries Affairs, DG Agriculture, DG Transport. 

Commission Decisions 

5.2. 
The Commission took 629 final State aid decisions83
 in 2007. In the vast majority of cases, the 
Commission  approved  the  measures  without  a  formal  investigation,  concluding  that  the 
examined aid was compatible with the State aid rules (87 % of all decisions in 2007) or did 
not  constitute  State  aid  (5 %  of  all  decisions).  Where  the  Commission  has  doubts  whether 
certain aid measures comply with the rules, it carries out a formal investigation during which 

80 
81 

82 
83 

Council Regulation No 659/1999 of 22 March 1999, OJ L 83/1, 27.03.1999, p. 1-9. 
In 2007 there were almost 250 registered complaints, some of which may have led (or may lead) to new 
registered cases. 
This figure excludes measures submitted under the block exemption regulations. 
Included  in  this  figure  are:  decisions  do  not  constitute  aid,  decisions  not  to  raise  objections,  positive 
decisions, conditional decisions and negative decisions. 

EN 

38 

   EN 

 
                                                 
third  parties  and  all  Member  States  are  invited  to  provide  observations.  At  the  end  of  this 
investigation procedure, the Commission either takes a positive, conditional or no aid decision 
(3 % of all decisions) or finds that the measure does not comply with State aid rules and hence 
is not compatible with the common market and takes a negative decision (5 % of all decisions 
made up of 3 % with recovery and 2 % without recovery).84 See Figure 4. 

In  total,  69  of  the  decisions  concerned  unlawful  aid.  These  cases  are  taken  up  by  the 
Commission  in  reaction  to  a  complaint  or  ex  officio  (case  started  at  the  Commission's  own 
initiative).  The  figures  also  include  cases  notified  by  a  Member  State,  but  for  which  the 
measure  was  fully  or  partially  implemented  by  the  Member  State  before  the  Commission's 
final decision (i.e.,cases where the standstill clause was not respected). See special focus on 
this  topic  in  the  spring  2007  Scoreboard.85  In  27  of  the  decisions  taken  in  2007,  the 
Commission  had  opened  a  formal  investigation  procedure,  reaching  a  (partly)  negative 
decision in 18 cases. 

Figure 4: State aid decisions 2007, EU-27 

Negative w ith 
recovery
3%

Positive or 
conditional
3%

Negative 
w ithout 
recovery
2%

No aid
5%

No objections
87%

Source: DG Competition, DG Maritime and Fisheries Affairs, DG Agriculture, DG Transport. 
Aid awarded under the State aid block exemption regulations86 

5.3. 
Experience has shown that the objectives of the Enabling Regulation have been largely met87 
with Member States able to introduce more than 2800 block exempted measures in the period 
2001 – 2007 under a series of block exemption regulations for SMEs, employment, training, 
regional  investment,  agriculture  and  fisheries.  This  has  been  accompanied  by  a  significant 
reduction in the number of notified aid measures for these types of aid since 2001. The recent 

84 

85 
86 
87 

Negative  decisions without recovery  are  almost  exclusively  decisions based on notified  aid.  Negative 
decisions to recover aid are the result of unlawful aid (i.e. non-notified) being awarded. 
COM(2007) 347 final, 28.June.2007. 
For full set of legislation, see http://ec.europa.eu/comm/competition/state_aid/legislation/block.cfm. 
See  page  11  of  the  Evaluation  report  on  the  application  of  Council  Regulation  (EC)  No  994/98  of  7 
May 1998, COM(2006)831 final of 21 December 2006. 

EN 

39 

   EN 

 
 
                                                 
upward  trend  is  in  line  with  one  of  the  key  objectives  in  the  SAAP,  that  is  to  facilitate  the 
granting of aid through block exemptions and focus more on the most distortive types of aid. 

In  2007  alone,  Member  States  introduced  over  1100  block  exempted  measures,  more  than 
double  the  figure  for  2006.  The  reasons  for  this  significant  increase  are  threefold:88  the 
beginning of a new programming period for EU Structural Funds, a high take-up rate for the 
new possibility to block exempt regional investment aid and a sharp increase (four times more 
than  2006)  in  the  number  of  measures  exempted  in  the  agricultural  sector,  following  new 
recent legislation.89 Member States introduced 303 measures on aid for SMEs primarily active 
in  the  industry  and  services  sectors,  496  exempted  measures  for  SMEs  active  in  the 
agricultural sector, 108 on training aid (almost double the number for 2006), 189 measures for 
regional investment and 31 on aid to employment. No exempted aid in the fisheries sector was 
possible  in  2007  though  a  new  block  exemption  Regulation  is  expected  to  be  adopted  in 
200890 (Figure 5 and Table 2 in Annex II). 

88 

89 

90 

See point 3.1 of the State aid Scoreboard Autumn 2007 Update, COM(2007) 791 final of 13 December 
2007. 
Regulation  1857/2006  to  exempt  aid  to  SMEs  active  in  the  production  of  agriculture  products  and 
amending  Regulation  (EC)  No  70/2001  (for  SMEs  active  in  processing  and  marketing  of  agricultural 
products). 
Draft Commission Regulation 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 C 248 of 23 October 2007, p. 13. 

EN 

40 

   EN 

 
                                                 
Figure 5: Trend in the number of BER measures introduced by Member States 2001-07 

SME

Training

Employment

Regional investment

Agriculture

Fish

r
e
b
m
u
N

500

400

300

200

100

0

2001

2002

2003

2004 
Year

2005

2006

2007

Source:  DG  Competition,  DG  Agriculture,  DG  Maritime  and  Fisheries  Affairs.  Reading  notes:  The  regional 
investment BER came into force from 1 January 2007; no exempted aid in the fisheries sector was possible in 
2007. 

Note: A full set of data for this graph can be found in Table 2 in Annex II. 

Four  Member  States,  Italy  (21 %  of  the  total  number  of  measures),  the  United  Kingdom 
(15 %), Spain (12 %) and Germany (11 %) accounted for almost 60 % of all the information 
forms submitted during 2001-2007. The EU-12 Member States accounted for more than 600 
measures submitted since 2004 (Figure 6 and Table 3 in Annex II).  

As  regards  expenditure  under  the  block  exempted  measures,  Member  States  awarded 
€12 billion  under  the  BER  for  industry  and  servi ces  in  the  period  2001  -  2006  (Figure  7). 
More  detailed  data  for  2006  were  included  in  the  autumn  2007  Scoreboard.91  New  data  for 
2007 will be published in the autumn 2008 Scoreboard.  

91 

COM(2007)791 final of 13 December 2007. 

EN 

41 

   EN 

 
 
                                                 
Figure 6: Number of block exemption measures introduced, by Member State, 2001-
07

Italy
United Kingdom
Spain
Germany
Slovenia
Netherlands
Austria
Poland
France
Hungary
Czech  Republic
Belgium
Ireland
Cyprus
Greece
Estonia
Latvia
Slovakia
Lithuania
Finland
Denmark
Malta
Portugal
Romania
Bulgaria
Sweden
Luxembourg

0

100

200

300

400

500

600

Industry and services

Agriculture and fisheries

Source: DG Competition, DG Agriculture, DG Maritime and Fisheries Affairs. Note: A full set of data for this 
graph broken down by type of block exemption Regulation can be found in Table 3 in Annex II 

EN 

42 

   EN 

 
 
 
Figure 7: Aid awarded under the block exemption Regulations, industry and services, in 
million €, 2001-2006 

1890

1633

1114

799

4481

Italy
Germany
United Kingdom
Poland
Spain
France
Austria
Belgium
Greece
Czech Republic
Ireland
Portugal
Hungary
Netherlands
Luxembourg
Sweden
Denmark
Lithuania
Latvia
Estonia
Cyprus
Slovakia
Finland
Malta
Slovenia

482

387
373

198
181
159
153

91
45
19
16
15
9
9
7
5
5
4
1
1

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

mio €

Source: DG Competition. Note: Data for EU-10 Member States are included from 2004 onwards. 

5.4. 

Duration of State aid procedures 

The  SAAP  acknowledged  the  existence  of  shortcomings  in  the  length  and  predictability  of 
State  aid  procedures  and  called  for  actions  to  modernise  them.  The  Commission  has  since 
made efforts to improve its internal practice and administration and increase efficiency in the 
State aid field. It has, for example, adopted internal measures to reduce the time required to 
treat State aid notifications and has started a dialogue with Member States on how to further 
improve the efficiency of State aid procedures. 

In this context, DG Competition recently carried out a statistical analysis in order to have an 
overview  of  the  duration  of  the  preliminary  examination  procedure  in  notified  aid  cases. 
Almost  1000  notified  cases  decided92  between  1/1/2004  and  30/06/2007  were  examined.  It 
should be recalled that Article 4(5) of the Procedural Regulation sets a period of two months 
for  the  conclusion  of  the  preliminary  examination  "following  the  receipt  of  a  complete 
notification".  Article 5(1)  requires  the  Commission  to  request  all  necessary  additional 
information from the notifying Member State when the notification is incomplete. In practice, 
the  incompleteness  of  notifications  causes  the  need  for  additional  information  and 
consequently prolongs the two-month period. 

The  statistical  results  show  that  in  the  period  under  review  the  average  duration  of  the 
preliminary  examination  following  the  receipt  of  the  complete  notification  is  approximately 
1.8 months. However, in about 80% of the cases the original notification cannot be considered 
complete,  thus  the  Commission  has  to  request  additional  information.  This  extends  the 

92 

The sample includes no aid decisions, decisions not to raise objections and decisions to open the formal 
investigation procedure (Articles 4(2), 4(3) and 4(4) of the Procedural Regulation). 

EN 

43 

   EN 

 
 
                                                 
duration of the preliminary examination for notified cases by 3.4 months to an average of 5.2 
months. As to the proportion of cases closed within a certain period of time, the results show 
that 46 % were closed within 4 months and 70 % were closed within 6 months. Finally, it is 
also  apparent  that  the  duration  of  notified  procedures  has  decreased  constantly  over  the  last 
five years. 

The Commission has managed to reduce the length of the preliminary examination procedure 
in the last five years by 1.4 months. The Commission will continue its efforts to reduce the 
time  required  to  treat  cases.  However,  any  further  reduction  would  seem  possible  only  if 
Member States also contribute to the process by improving the quality and the completeness 
of  the  information  submitted  to  the  Commission,  in  particular  at  the  point  of  notification. 
Improving  State  aid  rules  and  practices  is  indeed  a  shared  responsibility  between  the 
Commission  and  the  Member  States,  and  the  Commission  will  continue  the  dialogue  with 
Member  States  to  see  what  each  party  can  do  to  further  improve  State  aid  procedures  and 
practice. 

EN 

44 

   EN 

 
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 and a wide array of statistical tables:  

http://ec.europa.eu/competition/state_aid/studies_reports/studies_reports.cfm 

Any  queries  or  requests  for  data  should  be  sent 
Stateaid-Scoreboard@ec.europa.eu 

to 

the  scoreboard  mailbox  at 

State aid Register – a second transparency tool 

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 1st January 2000 as well as block exemption measures submitted by Member 
States. It is updated daily and thus ensures that the public has timely access to the most recent 
State aid decisions. http://ec.europa.eu/competition/state_aid/register/ 

Annual Report on Competition Policy 

The Commission publishes an Annual Report on Competition Policy which summarises the 
latest  case-law. 
most 
http://ec.europa.eu/competition/annual_reports/ 

legal  developments  as  well  as 

important  policy  and 

the 

Competition Policy Newsletter 

The  Competition  Policy  Newsletter,  which  is  published  three  times  a  year  by  DG 
Competition,  includes  a  series  of  articles  on  specific  legislative  developments  as  well  as 
interesting case-law. http://ec.europa.eu/competition/publications/cpn/ 

State Aid Weekly e-News 

State Aid Weekly e-News, now in its third year of production, is distributed free of charge to 
more than 3000 subscribers. It sets out the activities of the Commission in the area of State 
aid,  including  the  latest  legislative  developments,  Commission  decisions,  news,  upcoming 
events, reports and studies. http://ec.europa.eu/competition/state_aid/newsletter/index.html 

EN 

45 

   EN 

 
METHODOLOGICAL NOTES 

The Scoreboard covers State aid as defined under Article 87(1) EC Treaty that is granted by 
the  Member  States  and  has  been  examined  by  the  Commission.  Accordingly,  general 
measures  and  public  subsidies  that  have  no  effect  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. See also box 
on “What is a State aid” on page 11 of the spring 2005 update of the Scoreboard. All State aid 
data  refer  to  the  implementation  of  Commission  decisions  and  not  cases  that  are  still  under 
examination. There may be discrepancies with figures published in previous Scoreboards for a 
number of reasons: first, provisional or estimated figures may now be replaced by final data; 
second,  when  the  Commission  takes  a  decision  on  a  non-notified  aid  measure,  the  aid  in 
question is attributed to the year(s) in which it was awarded. 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  2006.  Community  funds  and 
instruments are excluded. 

The following symbols have been used in the Scoreboard: 

n.a. 

not available 

- 

0 

real zero 

less than half the unit used 

Further  information  on  methodological  issues  may  be  found  on  the  online  Scoreboard: 
http://ec.europa.eu/competition/state_aid/studies_reports/conceptual_remarks.html 

EN 

46 

   EN 

 
ANNEX I: COMPARISON OF 2001 AND 2008 COMMUNITY GUIDELINES ON STATE AID FOR ENVIRONMENTAL PROTECTION 

Main provisions concerning compatible aid 

2001 Environmental Aid Guidelines 

2008 Environmental Aid Guidelines 

Aid  for  renewable  energy  and 
energy efficient co-generation 

Investment aid 

40 % for large undertaking 

(on the basis of extra-costs) 

50 % for SME 

5 % or 10% regional bonus 

60 % for large undertakings 

70 % for medium 

80 % for small 

Operating aid 

10 % bonus serving an entire Community.  

100 % if competitive bidding process 

Member  States  may  be  able  to  grant  up  to  100  %  for  renewable 
energy where it can be shown to be necessary. 

___________________________ 

No regional bonus 

No bonus for serving an entire Community 

______________________________ 

Option 1: Aid  to  compensate  for  the  full  difference between  the 
production  cost  of  renewable  energy  and  the  market  price  of  the 
energy  concerned  (including  fair  return  on  capital),  until  total 
depreciation. 

Option  2:  Operating  aid  by  using  market  mechanism,  notably 
green certificates. 

Option  3:  Operating  aid  calculated  on  basis  of  external  costs 
avoided. 

Option 4: Aid must be limited to 5 years, and must be degressive 
from 100 % to zero, or limited to 50 % in case of non degressive 
aid. 

Options  of  guidelines  are  maintained,  however  option  3  is  always 
subject to a detailed assessment 

EN 

47 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
2001 Environmental Aid Guidelines 

2008 Environmental Aid Guidelines 

Aid for energy saving 

Investment aid 

40 % for large undertakings 

50 % for SME 

+5 % or +10 % regional bonus. 

Operating aid 

Operating  benefits  arising  during  first  5  years  must  be  deducted 
from eligible costs. 

_______________________________ 

Aid  to  compensate  for  the  difference  between  production  costs 
and market price of the product concerned. Aid must be limited to 
5 years, and must be degressive from 100% to zero, or limited to 
50% in case of non degressive aid. 

Investment  aid  for  improving 
on Community standards or in 
the  absence  of  Community 
standard 

30 % for large undertakings 

40 % for SME 

+5 % or +10 % regional bonus 

No bonus for eco innovation. 

Improving  on  standards  in  the 
transport sector 

Covered  under  aid  to  firms  improving  on  community  standards 
(E.1.2) 

60% for large undertakings 

70% for medium 

80 % for small 

100 % if competitive bidding process 

No regional bonus 

Deduction  of  operating  benefits  arising  during  first  5  years  must  be 
deducted from eligible costs the first 3 years for SMEs, the first 4 years 
for large undertakings not covered by EU-ETS and the first 5 years for 
large  undertakings  covered  by  EU-ETS  .  For  large  undertakings  the 
period can be reduced to 3 years if the depreciation period if less than 3 
years. 

______________________________ 

Idem. 

50 % for large undertakings 

60 % for medium 

70 % for small 

100 % if competitive bidding process 

No regional bonus + 10 % bonus for eco innovation. 

50 % for large undertakings 

60 % for medium 

70 % for small 

100 % if competitive bidding process 

+ 10 % bonus for eco innovation. 

EN 

48 

EN 

 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2001 Environmental Aid Guidelines 

2008 Environmental Aid Guidelines 

15 % for a period of 3 years from adoption of the standard. 

No aid after mandatory date of transposition 

Investment  aid  for  SME  to 
adapt to new EC standards 

Aid for environmental studies 

Not covered 

Aid  of  15  %  for  large  undertakings  (20  %  for  medium  and  25  %  for 
small)  if  adaptation  to  standards  more  than  3  years  before  date  of 
transposition. 

Aid  of  10  %  for  large  undertakings  15  %  for  medium  and  20  %  for 
small) if adaptation between 1 and 3 years before date of transposition. 

50 % for large undertakings 

60 % for medium 

70 % for small. 

Aid  for  district  heating  using 
conventional sources of energy 

Covered under the provision for energy saving 

50 % for large undertakings 

60 % for medium 

70 % for small 

100 % if competitive bidding process. 

Aid for waste management 

Not authorised for management of waste of other undertakings. 

50 % for large undertakings 

60 % for medium 

70 % for small. 

Aid for relocation 

Covers undertakings creating major pollution. 

Covers  undertakings  creating  major  pollution  and 
relocation of establishments that fall under the SEVESO II Directive. 

in  addition 

Aid for remediation of polluted 
sites 

Covers 100 % of cost and further 15 % of the cost of the work. 

Covers 100 % of the cost. 

Aid in favour of CO2 capture 

Not covered 

Aid 

involved 

in 

tradable 

Not covered 

No detailed criteria due to lack of experience, but it is mentioned that 
the  Commission  will  have  a  generally  positive  attitude  towards  State 
aid for such supports provided that they are environmentally safe. They 
will be assessed directly on the basis of Article 87(3) (b) or (c) of the 
Treaty. 

General criteria based on practice when investigating existing national 
allocation plans under the EU ETS ending in 2012. Certain additional 

EN 

49 

EN 

 
  
 
permit schemes 

Aid  under  the  form  of  tax 
reduction or exemption 

2001 Environmental Aid Guidelines 

2008 Environmental Aid Guidelines 

criteria  for  assessing  necessity  and  proportionality  do  not  apply  for 
trading period ending in 2012. 

Provisions applicable to new taxes: 

Provisions applicable to new and existing taxes 

•  Reductions/exemptions  may  be  declared  compatible  up  to  10 
years  without  conditions  if  the  companies  pay  at  least  the  EC 
minimum for harmonised taxes and a significant part of domestic 
taxes which have not been harmonised.. 

If  companies  do  not  pay  at  least  the  EC  minimum,  reductions/ 
exemptions  may  be  declared  compatible  up  to  10  years  if  the 
undertakings  conclude  agreements  to  improve  environment  or 
conditions  which  have  the  same  effect.  These  provisions  may  be 
applied  to  existing  taxes  if  the  tax  has  an  appreciable  positive 
impact  on  environment  and  if  the  derogations  has  been  decided 
when  the  tax  was  adopted  or  become  necessary  following 
significant economic modifications. 

Reductions/exemptions  may  be  declared  compatible  up  to  10  years 
without conditions if the companies pay at least the EC minimum of a 
harmonised tax. 

If  companies  do  not  pay  at  least  the  EC  minimum,  reductions/ 
exemptions  or  if  they  introduced  reductions/exemptions  from  a  non-
harmonised tax it may be declared compatible up to 10 years if these 
derogations are necessary and proportionate:  

•  New criteria to assess necessity have been developed. 

•  Proportionality is demonstrated if undertakings pay normally 20 % 
of  the  national  tax  (a  significant  part)  or  conclude  agreements.  In 
addition a new option relying on a benchmark method to determine the 
proportional amount of tax for has been introduced.  

A  standard  assessment  for  small  cases  and  a  detailed  assessment  for 
individual  cases  above  a  certain  aid  amount  or  above  a  certain 
production level. 

However, only one type of assessment for tax reductions/ exemptions 
from environmental taxes. 

(Future  Block  exemption  Regulation  will  entail  state  aid  for 
environmental  protection  and  thus  not  require  any  assessment  by  the 
Commission) 

Type of assessment 

Only one type of assessment 

Note: The percentages in the table refer to the aid intensities. Source: DG Competition 

EN 

50 

EN 

 
  
 
ANNEX II: STATISTICAL TABLES 

Table 1: State aid in Bulgaria and Romania in comparison to the EU averages, 2002-2006 

2002 

2003 

2004 

2005 

2006 

Annual average 2002-04 

Annual average 2005-06 

EU-27 

Total State aid for industry and services in million € 

58 .146 

53 .417 

49 603. 

48 042. 

48 747. 

As % of GDP 

0..54 

0.50 

0.45 

0.43 

0.42 

EU-12 

Total State aid for industry and services in million € 

7 .505 

11 635 

5 474 

3 529 

3 817 

As % of GDP 

1.22 

1.97 

0.89 

0.51 

0.51 

Bulgaria 

Total State aid for industry and services in million € 

92 

113 

56 

28 

31 

As % of GDP 

0.46 

0.54 

0.25 

0.12 

0.12 

Romania 

Total State aid for industry and services in million € 

1 259 

1 139 

1 595 

419 

545 

As % of GDP 

1.47 

1.52 

2.12 

0.48 

0.56 

Source: DG Competition 

53 722. 

0.50 

8 205 

1.35 

87 

0.41 

1 331 

1.69 

48 395. 

0.42 

3 673 

0.51 

30 

0.12 

482 

0.52 

EN 

51 

EN 

 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Table 2: Number of measures for which information forms were submitted under the State aid block exemption regulations, 2001-2007, 
EU-27 

Type of State aid block 
exemption

SME
Training
Employment
Regional investment
Agriculture
Fish
Grand total
Total less agriculture 
and fish

Year

2001

2002

2003

2004 

2005

2006

2007

102
48

150

150

123
80

203

203

139
55
8

202

202

149
79
21

72
1
322

249

197
68
26

88
22
401

291

183
57
35

119
24
418

275

303
108
31
189
496

1127

631

Total 
number 
2001-2007
1196
495
121
189
775
47
2823

2001

Note:  The  table  excludes  cases  withdrawn.  Figures  for  the  EU-10  are  included  as  of  1  May  2004,  for  the  EU-2  as  of  1  January  2007.  Source:  DG  Competition,  DG 
Agriculture, DG Maritime and Fisheries Affairs 

EN 

52 

EN 

 
  
 
Table 3: Number of measures by Member State for which information sheets were submitted under the State aid block exemption 
regulations, 2001-2007 

(Note: Member States are ranked in descending order according to the total number of BER measures) 

Member State

EU-27
Italy
United Kingdom
Spain
Germany
Slovenia
Netherlands
Austria
Poland
France
Hungary
Czech Republic
Belgium
Ireland
Cyprus
Greece
Estonia
Latvia
Slovakia
Lithuania
Finland
Denmark
Malta
Portugal
Romania
Bulgaria
Sweden
Luxembourg

Type of block exemption Regulation

SME Training Employment

1196
316
215
151
147
5
66
61
49
9
22
33
6
11
15
26
12
9
11
4
6
9
9
2
0
1
0
1

495
126
103
40
86
4
3
15
5
5
10
5
37
10
10
4
10
1
1
2
1
4
6
4
0
2
1
0

121
14
5
12
13
1
3
0
26
6
17
1
3
0
7
3
3
0
1
1
0
0
3
0
0
1
1
0

Regional 
investment 
189
1
17
35
13
4
1
23
21
3
12
18
3
2
2
3
3
1
1
2
3
2
1
5
11
1
1
0

Agriculture

Fish

Grand total

775
120
80
93
42
159
61
17
7
76
11
10
17
20
6
1
1
16
11
12
5
5
0
5
0
0
0
0

47
18
4
5
0
1
4
0
0
0
0
0
0
1
0
1
4
2
0
1
6
0
0
0
0
0
0
0

2823
595
424
336
301
174
138
116
108
99
72
67
66
44
40
38
33
29
25
22
21
20
19
16
11
5
3
1

Total less 
agriculture 
and fish

2001
457
340
238
259
14
73
99
101
23
61
57
49
23
34
36
28
11
14
9
10
15
19
11
11
5
3
1

Note: The table excludes cases withdrawn. Figures for the EU-10 are included as of 1 May 2004, for Bulgaria and Romania as of 1 January 2007. Source: DG Competition, 
DG Agriculture, DG Maritime and Fisheries Affairs 

EN 

53 

EN 

 
  
 
ANNEX III: PENDING RECOVERY DECISIONS (1 JANUARY 2008) 

Case number 

Working title 

MS  

Date  of  the 
decision 

Num.  of  the 
decision 

OJ 

CR 36a / 2006 

Terni Companies 

CR 23/2006 

Technologie Buczek 

CR 37/2005 

Tax-exempt reserve fund for certain companies 

CR 32/2005 

Rescue and restructuring aid to Ernault 

CR 16/2006 

Restructuring aid to Nuova Mineraria Silius  

CR 79/2001 

CR 78/2001 

CR 80/2001 

CR 38/2005 

Exemption  from  excise  duty  for  the  production  of 
alumina in Gardanne 
Exemption  from  excise  duty  for  the  production  of 
alumina in Shannon 
Exemption  from  excise  duty  for  the  production  of 
alumina in Sardinia 
Biria Gruppe 

Italy 

Poland 

Greece 

France 

Italy 

20/11/2007 

24/10/2007 

18/07/2007 

Not yet published 

Not yet published 

Not yet published 

04/04/2007 

2007/674/EC OJ L 277 of 20/10/2007, p. 25 

21/02/2007 

2007/499/EC OJ L 185 of 17/07/2007, p. 18 

France 

07/02/2007 

2007/375/EC OJ L 147 of 8/06/2007, p. 29 

Ireland 

07/02/2007 

2007/375/EC OJ L 147 of 8/06/2007, p. 29 

Italy 

07/02/2007 

2007/375/EC OJ L 147 of 8/06/2007, p. 29 

Germany 

24/01/2007 

2007/492/EC OJ L 183 of 13/07/2007, p. 27 

CR 52/2005 

Digital Decoders - Italy  

Italy 

24/01/2007 

2007/374/EC OJ L 147 of 8/06/2007, p. 1 

CR 30/2005 

Restructuring aid to Kliq NV 

Netherlands  19/07/2006 

2006/939/EC OJ L 366 of 21/12/2006, p. 40 

CR 30/2004 

CR 2/2004 

Exemption  from  corporate  tax  for  capital  gains  of 
certain operations/transactions by public undertakings 
Ad hoc financing of Dutch public broadcasters 

Portugal 

04/07/2006 

2006/748/EC OJ L 307 of 7/11/2006, p. 219 

Netherlands  22/06/2006 

Not yet published 

CR 25/2005 

Measures in favour of Frucona Kosice 

Slovakia 

07/06/2006 

2007/254/EC OJ L 112 of 30/04/2007, p. 14 

CR 37/2004 

Aid to Componenta Corporation  

Finland 

20/10/2005 

2006/900/EC OJ L 353 of 13/12/2006, p. 36 

CR 8/2004 

Fiscal incentives for newly listed companies 

Italy 

16/03/2005 

2006/261/EC OJ L 094 of 1/04/2006, p. 42 

CR 43/2001 

Aid to Chemische Werke Piesteritz GmbH 

Germany 

02/03/2005 

2005/786/EC OJ L 296 of 12/11/2005, p. 19 

CR 12/2004 

Fiscal incentives for outward FDI 

CR 57/2003 

Tremonti bis 

Italy 

Italy 

14/12/2004 

2005/919/EC OJ L 335 of 21/12/2005, p. 39 

20/10/2004 

2005/315/EC OJ L 100 of 20/04/2005, p. 46 

CR 40/2002 

Aid to Hellenic shipyards I 

Greece 

20/10/2004 

2005/246/EC OJ L 075 of 22/03/2005, p. 44 

EN 

54 

EN 

 
  
  
  
  
  
Case number 

Working title 

MS  

Date  of  the 
decision 

Num.  of  the 
decision 

OJ 

CR 13b/2003 

France Telecom - Taxe professionnelle 

France 

02/08/2004 

2005/709/EC OJ L 269 of 14/10/2005, p. 30 

CR 95/2001 

Aid to Siderurgica Anon 

CR 62/2003 

Urgent measures in support of employment 

CR 57/2002 

Article 44 septies CGI 

CR 39/2001 

Aid to Minas Rio Tinto sal 

Spain 

Italy 

France 

Spain 

16/06/2004 

2005/827/EC OJ L 311 of 26/11/2005, p. 22 

30/03/2004 

2004/800/EC OJ L 352 of 27/11/2004, p. 10 

16/12/2003 

2004/343/EC OJ L 108 of 16/04/2004, p. 38 

27/05/2003 

2004/300/EC OJ L 098 of 2/04/2004, p. 49 

CR 62/2000 

Aid to Kahla (Porzellan GmbH) 

Germany 

13/05/2003 

2003/643/EC OJ L 227 of 11/09/2003, p. 12 

CR 94/2001 

Export aid scheme Mecklenburg-Vorpommern 

Germany 

05/03/2003 

2003/595/EC OJ L 202 of 9/08/2003, p. 15 

CR 70/2001 

Aid to Hilados y Tejidos Puigneró S.A. 

Spain 

19/02/2003 

2003/876/EC OJ L 337 of 23/12/2003, p. 14 

CR 35/2002 

Fiscal aid scheme - Açores 

Portugal 

11/12/2002 

2003/442/EC OJ L 150 of 18/06/2003, p. 52 

CR 3/2002 

Aid to Refractarios especiales 

CR 27/1999 

Aid to Municipalizzate 

Spain 

Italy 

27/11/2002 

2003/283/EC OJ L 108 of 30/04/2003, p. 21 

05/06/2002 

2003/193/EC OJ L 077 of 24/03/2003, p. 21 

CR 44/2000 

Aid to SKL Motoren- und Systemtechnik GmbH 

Germany 

09/04/2002 

2002/898/EC OJ L 314 of 18/11/2002, p. 75 

CR 60/2000 

Fiscal aid - Province of Vizcaya (III) 

CR 58/2000 

Fiscal aid - Province of Alava (III) 

CR 59/2000 

Fiscal aid - Province of Guipuzcao (III) 

CR 53/1999 

Fiscal aid - Province of Guizpuzcoa (II) 

CR 54/1999 

Fiscal aid - Province of Vizcaya (II) 

CR 52/1999 

Fiscal aid - Province of Vizcaya (I) 

C 50/1999 

Fiscal aid - Province of Guipuzcoa (I) 

CR 48/1999 

Fiscal aid - Province of Alava (I) 

CR 49/1999 

Fiscal aid - Province of Alava (II) 

Spain 

Spain 

Spain 

Spain 

Spain 

Spain 

Spain 

Spain 

Spain 

20/12/2001 

2003/86/EC  OJ L 040 of 14/02/2003, p. 11 

20/12/2001 

2003/28/EC  OJ L 017 of 22/01/2003, p. 20 

20/12/2001 

2003/192/EC OJ L 077 of 24/03/2003, p. 1 

11/07/2001 

2002/894/EC OJ L 314 of 18/11/2002, p. 26 

11/07/2001 

2003/27/EC  OJ L 017 of 22/01/2003, p. 1 

11/07/2001 

2002/806/EC OJ L 279 of 17/10/2002, p. 35 

11/07/2001 

2002/540/EC OJ L 174 of 4/07/2002, p. 31 

11/07/2001 

2002/820/EC OJ L 296 of 30/10/2002, p. 1 

11/07/2001 

2002/892/EC OJ L 314 of 18/11/2002, p. 1 

CR 41/1999 

Aid to Lintra beteiligungsholding Gmbh 

Germany 

28/03/2001 

2001/673/EC OJ L 236 of 5/09/2001, p. 3 

CR 4/2000 

Manure processing scheme 

Netherlands  13/12/2000 

2001/521/EC OJ L 189 of 11/07/2001, p. 13 

EN 

55 

EN 

 
  
Case number 

Working title 

MS  

Date  of  the 
decision 

Num.  of  the 
decision 

OJ 

CR 38/1998 

Aid for Kimberly Clark/Scott Group 

France 

12/07/2000 

2002/14/EC  OJ L 012 of 15/01/2002, p. 1 

CR 81/1997 

Social security reductions - Venezia et Chioggia 

CR 49/1998 

Employment aid measures (Loi Nr 196/97) 

CR 44/1997 

Aid for Magefesa 

CR 18/1996 

Borotra aid scheme 

Italy 

Italy 

Spain 

France 

25/11/1999 

2000/394/EC OJ L 150 of 23/06/2000, p. 50 

11/05/1999 

2000/128/EC OJ L 042 of 15/02/2000, p. 1 

14/10/1998 

1999/509/EC OJ L 198 of 30/07/1999, p. 15 

09/04/1997 

1997/811/EC OJ L 334 of 5/12/1997, p. 25 

CR 28/1994 

Aid for Hamburger Stahlwerke GmbH 

Germany 

31/10/1995 

1996/236/EC OJ L 078 of 28/03/1996, p. 31 

EN 

56 

EN 

 
  
ANNEX IV: THE PENDING RECOVERY CASES FOR WHICH THE COMMISSION HAS DECIDED TO BRING THE CASE BEFORE THE COURT OF JUSTICE 

AND FOR WHICH THE ILLEGAL AND INCOMPATIBLE AID IS NOT YET RECOVERED 

Case number  Working title 

MS 

Court case 

State of play and recent developments 

CR 44/1997 

Aid to Magefesa 

Spain 

C-499/99 

CR 49/1998  

Employment aid measures (Loi Nr 196/97) 

Italy 

C-99/02 

CR 48/1999 

Fiscal aid - Province of Alava (I)  

Spain 

CR 49/1999 

Fiscal aid - Province of Alava (II) 

CR 50/1999 

Fiscal aid - Province of Guipuzcoa (I) 

CR 52/1999 

Fiscal aid - Province of Vizcaya (I) 

CR 53/1999 

Fiscal aid - Province of Guizpuzcoa (II) 

CR 54/1999 

Fiscal aid - Province of Vizcaya (II)  

(Basque fiscal aid schemes) 

C-485/03, 

C-486/03, 

C 487/03, 

C-488/03, 

C-489/03 

C-490/03 

02/07/02:  ECJ  judgment  condemning  Spain  for 
failing to implement CEC decision 

01/04/04:  ECJ 
failing to implement CEC decision  

judgment  condemning 

Italy 

for 

19/7/07: Commission sent letter of formal notice to 
Italy 

14/12/06:  ECJ  judgment  condemning  Spain  for 
failing to implement CEC decision 

11/07/07: Commission sent letter of formal notice to 
Spain 

CR 03/1999  

Spanish shipyards I 

Spain 

C-404/03 

CR 38/1998  

Aid for Kimberly Clark/Scott Group 

France 

C-232/05 

26/06/03:  ECJ  judgment  condemning  Spain  for 
failing to implement CEC decision 

18/10/04: Commission sent letter of formal notice to 
Spain 

05/10/06:  ECJ  judgment  condemning  France  for 
failing to execute CEC decision 

EN 

57 

EN 

 
  
 
 
Case number  Working title 

CR 27/1999  

Aid to Municipalizzate 

MS 

Italy 

Court case 

State of play and recent developments 

C-207/05 

01/06/06:  ECJ 
failing to execute CEC decision 

judgment  condemning 

Italy 

for 

CR 62/2000 

Thuringen Porzellan (Kahla) 

Germany 

C-39/06  

CR 62/2003 

Urgent employment measures 

Italy 

C-280/05  

CR 58/2000 

Fiscal aid - Province of Alava (III) 

Spain 

 C-177/06 

CR 59/2000 

Fiscal aid - Province of Guipuzcao (III) 

CR 60/2000 

Fiscal aid - Province of Vizcaya (III) 

(Basque fiscal aid schemes) 

CR 57/2003 

Tremonti Bis 

Italy 

19/07/07: Commission sent a letter of formal notice 
to Italy 

16/02/05: Commission decision to initiate Art. 88(2) 
action against Germany 

24/01/06: Application lodged at the ECJ pursuant to 
Art. 88(2) 

Press release: IP/05/189 

06/04/05: Commission decision to initiate Art. 88(2) 
action against Italy 

11/07/05: Application lodged at the ECJ pursuant to 
Article 88(2) 

Press release: IP/05/395 

21/12/05: Commission decision to initiate Art. 88(2) 
action against Spain 

04/04/06: Application lodged at the ECJ pursuant to 
Article 88(2) 

20/09/07:  ECJ  judgment  condemning  SPAIN  for 
failing to execute CEC decision 

Press release: IP/05/1655 

25/01/06: Commission decision to initiate Art. 88(2) 
action against Italy 

Press release: IP/06/77 

EN 

58 

EN 

 
  
  
Case number  Working title 

MS 

Court case 

State of play and recent developments 

CR 36/2001 

Beaulieu Ter Lembeek 

Belgium 

C-187/06 

CR 8/2004 

Fiscal incentives for newly listed companies 

Italy 

CR 13b/2003 

France Telecom – Business Tax Scheme 

France 

C-441/06 

25/01/06: Commission decision to initiate Art. 88(2) 
action against Belgium 

12/04/06: Application lodged at the ECJ pursuant to 
Article 88(2) 

Press release: IP/06/77 

19/07/06: Commission decision to initiate Art. 88(2) 
action against Italy 

Press release: IP/06/1040 

19/07/06: Commission decision to initiate Art. 88(2) 
action against France 

25/10/06: Application lodged at the ECJ pursuant to 
Article 88(2) 

18/10/07:  ECJ  judgment  condemning  FRANCE  for 
failing to execute CEC decision 

Press release: IP/06/1014 

CR 57/2002 

Exonérations 
d'entreprises en difficulté - Article 44 septies CGI 

fiscales  en 

faveur  de 

la 

reprise 

France 

 C-214/07 

24/10/06: Commission decision to initiate Art. 88(2) 
action against France 

CR 11/2004 

Olympic Airways / Olympic airlines 

Greece 

C-419/06 

Press release: IP/06/1471 

26/04/06 Commission decision to initiate Art. 88(2) 
action against Greece 

Press release: IP/06/531 

CR 19/2002 

Olympic Airways 

Greece 

C-415/03 

C 369/07  

26/04/06:  Commission  decision  to  initiate  Art  228 
action  against  Greece 
to  comply  with 
judgement of Court of Justice (case C-415/03) 

failure 

Press release: IP/06/531 

EN 

59 

EN 

 
  
  
Case number  Working title 

CR 81/1997 

Social security reductions – Venezia e Chioggia 

MS 

Italy 

CR 3/2002 

Aid to Refractarios especiales 

Spain 

Court case 

State of play and recent developments 

10/05/07: Commission decision to initiate Art. 88(2) 
action against Italy 

Press release: IP/07/648 

18/07/2007:  Commission  decision  to  initiate  Art. 
88(2) action against Spain 

Press release: IP/07/1138 

EN 

60 

EN