Report from the Commission - State Aid Scoreboard - Autumn 2008 Update -
Date: 2008-11-17
Institutions: European Commission
Subjects: EU Member State, State aid, control of State aid, report

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 17.11.2008 
COM(2008) 751 final 

REPORT FROM THE COMMISSION 

State Aid Scoreboard 
- Autumn 2008 Update -

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TABLE OF CONTENTS 

Executive summary .................................................................................................................... 4 

Introduction .............................................................................................................................. 11 

State aid as defined under Article 87 of the EC Treaty............................................................ 12 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

4. 

4.1. 

4.2. 

Part One: Progress Towards The European Strategy for Growth and Jobs (Lisbon 
Agenda) ...................................................................................................................... 13 

Part Two: Simplification of the state aid rules........................................................... 18 

The Commission's state aid control policy ................................................................ 18 

A new architecture for State aid control .................................................................... 19 

Revised set of State aid rules ..................................................................................... 21 

Part Three: Enforcement of state aid rules................................................................. 23 

Unlawful aid............................................................................................................... 23 

Enforcement of State aid Law: Cooperation with national courts ............................. 23 

Recovery of unlawful aid ........................................................................................... 24 

Ex-post monitoring .................................................................................................... 26 

Part Four: Trends and patterns of state aid expenditure in the member states........... 28 

State aid in absolute and relative terms...................................................................... 28 

State aid for horizontal objectives of common interest.............................................. 30 

4.2.1.  Trend in State aid for horizontal objectives and sectoral objectives.......................... 32 

4.2.2.  State aid for research and development and innovation (R&D&I)............................ 34 

4.2.3.  State aid for SMEs including risk capital................................................................... 36 

4.2.4.  State aid for environmental protection....................................................................... 37 

4.2.5.  State aid supporting regional development and cohesion .......................................... 38 

4.2.6.  State aid awarded under the block exemption regulations......................................... 38 

4.3. 

4.4. 

State aid compensating for Services of General Economic Interest (SGEI).............. 41 

State aid earmarked for specific sectors..................................................................... 44 

4.4.1.  State aid for rescue and restructuring firms in difficulty ........................................... 44 

4.4.2.  State aid to the shipbuilding sector ............................................................................ 44 

4.4.3.  State aid to the steel sector ......................................................................................... 44 

4.4.4.  State aid to the coal sector.......................................................................................... 45 

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4.4.5.  State aid to the transport sector .................................................................................. 45 

4.4.6.  State aid to the agricultural sector.............................................................................. 48 

4.4.7.  State aid to the fisheries sector................................................................................... 49 

4.5. 

State aid instruments .................................................................................................. 49 

5. 

6. 

Part Five: State aid related to the financial crisis....................................................... 51 

Part Six: Legislative and policy developments .......................................................... 55 

Additional Information on state aid available on the website.................................................. 58 

Methodological Notes .............................................................................................................. 59 

Annex: Statistical tables ........................................................................................................... 60 

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EXECUTIVE SUMMARY 

The autumn 2008 update of the State aid Scoreboard focuses on the State aid situation in the 
twenty-seven Member States for the year 2007 and the underlying trends. The main aim is to 
assess  Member  States  progress  towards  meeting  the  Lisbon  objectives  and  response  to 
successive European Councils call for “less and better targeted aid”. It includes an overview 
of the recent State aid cases in the banking sector that have resulted from the sub-prime crisis. 
This  update  of  the  Scoreboard  also  reports  on  progress  towards  delivering  a  comprehensive 
and coherent reform package for State aid that began with the State Aid Action Plan (SAAP) 
in 2005. 

Less and better targeted aid 

Response  to  Council  calls  for  less  State  aid:  underlying  trend  in  the  volume  of  aid 
continues to be downward or stable in the vast majority of Member States … 

The  Lisbon  European  Council  of  March  2000  called  on  the  Commission,  the  Council  and 
Member States to "further their efforts to … reduce the general level of State aid, shifting the 
emphasis  from  supporting  individual  companies  or  sectors  towards  tackling  horizontal 
objectives  of  Community  interest,  such  as  employment,  regional  development,  environment 
and  training  or  research".  Successive  European  Councils  have  since  repeated  the  call  for 
the  Commission 
targeted  aid”.  These  goals  were  underlined  by 
“less  and  better 
Recommendation on the Broad Economic Policy Guidelines for 2005-2008. Furthermore, less 
and better-targeted aid was identified as one of the four guiding principles underpinning the 
Commission's State aid reform programme launched in 2005. 

Looking at the trend from a long-term perspective, the overall level of State aid in the 1980s 
was in the region of 2% of GDP, fell to just below 1% in the 1990s and now stands at around 
0.5%-0.6%.  This  decline  in  State  aid  expenditure  can  be  explained  in  part  by  the  work  that 
began  in  the  mid  1980s  to  make  effective  State  aid  control  a  key  component  of  the  Single 
Market Programme. It is also the result of a general recognition that a high volume of State 
aid not only hindered an efficient allocation of resources but also rendered the economy as a 
whole less competitive. State aid discipline was then widened and strengthened in the 1990s 
in  the  context  of  EMU  and  then  given  new impetus by  the  Lisbon  Council in 2000 and the 
SAAP  in  2005.  The  resulting  reform  package  for  State  aid  focuses  largely  on  a  better 
targeting of aid while ensuring that distortions are kept to a minimum in order to maintain the 
functioning of the single market. 

Total  State  aid  less  railways  granted  by  the  Member  States  in  2007  stood  at  € 65  billion  or 
0.53% of EU Gross Domestic Product (GDP). Aid for industry and services amounted to € 49 
billion or 0.40% of GDP.  

From  a  short-term  perspective,  the  underlying  trend  in  total  aid  for  industry  and  services 
continues to be downward or stable in the vast majority of Member States. In relation to GDP, 
and during a period of steady economic growth, State aid for EU-27 decreased by 15% from 
0.50%  of  GDP  in  the  period  2002-2004  to  0.42%  of  GDP  in  the  period  2005-2007.  This 
positive development can be attributed to mainly three factors: 

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•  First,  and  in  line  with  expectations  during  a  period  of  economic  growth,  Member  States 
granted  considerably  less  rescue  and  restructuring  aid.  In  absolute  terms,  rescue  and 
restructuring aid decreased from an average of € 6.8 billion per year in 2002-2004 to € 1.8 
billion per year in 2005-2007. In this context, it is worth noting that while several Member 
States have awarded significant amounts of aid to rescue ailing firms in the past six years, 
most countries awarded relatively small amounts and indeed eight countries did not award 
any such aid. 

•  Second, state aid to the coal sector shows a continued downward trend, decreasing from an 
average  of  just  under  € 8  billion  per  year  to 
less  than  € 4  billion  per  year  over  the  two 
reporting  periods  2002-2004  and  2005-2007.  The  decrease  can  be  observed  primarily  in 
Poland, France, Germany, and, to a lesser extent, Spain. 

•  Third,  the  downward  trend  is  even  more  accentuated  in  the  EU-12.  Here,  pre-accession 
commitments and continued efforts after accession contributed likewise as these Member 
States continue to adjust their State aid policies and practices to the requirements under EU 
State aid law and policies. 

The  overall  EU-27  level  of  State  aid  does  not  only  reflect  the  broader  strategic  choices  or 
changes in national policies but is likewise influenced by a relatively small number of large 
cases  (for  example,  restructuring  aid  in  Germany  to  Bankgesellschaft  Berlin  (BGB), 
amounting to some € 8 billion in the years 2001  and 2002, € 4 billion for Polish coal in 2003, 
€ 1.4 billion to  Alstom in France 2004, € 750 mill ion restructuring aid to BAWAG in Austria 
2006, € 1.6 billion of rescue aid to Northern  Rock in the United Kingdom and a € 630 million 
restructuring aid package for Sachsen LB in Germany in 2007). 

It  should  be  noted  that  State  aid  expenditure  figures  refer  only  to  cases  decided  by  the 
Commission by 30 June 2008 (and for which aid was awarded up to the end of 2007) and not 
to ongoing State aid cases. 

…  though  the  level  of  aid  is  expected  to  rise  in  some  Member  States  in  2008  due 
primarily to the banking crisis as well as a general downturn in the economy 

Following the recent downturn in the economy, in particular the banking crisis, the share of 
rescue and restructuring aid is likely to increase significantly for the year 2008. 

The  Commission  has  been  able  to  deal  quickly  and  effectively  with  the  rescue  and 
restructuring of troubled banks within its current rules 

Since  the  beginning  of  the  current  financial  crisis,  Member  States  have  announced 
unprecedented  support  measures  for  the  financial  sector,  ranging  from  increased  (or  even 
unlimited) deposit guarantees, interbank credit guarantees, direct capital injections and partial 
nationalization  to  individual  rescue  packages.  To  a  considerable  extent,  these  support 
measures  are  subject  to  European  State  aid  control,  and  the  Commission  has  thus  been 
playing a key role in this situation. Coordinated action by Member States and the Commission 
has  ensured  that  large  support  schemes  for  the  financial  sector  could  be  implemented  in 
compliance  with  EU  State  aid  rules.  The  current  situation  and  the  large  number  of 
notifications  provide  a  significant  challenge  for  the  Commission  to  deal  with  these  cases 
quickly, but at the same time to continue to ensure that measures are proportionate and do not 
create undue distortions of competition. In fact, the Commission has managed to respond to 

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notifications  submitted  by  Member  States  and  to  approve  schemes  in  record  time  -  even 
within 24 hours. 

While a crisis at an individual bank may have the potential to trigger a general banking crisis 
and vice versa, in terms of compatibility with EU State aid rules individual rescue cases differ 
considerably  from  schemes  aimed  at  the  entire  financial  sector.  The  Commission  has  been 
tackling  the  individual  rescue  cases  during  the  financial  crisis  based  on  the  guidelines  on 
rescue and restructuring aid. The Commission has made an important effort to deal in a rapid, 
efficient  and  flexible  way  with  the  cases  submitted:  Northern  Rock  (notification  on  26 
November 2007, approved on 5 December 2007), West LB (notification on 27 March 2008, 
approved on 30 April 2008, Roskilde Bank (notification on 22 July 2008, approved on 31 July 
2008),  and  Hypo  Real  Estate  (notification  on  30  September  2008,  approved  on  2  October 
2008).  Also  in  more  complex  cases,  where  a  formal investigation procedure was inevitable, 
such as Sachsen LB, the Commission was able to take a final decision in the case within three 
months after the initiation of a formal investigation procedure. 

Responding to exceptional circumstances and systemic risk 

the  financial  crisis  deepened 

As 
the  Commission  published  a 
Communication1 on how Member States can best support financial institutions in the current 
financial  crisis  whilst  respecting  EU  State  aid  rules.  The  Commission  acknowledges  the 
exceptional circumstances and the systemic risks inherent to a financial crisis and takes them 
into account when dealing with support schemes. 

in  October  2008, 

The current financial crisis has, however, led to a need for State interventions that differ from 
the traditional rescue or restructuring of a financial institution in difficulties. To a large extent 
the measures currently taken by Member States do not concern specific banks in difficulties, 
but are aimed at the entire banking sector. These measures have been announced in order to 
respond  to  the  systemic  risk  that  is  seen  in  the  banking  sector.  In  its  Communication  the 
Commission acknowledges the exceptional circumstances and the systemic risk in the current 
situation.  The  Commission  can  therefore  apply  Article  87(3)(b)  of  the  EC  Treaty.  This 
exception to the general prohibition of State aid can be invoked in order to 'remedy a serious 
disturbance of the economy'. In October 2008 the Commission approved far-reaching support 
measures  notified  by  Ireland,  the  United  Kingdom  and  Denmark.  These  schemes  involve  a 
combination  of  increasing  guarantees  for  bank  deposits,  guarantees  for  interbank  loans  and 
capital  injections.  Several  other  countries  have  notified  or  are  expected  to  notify  similar 
schemes.  However,  even  under  exceptional  circumstances 
the  Commission's 
responsibility to ensure compliance with European State rules while at the same time respond 
flexibly and swiftly to the systemic risk posed by the financial crisis.  

is 

it 

State aid in the current economic downturn 

The  current  financial  crisis  and  downturn  in  the  economy  is  already  beginning  to  have  a 
negative  impact  on  jobs  and  on  the  order  books  of  businesses.  There  is  consensus  that 
Member States have to coordinate their response to this crisis. Member States' economies are 
too intertwined and a short-term fix involving a subsidy race between Member States should 
be avoided. On the contrary, State support for European business will only show results if it is 

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sustainable.  While  boosting  sustainable  investment  benefits  European  industry  in  general, 
particular emphasis should be placed on SMEs which may face greater difficulties of access 
to finance than other companies. 

The  recent  Small  Business  Act  adopted  by  the  Commission  identifies  a  large  number  of 
actions  to  support  SMEs.  Furthermore,  the  recent  modernisation  of  EU  State  aid  rules 
encourages Member States to support sustainable investment, thus contributing to the Lisbon 
strategy  for  growth,  jobs  and  competitiveness.  For  SMEs,  the  recently  adopted  GBER  now 
offers  Member  States  a  wide  range  of  aid  measures  with  a  much  reduced  administrative 
burden. This also enables Member States to facilitate access to finance particularly for SMEs, 
and so tackle the current financial and economic crisis effectively. 

The  majority  of  Member  States  have  contributed  positively  to  the  Council's  call  for 
better targeted aid 

In  line  with  the  commitments  undertaken  at  the  various  European  Councils,  most  Member 
States have continued to shift the emphasis from supporting individual companies or sectors 
towards  horizontal  objectives  of  common  interest.  For  the  EU-27,  the  average  share  of 
horizontal objectives in total aid increased from 67% over the period 2002-2004 to 81% over 
the  period  2005-2007.  This  compares  with  around  50%  in  the  mid-Nineties.  In  welcoming 
this trend, one should be aware that much of the increase in horizontal aid can be attributed to 
an increase in environmental tax exemptions, in particular for energy intensive industries. Aid 
for environmental protection increased by € 3 bi llion over the two reporting periods (the share 
in total aid rose by + 8 percentage points to 27%) with Sweden (+€ 1.4 billion) and Germany 
(+ € 1.0 billion) the main contributors to this  rise. The share of R&D&I aid (+ 2.5 points to 
13% of total aid) also rose significantly. 

The  clear  positive  shift  towards  horizontal  objectives  is  even  more  significant  in  the  EU-12 
Member States as they continue to adjust their State aid policies and practices. 

Simplification of State aid rules 

State aid reform package: a new set of rules and a new architecture for State aid 

The  State  Aid  Action  Plan  (SAAP),  adopted  in  June  2005,  announced  that  the  Commission 
would set out to tackle a series of acknowledged deficiencies in State aid policy, and thereby 
transform  State  aid  into  an  effective  policy  tool  for  growth  and  jobs.  The  plan  launched  a 
review of almost all the State aid rules and procedures. 

There are 4 guiding principles underpinning the reform programme:  

–  less and better targeted State aid; 

–  a refined economic approach; 

–  more  effective  procedures,  better  enforcement,  higher  predictability  and  enhanced 

transparency; 

–  a shared responsibility between the Commission and Member States. 

Since  2005,  the  Commission  has  worked  in  close  cooperation  with  the  Member  States  to 
deliver these reforms. As outlined in the SAAP roadmap, the Commission has revised a large 
number  of  its  guidelines,  frameworks  and  communications.  This  includes  the  Decision  and 

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guidelines  on  Services  of  General  Economic  Interest,  a  revised  set  of  Regional  Aid 
Guidelines, a new framework on Research, Development and Innovation, revised Community 
guidelines  on  state  aid  for  environmental  protection  and  a  new  General  Block  Exemption 
Regulation. 

In order to make procedures and decision-making faster and more efficient, the Commission 
has made substantial changes to the architecture of its State aid control. The new architecture 
is  based  on  a  "3–stream  system":  block  exemption,  standard  assessment  and  detailed 
assessment.  This  is  a  crucial  feature  that  allows  the  Commission  to  focus  on  the  most 
distortive  cases  as  well  as  reducing  the  administrative  burden  for  companies  and  Member 
States for cases which are less important. 

Indeed  an  increasing  number  of  aid  measures  are  exempted  from  ex  ante  Commission 
scrutiny,  either  by  the  de  minimis  Regulation  or  by  the  new  General  Block  Exemption 
Regulation.  The  rationale  behind  this  change  is  that  such  measures  are  unlikely  to  have  a 
significant impact  on competition at  the Community  level  and  may  thus  be  granted  without 
prior  notification  to  the  Commission  provided  they  fulfil  the  criteria  of  the  respective  legal 
instruments. In this context, changes to the state aid architecture have already begun to have 
an impact with a sharp increase observed in 2007 in the share of block exempted aid measures 
(65% of all measures in 2007 compared with 40% in 2002). Although this is not yet reflected 
to  the  same  extent  in  terms  of  expenditure,  2007  saw  a  significant  rise  in  the  share  of 
expenditure awarded under the  block exemption regulations (BER): from  6%  of  total  aid in 
2006 to 13% in 2007. 

By  applying  a  level  of  assessment  proportionate  to  the  impact  of  the  aid  measure,  the  new 
State aid architecture assures a strict but practical form of State aid control in an EU of 27, 
where it is impossible to assess every notification of national aid measures. Furthermore, the 
new architecture facilitates and accelerates the implementation of compatible aid considerably 
and, thus, provides an incentive for Member States to introduce better targeted aid measures 
that  contribute  to  growth  and  employment,  notably  R&D&I  and  risk  capital.  Last  but  not 
least, the new architecture frees Commission resources to examine the most distortive cases 
more thoroughly. Such cases are subject to a detailed and rigorous assessment of their effects 
on competition in the internal market. 

Member  States  have  been  able  to  introduce  more  than  1700  block  exempted  aid 
measures in the past 18 months 

Member States continue to use block exempted measures in increasing numbers: the number 
rose  sharply  in  2007  with  over  1100  measures  introduced,  more  than  double  the  figure  for 
2006.  The  trend  has  continued  with  a  further  600  measures  block  exempted  in  the  first  six 
months  of  2008.  In  all,  some  3400  measures  have  been  introduced  since  the  first  BER  was 
introduced  in  2001.  Expenditure  under  the  BER  has  risen  accordingly  –  Member  States 
awarded an estimated € 6.2 billion in 2007 under the four block exemption regulations for the 
industry and services sectors. This compares with only € 3.2 billion in 2006. 

Although virtually all Member States have increased the number of block exempted measures, 
the  extent  to  which  each  country  makes  use  of  the  possibilities  offered  by  the  BER  varies 
considerably. A new General Block Exemption Regulation (GBER), which came into force in 
August  2008,  should  lead  to  a  further  rise  in  the  number  of  block  exempted  measures.  The 
new  GBER  consolidates  into  one  text  and  harmonises  the  rules  previously  existing  in  five 

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separate Regulations and enlarges the categories of state aid covered by the exemption. The 
new regulation authorises aid in favour of SMEs, research, innovation, regional development, 
training,  employment,  risk  capital,  environmental  protection  aid,  aid  measures  promoting 
entrepreneurship,  such  as  aid  for  young  innovative  businesses,  aid  for  newly  created  small 
businesses  in  assisted  regions,  as  well  as  measures  tackling  problems,  like  difficulties  in 
access to finance, faced by female entrepreneurs. 

The increase in block exempted measures has been accompanied by a significant reduction in 
the  number  of  notified  measures  for  these  types  of  aid,  thus  reducing  the  administrative 
burden  on  Member  States  and  companies.  This  should  be  seen  against  the  backdrop  of  a 
continuing trend towards horizontal aid measures allowing Member States to grant individual 
awards of aid under approved schemes without the need for notification. 

Enforcing the State aid rules 

More  effective  recovery  of  aid:  € 7  billion  or   92%  of  total  illegal  and  incompatible  aid 
had effectively been recovered by June 2008 

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.  The  latest  figures  indicate  that  significant 
progress has been made since 2005. By the end of June 2008, there were 47 pending recovery 
decisions compared with 93 at the end of 2004. The total amount of aid to be recovered on the 
basis of the 126 recovery decisions adopted between 2000 and 2007 is (at least) € 9 billion. Of 
this figure, some € 7.1 billion of illegal and in compatible aid had been effectively recovered 
by  the  end  of  June  2008  as  well  as  € 2.4 billion  of  interest.  In  addition  to  the  amounts 
effectively  recovered,  a  further  € 1.26 billion  was  “lost”  in   bankruptcy  proceedings.  This 
means  that  92%  of  the  total  amount  of  illegal  and  incompatible  aid  has  effectively  been 
recovered compared with only 25% at the end of 2004. 

New Notice on the Enforcement of State aid Law by National Courts 

The  Commission  considers  that  State  aid  enforcement  by  national  courts  can  play  an 
important role in the overall system of State aid control. National courts are often well placed 
to protect individual rights affected by violations of the State aid rules and can offer quick and 
effective  remedies  to  third  parties.  The  Commission  therefore  sees  a  need  to  give  clear 
guidance  to  the  courts  and  potential  claimants  on  the  different  issues  that  can  arise  in  the 
context  of  State  aid  litigation  at  national  level.  This  guidance  will  be  based  on  the 
jurisprudence of the Community courts and will cover issues such as the remedies available to 
third  parties,  procedural  matters  (such  as  legal  standing),  the  circumstances  in  which  a 
national court should issue interim measures and the conditions for claiming damages in the 
event of a breach of the State aid rules. In addition, the Commission wishes to intensify its co-
operation with national courts in individual cases. It hopes to achieve this aim by providing 
practical and straight forward co-operation mechanisms to national judges along the lines of 
those  already  existing  in  the  antitrust  area.  To  reach  the  above  aims,  the  Commission  is 
currently in the process of preparing a new notice on State aid enforcement by national courts. 
The Commission has recently published a first draft for consultation and expects to issue the 
final notice in early 2009. 

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Ex-post monitoring 

In order to ensure the continued proper enforcement of the State aid architecture, in which an 
increasing  number  of  aid  measures  are  no  longer  subject  to  the  notification  obligation,  the 
Commission has been stepping up its ex post monitoring of such measures. DG Competition 
started, in 2006, a sample-based monitoring exercise covering both approved aid schemes and 
measures adopted under the BERs. On the basis of the experience gathered in this first pilot 
project, similar exercises have been launched in 2007 and, most recently in 2008. The analysis 
of the results  of  the first two  exercises shows that, overall, the part of the existing  state  aid 
architecture  allowing  for  the  approval  of  aid  schemes  and  allowing  Member  States  to 
implement  aid  measures  under  BERs,  functions  in  a  satisfactory  manner.  In  a  minority  of 
cases  substantive  problems  or  procedural  issues  (such  as  transparency,  reporting,  speed  and 
quality of answers) were identified. 

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INTRODUCTION 

The autumn 2008 update of the State aid Scoreboard focuses on the State aid situation in the 
twenty-seven EU Member States for the year 2007 and the underlying trends. The main aim is 
to assess Member States progress towards meeting the Lisbon objectives and their response to 
successive European Councils call for “less and better targeted aid”. It includes an overview 
of the recent State aid cases in the banking sector that have resulted from the sub-prime crisis. 
This  update  of  the  Scoreboard  also  reports  on  progress  towards  delivering  a  comprehensive 
and coherent reform package for State aid that began with the State Aid Action Plan in 2005. 

The Scoreboard is divided into six parts. Part One looks at the extent to which Member States 
have contributed over the last five years to the Lisbon strategy. Part Two provides an overview 
of the new state aid rules and revised state aid architecture that have been put into place since the 
State Aid Action Plan in 2005. Part Three focuses on ongoing efforts to enforce our state aid 
rules  and  recover  unlawful  aid.  More  in-depth  statistical  information  and  analysis  regarding 
the  amounts  and  types  of  State  aid  awarded  by  each  Member  State  in  2007  are  included  in 
Part Four. Part Five provides an overview of the recent State aid cases in the banking sector 
while Part Six includes a summary of recent legislative and policy developments. 

This  Scoreboard  and  previous  editions  can  be  consulted  on  the  Competition  Directorate 
General’s  website.  Also  available  are  a  series  of  key  indicators  and  a  range  of  statistical 
information for all EU Member States. 

The  EFTA  Surveillance  Authority  (ESA)  publishes  an  annual  scoreboard  on  the  volume  of 
state  aid  granted  in  Iceland,  Liechtenstein  and  Norway.  Data  for  these  countries  have  also 
been included for the first time in Table 1 (Annex). 

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STATE AID AS DEFINED UNDER ARTICLE 87 OF THE EC TREATY 

The Scoreboard covers State aid as defined under Article 87(1) of the EC Treaty2 that has been granted by the 
Member States and has been the subject of a final Commission decision or has been granted on the basis of a 
block exemption regulation. 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.  All  aid  compensating  for  services  of  general  economic  interest 
(SGEI) is also excluded from the Scoreboard (see below). Aid measures covered by the de minimis Regulation3 
are also excluded as by their nature they do not qualify as State aid. 

State  aid  is  a  form  of  state  intervention  used  to  promote  a  certain  economic  activity.  It  implies  that  certain 
economic sectors or activities are treated more favourably than others and thus distorts competition because it 
discriminates between companies that receive assistance and others that do not. In order to determine whether a 
measure  constitutes  State  aid,  a  distinction  has  thus  to  be  drawn  between  the  situation  where  the  support  is 
directed at certain undertakings or the production of certain goods, as specified in Article 87(1) of the Treaty, 
and  the  situation  where  the  measures  in  question  are  equally  applicable  throughout  the  Member  State  and  are 
intended  to  favour  the  whole  of  the  economy.  In  the  latter  case,  there  is  no  State  aid  within  the  meaning  of 
Article 87(1). 

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

Commission 

website 

found 

cases 

be 

in 

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

Another  important  area  concerns  aid  which  compensates  for  the  provision  of  SGEI.  In  its  judgment  in  the 
Altmark case4, the Court of Justice ruled that compensation to undertakings that perform a SGEI is not State aid, 
provided  certain  conditions  are  fulfilled.  As  a  result,  similar  measures  are  now  classed  as  aid,  or  non-aid 
depending, for example, on whether a certain kind of tender was used. All measures compensating for SGEI are 
therefore excluded from the Scoreboard. In contrast, in cases where part of the aid is found to overcompensate 
for the SGEI the appropriate amount is included as aid, e.g., in the Deutsche Post case5. 

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

2 

3 

4 

5 

The  measure  constitutes  state  aid  if  it  is  granted  by  a  Member  State  or  through  State  resources,  it 
distorts or threatens to distort competition, it favours certain undertakings or the production of certain 
goods, and it affects trade between Member States. 
Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 
88 of the Treaty to de minimis aid, OJ L 379, 28.12.2006, p. 5.  
C-280/00 of 24 July 2003 concerning the grant of licences for scheduled bus transport services in the 
Landkreis of Stendal (Germany) and public subsidies for operating those services.  
Case C61/1999 in which the Commission reached a negative decision on 19.6.2002. 

EN 

12 

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1. 

PART  ONE:  PROGRESS  TOWARDS  THE  EUROPEAN  STRATEGY  FOR  GROWTH  AND 
JOBS (LISBON AGENDA) 

Member States progress towards less and better-targeted aid 

The  Lisbon  European  Council  of  March  2000  called  on  the  Commission,  the  Council  and 
Member States to "further their efforts to … reduce the general level of State aid, shifting the 
emphasis  from  supporting  individual  companies  or  sectors  towards  tackling  horizontal 
objectives  of  Community  interest,  such  as  employment,  regional  development,  environment 
and  training  or  research".  Successive  European  Councils  have  since  repeated  the  call  for 
the  Commission 
targeted  aid”.  These  goals  were  underlined  by 
“less  and  better 
Recommendation  on  the  Broad  Economic  Policy  Guidelines  for  2005-2008.6  Furthermore, 
less and better-targeted aid was identified as one of the four guiding principles underpinning 
the reform programme that began with the State Aid Action Plan (SAAP) in 2005. 

Looking at the trend from a long-term perspective, the overall level of State aid in the 1980s 
was in the region of 2% of GDP, fell to just below 1% in the 1990s and now stands at around 
0.5%-0.6% (Figure 1). This decline in State aid expenditure can be explained in part by the 
work that began in the mid 1980s to make effective State aid control a key component of the 
Single Market Programme. It is also the result of a general recognition that a high volume of 
State aid not only hindered an efficient allocation of resources but also rendered the economy 
as  a  whole  less  competitive.  State  aid  discipline  was  then  widened  and  strengthened  in  the 
1990s in the context of EMU and then given new impetus by the Lisbon Council in 2000 and 
the  SAAP  in  2005.  The  resulting  reform  package  for  State  aid  focuses  largely  on  a  better 
targeting of aid while ensuring that distortions are kept to a minimum in order to maintain the 
functioning of the single market. 

Figure 1: Trend in the overall level of aid as a percentage of GDP, EU, 1992-2007 

P
D
G
%

1

0,9

0,8

0,7

0,6

0,5

0,4

0,3

0,2

0,1

0

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Note: Data refer to industry and services only. Source: DG Competition. 

6 

COM(2005) 141 final, 12.4.2005. 

EN 

13 

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Methodological notes 

At  the  Stockholm  European  Council  in  2001,  Member  States  pledged  to  demonstrate  a  downward 
trend in State aid in relation to GDP. The 'State aid as percentage of GDP' indicator takes into account 
the  general  economic  situation  in  the  particular  Member  State.  The  degree  to  which  Member  States 
have reduced (or not) the level of State aid can be measured by looking at total State aid relative to 
GDP over a period of one year, i.e. the trend from 2006 to 2007 or by observing the underlying trend 
over the periods 2002-2004 and 2005-2007. In order to eliminate as far as possible annual fluctuations 
and the effects of delayed reporting,7 the latter option is preferred. 

As comparable data on transport and agriculture are not available for EU-12 Member States prior to 
their  accession,  it  is  not  possible  to  draw  conclusions  on  a  long-term  trend  for  total  State  aid. 
Therefore,  observations  on  the  underlying  trend  are  based  on  data  for  total  aid  for  industry  and 
services (i.e. total aid less agriculture, fisheries and transport).  

It  is  important  to  bear  in  mind  that  some  aid  measures  can  not  be  quantified  and  are  therefore  not 
included  in  the  scoreboard  figures.8  Although  the  number  of  measures  is  limited,  the  distortion  of 
competition  is  often  very  significant  and  has  an  impact  on  the  overall  level  of  State  aid,  e.g.,  the 
unlimited  State  guarantees  previously  available  to  Electricité  de  France  (EDF)  or  the  German 
Landesbanken.  Another  example  is  the  aid  to  France  Telecom,  part  of  which  cannot  be  quantified9 
while the other part may be underestimated.10 

The underlying trend in total aid for industry and services continues to be downward or stable 
in the vast majority of Member States (Figure 2). In relation to GDP, and during a period of 
steady economic growth, State aid for EU-27 decreased by 15% from 0.50% of GDP in the 
period 2002-2004 to 0.42% of GDP in the period 2005-2007. Total State aid11 granted by the 
Member States in 2007 stood at € 65 billion or 0.53% of EU Gross Domestic Product (GDP). 
Aid for industry and services amounted to €  49 billion or 0.40% of GDP. Table 1 in Annex 
provides an overview of the key figures for each Member State. 

7 

8 

9 
10 

11 

In  spite  of  the  Member  States’  obligation  (in  the  Commission  Regulation  No  794/2004  of  21  April 
2004)  to  report  State  aid  expenditure  figures  for  the  year  t-1,  some  Member  States  are  able  to  report 
figures for some measures only for year t-2. In addition, unlawfully granted State aid is included in the 
Scoreboard  data  only  after  Commission’s  decision  on  particular  unlawful  aid  case  and  retroactively 
added to the year in which the aid was granted. Therefore, overall aid levels tend to be underestimated 
for the most recent years. 
For more details on not quantifiable or underestimated measures, especially in rescue and restructuring 
cases, see the feature chapter of the Autumn 2006 scoreboard, pp 32-33. 
C 13a/2003 Mesures Financières-France Telecom. 
C 13b/2003 Taxe professionnelle-France Telecom has been estimated between € 798mn and € 1.14bn 
but only the minimum of € 798mn is included in the scoreboard totals. 
The  total  covers  aid  to  manufacturing,  services,  coal,  agriculture,  fisheries  and  part  of  the  transport 
sector  but  excludes  aid  to  the  railway  sector,  aid  for  compensation  for  services  of  general  economic 
interest due to the lack of comparable data. 

EN 

14 

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Figure 2: Trend in State aid in industry and services as a percentage of GDP, 2002-04 
and 2005-07 

Est onia

Bulgaria

Luxembourg

Lithuania

Latvia

Greece

United Kingdom

Netherlands

Belgium

Italy

Ireland

Finland

Spain

France

Poland

EU15

EU27

Slovenia

Romania

Aust ria

EU12

Slovakia

Denmark

Cyprus

Czech Republic

Germany

M alta

Sweden

Hungary

Port ugal

0

0,5

1

1,5

2

2,5

% of GDP

Avg 2005-2007

Avg 2002-2004

Note:  Member  States  are  ranked  in  ascending  order  according  to  the  total  amount  of  State  aid  expressed  as  a 
percentage of GDP for the period 2005-2007. Data cover all State aid measures as defined under Article 87(1) of 
the  EC  Treaty  that  have  been  awarded  by  Member  States  and  examined  by  the  Commission.  Source:  DG 
Competition. 

This positive development can be attributed to mainly three factors: 

•  First, and in line with expectations in a period of economic growth, Member States granted 
considerably less rescue and restructuring aid. While such aid to ailing firms accounted for 
12% of total aid in the period 2002 – 2004, it amounted to only 4% in  the years 2005 – 
2007. In absolute terms, rescue and restructuring  aid  decreased  from  an  average  of  €  6.8 
billion per year to € 1.8 billi on per year (Figure 8). Following the recent downturn in the 
economy, affecting the banking sector in particular, the share of rescue and restructuring 

EN 

15 

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aid  is  likely  to  increase  significantly  for  the  year  2008.  Already  in  2007,  both  Northern 
Rock12 in  the United  Kingdom and Sachsen  LB13  in  Germany  received  large  amounts  of 
rescue  and  restructuring  aid  respectively.  In  this  context,  it  is  worth  noting  that  while 
several Member States  have  awarded significant  amounts  of  aid  to  rescue  ailing  firms  in 
the past six years, most countries have awarded relatively small amounts and indeed eight 
have not awarded any such aid (see section 4.5.1). 

•  Second, state aid to the coal sector shows a continued downward trend, decreasing from an 
less  than  € 4  billion  per  year  over  the  two 

average  of  just  under  € 8  billion  per  year  to 
reporting  periods.  The  decrease  can  be  observed  primarily  in  Poland,  France,  Germany, 
and, to a lesser extent, Spain. 

•  Third,  the  downward  trend  is  even  more  accentuated  in  the  EU-12.  Here,  pre-accession 
commitments and continued efforts after accession contributed likewise as these Member 
States continue to adjust their State aid policies and practices to the requirements under EU 
State aid law and policies. 

The  overall  EU-27  level  of  State  aid  does  not  only  reflect  the  broader  strategic  choices  or 
changes in national policies but is likewise influenced by a relatively small number of large 
cases  (for  example,  restructuring  aid  in  Germany  to  Bankgesellschaft  Berlin  (BGB), 
amounting to some € 8 billion in the years  2001 and 2002, € 4 billion for Polish coal in 2003, 
€ 1.4 billion to  Alstom in France 2004, € 750 mill ion restructuring aid to BAWAG in Austria 
2006,  € 1.6  billion 14  of  rescue  aid  to  Northern  Rock  in  the  United  Kingdom  and  a  € 630 
million restructuring aid package for Sachsen LB in Germany). 

The EU average of State aid for industry and services expressed as percentage of GDP hides 
differences  between  Member  States.  The  sharpest  falls  can  be  observed  in  five  EU-12 
countries (Czech Republic, Cyprus, Romania, Poland and Malta), due largely to the phasing 
out  of  pre-accession  measures,  and  in  Poland  due  mainly  to  the  declining  aid  to  the  coal 
industry.  Of  the  EU-15  countries,  Germany,  Denmark  and  Spain  also  experienced  a 
significant decrease. In Germany the decrease can also be explained by the diminishing aid to 
the  coal  industry  in  addition  to  the  above  mentioned  BGB  case  and  a  sharp  decline  in 
environmental aid in 2007. The decline in Denmark was mainly due to reduced expenditure in 
several  environmental  aid  measures.  In  Spain,  the  decrease  can  mainly  be  explained  by 
declining expenditure for the coal industry. France also saw a sharp drop in aid for the coal 
sector  but  the  decrease  was  offset  by  an  increase  in  horizontal  aid,  particularly  for 
employment, regional development and R&D&I. 

In contrast, State aid in relation to GDP increased significantly during the two periods under 
review  in  two  Member  States:  in  Sweden  the  increase  can  be  attributed  to  the  aid  for 
environmental protection while the restructuring aid to BAWAG in 2006 accounts for the rise 
in total aid for Austria. 

At  the  same  time,  and  in  line  with  the  commitments  undertaken  at  the  various  European 
Councils,  most  Member  States  have  continued  to  redirect  aid  towards  such  horizontal 

12 

13 
14 

Case NN70/2007. The amount of aid is based on the rescue aid awarded to Northern Rock and has been 
estimated for Scoreboard purposes only. 
Case C9/2008. 
See footnote 12 

EN 

16 

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objectives of  common interest.  For the EU-27, the average share of  horizontal  objectives in 
total  aid  increased  from  67%  in  2002-2004  to  81%  over  the  period  2005-2007.  The 
corresponding  figure  in  the  mid-1990s  was  around  50%.  The  upward  trend  was  largely  the 
result of a significant increase in aid for environmental protection (+ 8 percentage points, € 3 
billion  in  absolute  terms),  particularly  in  Sweden  (+€ 1.4  billion)  and  Germany  (+  € 1.0 
billion).  The  increase  would  have  been  considerably  higher  had  it  not  been  for  a  sharp 
decrease  (-  € 2.5  billion  from  2006  to  2007)  in  German  environmental  aid  expenditure  (see 
section 4.2.4). The share of aid for R&D&I (+ 2.4 points) in total aid also rose significantly. 
See  Figure  3  together  with  section  4.2  which  also  includes  a  detailed  look  at  the  various 
objectives, sectors and instruments favoured by Member States. 

Figure 3: Share of horizontal aid in total aid, trend 2002-2007 

Luxembourg

Est onia

Czech Republic

Sweden

Belgium

Latvia

Greece

Finland

Netherlands

Denmark

Lithuania

France

Slovenia

Poland

EU 15

Italy

Germany

EU 27

Bulgaria

United Kingdom

Ireland

Aust ria

Slovakia

Spain

Cyprus

EU 12

Hungary

Romania

Port ugal

M alta

A vg 2002-2004

A vg 2005-2007

0

20

40

60

80

100

%

Note: Member States are ranked in descending order according to the percentage share of horizontal aid in total 
aid. Data refer to industry and services only. Source: DG Competition. 

EN 

17 

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2. 

PART TWO: SIMPLIFICATION OF THE STATE AID RULES 

2.1. 

The Commission's state aid control policy 

The  Commission  has  the  exclusive  competence  to  evaluate  the  compatibility  of  state  aid 
measures with the EC Treaty. Accordingly, Member States are obliged to notify all measures 
prior  to  their  implementation15  to  the  Commission,  unless  they  are  covered  by  a  block 
exemption Regulation or the "de minimis" Regulation16. In 2007, 778 cases were notified by 
Member  States:  53 %  concerned  the  industry  and  services  sectors,  33 %  agriculture,  8 % 
transport  and  6 %  fisheries.  Italy  submitted  the  largest  number  (117)  of  notifications 
accounting for 15 % of the total, followed by Germany 13 %, Spain 12 %, France 9 % and the 
United  Kingdom  for  6 %.  See  tables  on  website  for  number  of  notifications  by  sector,  year 
and Member State. 

Due to the recent enlargements in 2004 and 2007 and the introduction of a new programming 
period for EU structural funds in 2007, the number of annual notifications over the past few 
years does not provide a clear picture of the underlying trend. An expected drop in the future 
level of notifications is however 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 this respect, there was a remarkable rise in the number of block exempted measures in 2007 
(see sections 2.2 and 4.2.6) In addition to dealing with notified aid measures, the Commission 
also  takes  up  state  aid  cases  in  reaction  to  a  complaint17  or  ex  officio  (case  started  at  the 
Commission's  own  initiative).  In  2007,  78  such  "non-notified"  cases  were  initiated  by  the 
Commission. 

The  vast  majority  (92%)  of  all  state  aid  cases  are  approved  at  the  end  of  the  preliminary 
investigation procedure, which should be taken within two to four months after notification. 
Of  the  629  final  State  aid  decisions18
  taken  in  2007,  the  Commission  concluded  in  the 
preliminary  phase  that  87 %  of  all  measures  examined  were  compatible  with  the  State  aid 
rules  and  that  5 %  did  not  constitute  State  aid.  Where  the  Commission  has  doubts  whether 
certain aid measures comply with the rules, it carries out a formal investigation during which 
third  parties  and  all  Member  States  are  invited  to  provide  observations.  At  the  end  of  this 
investigation procedure, the Commission either takes a positive, conditional or no aid decision 
(an additional 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 thus takes a negative decision 
(5 % of all decisions made up of 3 % with recovery and 2 % without recovery).19 

15 

16 

17 

18 

19 

Article 88 EC Treaty; detailed provisions in Council Regulation No 659/1999 of 22 March 1999, OJ L 
83/1, 27.03.1999, p. 1-9. 
Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 
88 of the Treaty to de minimis aid, OJ L 379, 28.12.2006, p. 5. 
In  2007  there  were  just  under  250  registered  complaints,  some  of  which  led  (or  may  lead)  to  new 
registered state aid cases. 
Of  this  figure,  347  concerned  industry  and  services,  202  agriculture,  61  transport  and  19  fisheries. 
Included  are  the  following  types  of  decision:  decisions  do  not  constitute  aid,  decisions  not  to  raise 
objections,  positive  decisions,  conditional  decisions  and  negative  decisions.  Other  types  of  decision 
such  as  corrigenda  as well  as  measures  withdrawn by  Member  States  after  a  formal  investigation  are 
excluded. 
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. 

EN 

18 

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It  is  worth  noting  that  for  a  significant  number  of  state  aid  cases,  competition  concerns  are 
resolved  by  mutual  agreement  during  the  preliminary  investigation  procedure  so  that  the 
Commission can approve the project without an in-depth investigation. This is an important 
but often underestimated aspect of the Commission's state aid control. 

There are a number of other important Commission decisions regarding existing aids, such as 
those leading to a Member State withdrawing an unlimited guarantee, for which the state aid 
element  cannot  easily  be  quantified.  Although  the  number  of  such  measures  is  limited,  the 
distortion  of  competition  is  often  very  significant,  e.g.,  the  unlimited  State  guarantees 
previously  available  to  Electricité  de  France  (EDF)  and  to  the  German  Landesbanken.  The 
Commission  thus  requested  the  Member  States  to  withdraw  or  phase  out  such  distortive 
support.  

In  the  same  line,  the  Commission  requested  Hungary  and  Poland,  in  the  first  semester  of 
2008, to refrain from granting state aids under long term power purchase agreements (PPAs) 
for  electricity  because,  in  the  specific  circumstances  of  the  cases,  they  constituted  unlawful 
and incompatible state aid to the power generators. This is a crucial step in the liberalisation 
of the electricity market in these countries. 

2.2. 

A new architecture for State aid control 

The State Aid Action Plan (SAAP)20, adopted in June 2005, announced that the Commission 
would set out to tackle a series of acknowledged deficiencies in State aid policy, and thereby 
transform  State  aid  into  an  effective  policy  tool  for  growth  and  jobs.  The  plan  launched  a 
review of almost all the State aid rules and procedures. 

There are 4 guiding principles underpinning the reform programme:  

–  less and better targeted State aid; 

–  a refined economic approach; 

–  more  effective  procedures,  better  enforcement,  higher  predictability  and  enhanced 

transparency; 

–  a shared responsibility between the Commission and Member States. 

In order to make procedures and decision-making faster and more efficient, the Commission 
has made substantial changes to the architecture of its State aid control. This is achieved by 
subjecting  the  various  aid  measures  to  a  level  of  control  which  reflects  their  respective 
potential  effect  on  competition  and  trade.  The  new  architecture  is  based  on  a  "3–stream 
system": block exemption, standard assessment and detailed assessment. 

An  increasing  number  of  aid  measures  are  exempted  from  ex  ante  Commission  scrutiny, 
either  by  the  de  minimis  regulation21  or  by  the  new  General  Block  Exemption  Regulation 
(GBER)  22  (see  new  legislation  in  Part  Six).  The  rationale  behind  this  change  is  that  such 

20 
21 

22 

COM(2005) 107 final, 7.6.2005. 
Commission Regulation (EC) No 1998/2006 of 15 December 2006 on the application of Articles 87 and 
88 of the Treaty to de minimis aid, OJ L 379, 28.12.2006, p. 5. 
Commission Regulation (EC) No 800/2008 of 6 August 2008 on the application of Articles 87 and 88 
of  the  Treaty  declaring  certain  categories  of  aid  compatible  with  the  common  market,  OJ  L  214, 
9.8.2008, p. 3. 

EN 

19 

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measures are unlikely to have a significant impact on competition at the Community level and 
may  thus  be  granted  without  prior  notification  to  the  Commission  provided  they  fulfil  the 
criteria  of  the  respective  legal  instruments.  For  State  aid  measures  that  remain  subject  to 
Commission  scrutiny  prior  to  their  implementation,  Member  States  can  notify  aid  schemes. 
After a scheme has been approved, a Member State may generally grant individual awards of 
aid  without  further  notice  to  the  Commission.  Only  large  individual  applications  of  aid 
schemes exceeding certain thresholds and individual aid (also known as 'ad hoc' aid) awarded 
outside a scheme need to be notified individually. The majority of these cases are subject to a 
standard assessment rather than a detailed economic assessment. 

The  new  architecture  can  be  illustrated  by  the example  of  aid  for  environmental  protection. 
The  new  GBER  exempts  environmental  aids  in  several  ways  from  the  notification 
requirement and, thus, from approval procedure.23 Those environmental aids that are notified 
are governed by the environmental aid guidelines adopted in January 200824 which foresee a 
standard  assessment  (paragraph  38  and  Chapter  3)  and  a  detailed  assessment  (paragraph  39 
and Chapter 5). Section 4.2.2 of this Scoreboard also provides further information of detailed 
assessments carried out in the area of R&D&I aid. 

Figures 4a and 4b: Trend in the type of aid measure used (numbers and expenditure) 

Number of measures by type

1200

1000

800

600

400

200

0

2002

2003

2004

2005

2006

2007

Notifiable individual aid

Schemes

Block exempted aid

Aid volumes by type

70

60

50

40

30

20

10

0

 €

n
o

i
l
l
i

b

2002

2003

2004

2005

2006

2007

Notifiable individual aid

Schemes without individually notified applications

Block exempted aid

Source: DG Competition. Data refer to industry and services only. Note: The "number of measures" is based on 
the number of decisions taken by the Commission in a given year except for the case of block exempted aid for 
which  the  number  corresponds  to  the  measures  reported  by  Member  State.  Due  to  differences  in  the 
nomenclature  of  aid  measures,  data  for  EU-12  are  not  included  prior  to  accession.  This  does  not  have  a 
significant impact on the graph. 

23 
24 

cf. Section 4, Articles 17-25. 
Community  Guidelines  for  State  aid  for  environmental  protection,  OJ  C  82,  1.4.2008,  p.  1;  cf. 
paragraph 14. 

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20 

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Figure 4a shows the trend in the number of aid measures by type (individual aid, aid schemes 
or  block  exempted  aid)  while  Figure  4b  provides  the  same  overview  in  terms  of  aid 
expenditure. A comparison of the two graphs shows, for example, that while the number of 
notified aid schemes accounted for just under 25% of all aid measures in 2007, aid awarded 
under such schemes accounted for almost 80% of total aid expenditure. 

The  data  also  show  that  the  number  of  aid  measures  that  are  subject  to  an  individual 
assessment  procedure  is  relatively  small,  accounting  for  10%  of  all  State  aid  measures  in 
2007. This share is rather stable over time with a peak, in terms of aid volume, in 2002, due 
largely to the rescue aid in favour of the Berliner Bankgesellschaft in Germany. The current 
banking crisis is likely to lead to an increase in the share of individual aid in 2008. 

Changes  to  the  state  aid  architecture  have  already  begun  to  have  an  impact  with  a  sharp 
increase observed in 2007 in the share of block exempted aid measures (65% of all measures 
in 2007 compared with 40% in 2002). Although this is not yet reflected to the same extent in 
terms of expenditure, 2007 saw a significant rise in the share of BER expenditure in total aid 
(from 6% in 2006 to 13% in 2007). 

As already pointed out in previous issues of the Scoreboard, the reasons for this increase of 
block  exempted  measures  in  2007  are  threefold.25  First,  a  new  EU  structural  funds 
programming  period began  in 2007 (valid until 2013)  and triggered a significant number of 
new  state  aid  block  exemption  measures,  as  many  state  aid  measures  are  co-financed  by 
structural funds. Second, there is a sharp increase in the number of measures exempted in the 
agricultural sector. Third, the Commission observed a high take-up rate for the new possibility 
to  block  exempt  regional  investment  aid.  While  the  first  explanation  is  of  only  temporary 
nature, the remaining two indicate a permanent shift in the direction of block exempted aids. 

By applying a level of assessment proportionate to the potential impact of the aid measure, the 
new State aid architecture assures a strict but practical form of State aid control in an EU of 
27, where it is impossible to assess every notification of national aid measures. Furthermore, 
the  new  architecture  facilitates  and  accelerates  the  implementation  of  compatible  aid 
considerably and, thus, provides an incentive for Member States to introduce better targeted 
aid  measures  that  contribute  to  growth  and  employment,  notably  R&D&I  and  risk  capital. 
Last  but  not  least,  the  new  architecture  frees  Commission  resources  to  examine  the  most 
potentially distortive cases more thoroughly. 

2.3. 

Revised set of State aid rules 

Since  2005,  the  Commission  has  worked  in  close  cooperation  with  the  Member  States  to 
deliver  these  reforms.  As  outlined  in  the  SAAP  roadmap26,  the  Commission  has  revised  a 
large number of its guidelines, frameworks and communications. This includes the Decision 
and  guidelines  on  Services  of  General  Economic  Interest,  a  revised  set  of  Regional  Aid 
Guidelines, a new framework on Research, Development and Innovation, revised Community 

25 

26 

EN 

See point 3.1 of the State aid Scoreboard Autumn 2007 Update, COM(2007) 791 final, available online 
at: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52007DC0791:EN:NOT. 
http://eur-
107 
State  Aid  Action 
lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:52005DC0107:EN:NOT,  Figure  1:  Roadmap 
2005-2009 (indicative). 

Plan,  COM(2005) 

available 

online 

final, 

at: 

21 

   EN 

                                                 
guidelines  on  state  aid  for  environmental  protection  and  a  new  General  Block  Exemption 
Regulation. See Table 2 in Annex. 

EN 

22 

   EN 

3. 

PART THREE: ENFORCEMENT OF STATE AID RULES 

3.1. 

Unlawful aid  

Article 88(3) of the EC Treaty obliges Member States to not only notify state aid measures to 
the  Commission  before  their  implementation  but  also  to  await  the  outcome  of  the 
Commission's  investigation  before  implementing  notified  measures.  When  either  of  these 
obligations is not respected, the state aid measure is considered to be unlawful. 

In  the  7-year  period  2000-2006,  the  Commission  took  608  decisions  on  unlawful  aid.  In 
addition, there are around 200 pending unlawful aid cases which are still under Commission 
scrutiny. 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).  

In  the  period  under  review,  the  Commission  'intervened'  in  25.6%  of  unlawful  aid  cases  by 
taking  a  negative  decision  on  an  incompatible  aid  measure  (24.0%)  or  taking  a  conditional 
decision  (1.6%).  The  need  for  the  Commission  to  intervene  in  the  granting  of  aid  with  a 
negative or conditional decision for at least a part of the aid unlawfully implemented by the 
Member  State  concerned  is  around  ten  times  higher  than  that  for  notified  aid  decisions 
(2.7%).  The  share  of  unlawful  cases  (25.6%)  in  which  the  Commission  needs  to  intervene 
varies  considerably  according  to  sector:  37%  of  all  unlawful  aid  cases  in  the  industry  and 
services sectors, followed by transport and coal (17% of all unlawful aid cases in this sector), 
agriculture (9%) and fisheries (5%). 

See special focus on this topic in the spring 2007 Scoreboard.27  

3.2. 

Enforcement of State aid Law: Cooperation with national courts 

The  Commission  considers  that  State  aid  enforcement  by  national  courts  can  play  an 
important role in the overall system of State aid control. National courts are often well placed 
to protect individual rights affected by violations of the State aid rules and can offer quick and 
effective remedies to third parties. 

The  2006  study  on  State  aid  enforcement  by  national  courts28  found  that,  whilst  there  had 
been  a  significant  increase  in  the  involvement  of  national  courts  in  State  aid  law  generally, 
only a limited number of legal actions were specifically aimed at enforcing compliance with 
the State aid rules. 

The Commission therefore sees a need to give clear guidance to national courts and potential 
claimants on the different issues that can arise in the context of State aid litigation at national 
level.  This  guidance  will  be  based  on  the  jurisprudence  of  the  Community  courts  and  will 
cover issues such as the remedies available to third parties, procedural matters (such as legal 

27 
28 

EN 

COM(2007) 347 final, 28.6.2007. 
Study 
of  State 
enforcement 
the 
http://ec.europa.eu/comm/competition/state_aid/studies_reports/studies_reports.cfm.  

national 

law 

aid 

on 

at 

level, 

23 

available 

at 

   EN 

                                                 
standing), the circumstances in which a national court should issue interim measures and the 
conditions for claiming damages in the event of a breach of the State aid rules. 

In  addition,  the  Commission  wishes  to  intensify  its  co-operation  with  national  courts  in 
individual cases. It hopes to achieve this aim by providing practical and straight forward co-
operation  mechanisms  to  national  judges  along  the  lines  of  those  already  existing  in  the 
antitrust area.29 

To reach the above aims, the Commission is currently in the process of preparing a new notice 
on  State  aid  enforcement  by  national  courts.  This  new  notice  will  replace  the  existing  1995 
cooperation  notice30,  while  aligning  its  scope  as  far  as  possible  with  the  applicable  rules  in 
antitrust. The Commission has recently published a first draft for consultation and expects to 
issue the final notice in early 2009. 

3.3. 

Recovery of unlawful 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. 

The  latest  figures  indicate  that  significant  progress  has  been  made  in  the  execution  of 
recovery  decisions  since  the  SAAP  in  2005.  By  the  end  of  June  2008,  there  were  only  47 
pending  recovery  decisions  compared  with  93  at  the  end  of  2004.  This  improvement  in  the 
Commission's  enforcement  record  of  its  decisions  should  contribute  to  a  higher  state  aid 
discipline by Member States. 

In  the  first  half  of  2008,  ten  pending  recovery  cases  were  closed,  whilst  seven  recovery 
decisions  were  taken  and  three  cases  were  re-opened.  As  of  30  June  2008,  Spain  had  the 
highest  number  of  pending  cases (14  which  represents  30  %  of  the  EU  total)  although  nine 
cases  refer  to  Basque  fiscal  schemes  for  which  the  Commission  has  initiated  infringement 
proceedings against Spain for failure to implement the Decisions and the ECJ judgment. Italy 
had 12 pending cases followed by Germany (7) and France (4). During the first half of 2008, 
the  Commission  adopted  for  the  first  time  recovery  decisions  against  Austria,  Hungary  and 
Romania.  It  is  also  worth  noting  that  there  were  no  pending  cases  in  14  of  the  27  Member 
States. 

Table 3 in Annex provides data on the amounts of aid to be recovered under the 126 recovery 
decisions  adopted  since  2000.  For  118  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 30 June 2008 is at 
least € 9 billion. 

29 

30 

Commission  Notice  on  the  cooperation  between  the  Commission  and  the  courts  of  the  EU  Member 
States in the application of Articles 81 and 82 EC (OJ C 101, 27.4.2004, p. 54).  
Commission Notice on cooperation between national courts and the Commission in the State aid field 
(OJ C 312, 23.11.1995, p. 8).  

EN 

24 

   EN 

                                                 
The recovery process 

Article 14(1) of the Procedural Regulation31 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".32  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 they enjoyed over their competitors in the market, and the situation as it existed prior 
to  the  granting  of  the  aid  is  restored".33  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.34 

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 
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. 

Of the € 9 billion aid to be recovered under de cisions adopted since 2000, some € 7.1 billion 
of illegal and incompatible aid had been effectively recovered by the end of June 2008 as well 
as  € 2.4 billion  of  interest.  In  addition  to 
the  amounts  effectively  recovered,  a  further 
€ 1.26 billion of unlawful and incompatible aid was “lost” in bankruptcy proceedings. 35 This 
means  that  92%  of  the  total  amount  of  illegal  and  incompatible  aid  has  effectively  been 
recovered (Figure 5). The percentage of illegal and incompatible aid still to be recovered has 
fallen accordingly from 75% at the end of 2004 to 8% at the end of first half of 2008. 

In addition, the Commission has taken 12 recovery decisions in the area of agriculture since 
1999, of which 9 are pending. Around €  1 billion of aid is yet to be recovered. In the area of 
fisheries, there were 2 recovery decisions involving France in 2004 (amounts unknown) and 3 
recovery decisions involving the United Kingdom in 2007. The total amount was less than € 1 
million  of  which  a  significant  part  qualified  as  de  minimis  aid  and  thus  did  not  need  to  be 
recovered. 

31 
32 

33 
34 
35 

Council Regulation No 659/1999 of 22 March 1999, OJ L 83/1, 27.3.1999, p. 1-9. 
When  state  aid  is  granted  without  respecting  Article  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. 
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 

25 

   EN 

                                                 
Figure 5: Recovery of illegal and incompatible aid – state of play 30 June 2008 

Amount 
outstanding to 
be recovered
8%

Aid lost in 
bankruptcy
14%

Principal 
reimbursed
78%

Notes:  This  covers  all  recovery  decisions  taken  between  1  January  2000  and  30  June  2008  for  which  the  aid 
amount is known. The amount recovered excludes interest. The data cover industry and services only. Source: 
DG Competition. 

Recovery  of  illegal  incompatible  State  aid  is  still  a  lengthy  process:  Of  the  47  pending 
recovery cases, 24 were adopted more than four years ago, and six more than eight years ago. 
Significant efforts have and are being made to implement the oldest recovery decisions. 

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. A complete list of these cases is available on the DG Competition website. 

3.4. 

Ex-post monitoring 

In order to ensure the continued proper enforcement of the State aid architecture, in which an 
increasing  number  of  aid  measures  are  no  longer  subject  to  the  notification  obligation,  the 

EN 

26 

   EN 

 
Commission  has  been  stepping  up,  as  announced  in  the  SAAP36,  its  ex  post  monitoring  of 
such measures.  

This development should be seen, more generally, in the light of the fact that Member States 
are  increasingly  implementing  horizontal  policy  goals  by  means  of  –  previously  approved  - 
aid schemes and by means of measures implemented under the block exemption regulations 
(BER - see sections 2.2 and 4.2.6). This trend is expected to continue after the recent entry 
into force of the general block exemption regulation (see part 6). 

In  the  light  of  the  above,  DG  Competition  has  started,  in  2006,  a  sample-based  monitoring 
exercise covering both approved aid schemes and measures adopted under BERs. On the basis 
of the experience gathered in this first pilot project, similar exercises have been launched in 
2007 and, most recently in 2008. 

With these three combined exercises, DG Competition has covered an important part of the 
different  main  substantive  types of aid: specific aid measures implemented most notably on 
the  basis  of  the  SME  BER,  training  BER,  employment  BER,  regional  BER,  the  R&D&I 
Framework,  the  environmental  guidelines  and  the  rescue  and  restructuring  guidelines  have 
been monitored in this manner. This monitoring took place both at the level of the scheme and 
at  the  level  of  important  individual  decisions  implementing  such  schemes.  DG  Competition 
has  now  also  addressed  aid  measures  adopted  by  all  of  the  27  Member  States  of  the 
Community, thereby ensuring a balanced geographical coverage. 

The analysis of the results of the first two exercises shows that, overall, the part of the existing 
state aid architecture allowing for the approval of aid schemes and allowing Member States to 
implement aid measures under BERs functions in a satisfactory manner. In a minority of cases 
substantive problems or procedural issues (such as transparency, reporting, speed and quality 
of answers) were identified. The cases in which no appropriate solution was yet identified are 
currently still being investigated. Finally, it has to be noted all Member States are cooperating 
with the Commission, albeit many submitted the information which had been requested from 
them with considerable delay. 

36 

See in particular points 52 to 54 of the SAAP.  

EN 

27 

   EN 

                                                 
4. 

PART FOUR: TRENDS AND PATTERNS OF STATE AID EXPENDITURE IN THE MEMBER 
STATES 

4.1. 

State aid in absolute and relative terms 

Total  State  aid37  granted  by  the  Member  States  stood  at  € 65  billion  in  2007.  In  absolute 
terms, Germany granted the most aid (€ 16.2 bi llion) followed by France (€ 9.8 billion), the 
United Kingdom (€ 6.2 billion), Spain (€ 

5.4 billion), and Italy (€ 5.1 billion). 

In sectoral terms, around € 45 bi llion of aid was earmarked for the manufacturing and services 
sectors, € 13.2 billion for agriculture and fish eries, € 3.4 billion for coal, € 2.4 billion for the 
transport  (excluding  railways)  sector  and  € 1.0  billion  fo r  the  other  non  manufacturing 
sectors38 (Figure 6). There are significant differences between Member States in the sectors to 
which  they  direct  aid.  In  2007,  aid  directed  at  the  manufacturing  and  service  sectors 
represented  80%  or  more  of  total  aid  in  Belgium,  Czech  Republic,  Denmark,  Portugal, 
Slovakia and Sweden. Aid to the agricultural and fisheries sectors accounted for, on average, 
40%  of  total  aid  in  the  EU-1239  Member  States,  more  than  twice  the  share  of  the  EU-15 
average.  The  share  of  aid  to  the  coal  industry  was  relatively  high  in  Spain  (15%)  and 
Germany (14%). 

Figure 6: Total State aid by sector, EU-27, 2007 

Transport 
excluding 
railw ays
4%

Coal
5%

Other non-
manufacturing
1%

Agriculture and 
Fisheries
20%

Manufacturing 
and services
70%

37 

38 

39 

The  total  covers  aid  to  manufacturing,  services,  coal,  agriculture,  fisheries  and  part  of  the  transport 
sector  but  excludes  aid  to  the  railway  sector,  aid  for  compensation  for  services  of  general  economic 
interest due to the lack of comparable data. 
Other non manufacturing sectors includes aid for mining and quarrying, oil and gas extraction, aid for 
electricity, gas and water supply and aid for construction. 
The ten Member States that joined the EU in 2004 plus Bulgaria and Romania. 

EN 

28 

   EN 

 
                                                 
Note: Data cover all State aid measures as defined under Article 87(1) of the EC Treaty that have been awarded 
by  Member  States  and  examined  by  the  Commission.  Included  are  all  sectors  except  railways.  Source:  DG 
Competition, DG Energy and Transport, DG Agriculture and DG Maritime Affairs and Fisheries. 

State aid measured as a percentage of GDP 

In relative terms, State aid amounted to below 0.53% of EU GDP in 2007. This average hides 
significant  disparities  between  Member  States:  the  share  of  total  aid  to  GDP  ranges  from 
around 0.4% or less in nine countries including Italy and the United Kingdom to 1% or more 
in five EU-12 countries together with Finland. For Bulgaria, Latvia, Romania and Finland, the 
high  proportion  can  be  explained  by  the  relatively  large  amounts  of  agricultural  aid  which 
represent  between  70%  and  90%  of  aid  in  these  countries.  In  Hungary  and  Malta,  it  is  due 
largely to pre-accession measures which are being phased out under transitional arrangements 
or limited in time. Sweden (0.9% of GDP) also lies well above the EU average but this can be 
attributed to the large proportion of aid for environmental protection which represents around 
80% of total Swedish aid (Figure 7). 

Figure 7: Total State aid as a percentage of GDP, 2007 

Luxembo urg

Esto nia

United Kingdo m

Greece

B elgium

Italy

A ustria

Cyprus

Netherlands

Slo vakia

EU 15

Spain

France

EU 27

Slo venia

Ireland

P o land

Denmark

Lithuania

Germany

Czech Republic

M alta

EU 12

Sweden

Latvia

Finland

Ro mania

P o rtugal

B ulgaria

Hungary

0

0,2

0,4

0,6

0,8

1

1,2

1,4

1,6

% of GDP

Industry and services as % o f GDP

A griculture, fisheries and transpo rt as % o f GDP

Note:  Member  States  are  ranked  in  ascending  order  according  to  the  total  amount  of  aid  expressed  as  a 
percentage of GDP. Data cover all State aid measures as defined under Article 87(1) of the EC Treaty that have 
been  awarded  by  Member  States  and  examined  by  the  Commission.  Included  are  all  sectors  except  railways. 
Source: DG Competition, DG Energy and Transport, DG Agriculture and DG Maritime Affairs and Fisheries. 

EN 

29 

   EN 

 
Indeed,  due  to  the  particularities  associated  with  aid  to  agriculture  and  fisheries,  it  is  worth 
looking  at  total  aid  less  these  sectors  (i.e.  total  aid  to  industry  and  services).  This  second 
indicator  produces  a  rather  different  ranking  of  Member  States.  For  example,  Bulgaria 
(0.09%), Romania (0.24%) and Finland (0.35%) lie below the EU average (0.40%) of aid for 
industry and services as a percentage of GDP. 

The  underlying  trend  in  the  volume  of  State  aid  for  industry  and  services  continues  to  be 
downward or stable in the majority of Member States. See Part One.  

4.2. 

State aid for horizontal objectives of common interest 

State  aid  for  horizontal  objectives,  i.e.  aid  that  is  not  granted  to  specific  sectors,  is  usually 
considered  as  being  better  suited  to  address  market  failures  and  thus  less  distortive  than 
sectoral  and  ad  hoc  aid.  R&D&I,  safeguarding  the  environment,  energy  saving,  support  to 
SMEs,  employment  creation,  the  promotion  of  training  and  aid  for  regional  economic 
development are the most prominent horizontal objectives pursued with State aid. Due to data 
constraints,40 this section looks at horizontal objectives in the context of total aid for industry 
and services. 

In  22  Member  States,  at  least  three-quarters  of  all  the  aid  awarded  in  2007  was  for 
horizontal objectives of common interest 

On  average,  aid  earmarked  for  horizontal  objectives,  accounted  for  80%  of  total  aid  for 
industry and services in 2007. This compares with 74% in 2004 and around 50% in the mid 
Nineties. In welcoming this trend, one should be aware that much of the increase in horizontal 
aid can be attributed to an increase in tax exemptions for the environment and energy saving, 
in particular for energy intensive industries.  

The remaining 20% was aid directed at specific sectors41: financial services (9%), coal (7%), 
manufacturing  and  other  services  (3%),  and  other  non-manufacturing  sectors  (1%).  In 
interpreting these figures, however, it is important to bear in mind that some aid measures can 
not  be  quantified  (see  section  2.1).  Another  factor  that  keeps  the  volume  of  sectoral  and 
individual  aid  artificially  low  is  that  Commission  decisions  which  follow  an  unlawful  aid 
procedure42 tend to refer to aid that was granted up to several years previously and involve ad 
hoc  awards  of  aid  to  individual  companies.  Although  the  data  for  all  years  are  adjusted 
retrospectively when the Commission takes its decision, the overall level is underestimated. 

In 17 Member States, around 90% or more of all the aid awarded in 2007 was earmarked for 
horizontal  objectives  (Figure  3).  In  another  group  of  five  Member  States  (Germany,  Spain, 
Ireland, Slovakia, Slovenia), the share of horizontal aid was between 70% and 85% while in 
the  remaining  five  others  the  share  was  significantly  lower:  the  United  Kingdom  (62%), 
Hungary  (53%),  Romania  (36%),  Portugal  (10%),  Malta  (4%).  The  low  share  of  horizontal 
aid (and thus relatively high share of sectoral aid) in Malta can be explained by a tax relief 

40 

41 

42 

Transport  and  Fisheries  aggregated  data  cannot  be  broken  down  by  objective.  Agriculture  data  have 
been  collected  by  objective  since  2004.  This  information  cannot  yet  be  used.  In  addition,  primary 
objectives  for  agriculture  are  specific  to  this  sector  and  could  not  be  integrated  into  this  general 
overview. 
These percentages exclude those measures with a horizontal objective that are nevertheless earmarked 
for the manufacturing and services sectors. 
Such cases are denoted by a ‘NN’ case number. 

EN 

30 

   EN 

                                                 
measure under the Business Promotion Act,43 while in Portugal it is due to a large regional aid 
tax  scheme  (being  phased  out)  in  Madeira  which  in  practice  benefits  a  limited  number  of 
sectors.  In  Romania,  a  significant  proportion  of  aid  continues  to  be  awarded  to  the 
manufacturing  sector  as  well  as  to  the  mining  industry  while  Hungary  continues  to  grant  a 
large proportion of aid through an Investment tax benefit scheme. The United Kingdom has 
consistently had a share of horizontal aid around 90% but this fell in 2007 due to the rescue 
aid package for Northern Rock. 

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

When making comparisons between Member States, it is important to bear in mind that aid 
measures are classified according to their primary objective at the time the aid was approved 
and  not  according  to  the  final  recipients  of  the  aid.  Notwithstanding  the  measurement 
difficulties, the data do give an indication as to which horizontal objectives are favoured by 
Member States. The largest proportion of aid was directed exclusively to the environment and 
energy  saving  objectives  (25%  of  the  total  State  aid  for  industry  and  services),  which  were 
extensively supported by the Nordic countries (85% of total aid in Sweden, 41% in Finland, 
32%  in  Denmark),  the  Netherlands  (58%),  Austria  (49%),  Germany  (41%)  and  the  United 
Kingdom (26%) . In contrast, the average for the EU-12 countries was 2%. 

The second most favoured horizontal objective was regional development (20% of total aid), 
which  was  mainly  supported  by  EU-12  and  southern  Member  States  (86%  of  total  aid  in 
Greece, 60% in Bulgaria, 58% in Latvia, 52% in Slovakia, 41% in Spain, 39% in the Czech 
Republic and 36% in France). An additional 15% of aid went to R&D&I activities, which was 
favoured  most  by  Luxembourg  (38%),  Bulgaria  (30%),  Belgium  (29%),  France  (29%), 
Finland (26%), Estonia (25%), Austria (25%) and the Czech Republic 24%). 

Other  objectives  were  supported  to  a  lesser  extent:  SMEs  (9%  of  total  aid),44  employment 
(5%),  culture  and  heritage  conservation  (3%),  risk  capital  (1%),  training  (1%)  and  other 
such  as  commerce  and 
horizontal  objectives 
internationalisation and natural disasters. 

include  objectives 

(1%)  which 

The relative share of objectives is considerably different in the EU-12 countries where aid to 
the  environment  and  energy  saving  represents  a  mere  2%  of  total  aid.  The  most  favoured 
objective  is  aid  for  regional  development  (28%  of  total  aid  for  industry  and  services), 
followed  by  employment  aid  (18%),  SMEs  (11%)  and  R&D&I  (8%).  The  relatively  high 
share  of  employment  aid  in  EU-12  is  due  mainly  to  a  Polish  block  exempted  scheme  for 
disabled people.45 

43 
44 

45 

Case MT/6/2002. Accession Treaty 2003, OJ L 236 of 23.9.2003, p. 797, OJ C 227 E, 23.9.2003, p. 2. 
This  figure  only  captures  aid  exclusively  earmarked  for  SMEs  for  which  there  was  no  other  primary 
objective.  For  example,  risk  capital  aid  which  accounts  for  1.0  %  of  total  aid  (included  in  "other 
horizontal objectives") is also exclusively directed to SMEs. Indeed total aid granted to SMEs is much 
higher  since  most  schemes  for  other  horizontal  objectives  such  as  environment  and  energy  saving, 
regional development, research and development are open to companies regardless of their size. 
XE 11/2004.  

EN 

31 

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4.2.1.  Trend in State aid for horizontal objectives and sectoral objectives 

As  outlined  in  Part  One,  Member  States  have  continued  to  redirect  aid  towards  such 
horizontal  objectives.  The  upward  trend  was  almost  exclusively  the  result  of  a  significant 
increase  in  aid  for  environmental  and  energy  saving  objectives  coupled  with  a  decrease  in 
sectoral  aid  (Figures  8  and  9).  This  decrease  was  particularly  significant  in  the  Czech 
Republic, where € 2 billion restructuring aid was  awarded to the banking sector in 2003 and in 
Germany (BGB in 2001 and 2002). 

Figure 8: Trend in level of aid by primary objective, EU-27, 2002-2007 

P
D
G

f
o
%

0,60

0,50

0,40

0,30

0,20

0,10

0,00

Rescue and restructuring (other
sectors)

Rescue and restructuring for
financial services

Other sectoral

Coal

Other horizontal

Employment and training

SMEs including risk capital

Regional development

R&D

Environmental protection & energy
saving

2002

2003

2004

2005

2006

2007

Note: Data cover industry and services only. Source: DG Competition. 

The clear positive trend was observed, to varying degrees, in the majority of Member States. 
All EU-12 Member States are progressively redirecting aid towards horizontal objectives: the 
average  share  of  horizontal  objectives  in  total  aid  increased  from  30%  to  67%  between  the 
two periods 2002-2004 and 2005-2007. The share of horizontal aid increased in particular in 
the  Czech  Republic  (+84  points),  Lithuania  (+  74  points),  Poland  (+63  points)  and  Cyprus 
(+38  points).  The  remarkable  increase  in  these  countries  can  mainly  be  explained  by  an 
increase in regional aid (Czech Republic, Lithuania, Poland), employment aid (Poland), aid to 
SMEs (Lithuania) and aid for R&D&I (Czech Republic). In Cyprus the explanation lies in the 
expiry of an important tax exemption scheme for sectoral development,46 accounting for half 
of total aid in Cyprus, coupled with a significant increase in cultural aid (+24 points). The two 
EU-15  Member  States  with  significant  increases  in  the  share  of  horizontal  aid  were  Ireland 
(+18 points) and Germany (+16 points). Ireland spent more on aid to SMEs (+12 points) and 
on aid for culture (+ 6 points), while the increase in Germany can be largely explained by a 

46 

Special tax regime under the International Business Enterprises Act.  

EN 

32 

   EN 

 
 
 
 
                                                 
shift towards aid for environmental protection (+13 points). Lithuania (+22 points), Belgium 
(+17 points) and the Netherlands (+12 points) also increased their share of environmental aid. 

Figure 9: Trend in share of primary objectives as % of total aid (2005-2007 compared 
with 2002-2004) 

Research &
Development

Regional
development 

SME

40

30

20

10

0

Training

Employment 

Environment/
energy saving

Other horizontal
objectives

Total
sectoral aid (including rescue and
restructuring aid)

Aid objectives
EU 27, 2002-2004
Aid objectives
EU 27, 2005-2007

Source: Data cover industry and services only. DG Competition. 

In contrast, the share of horizontal aid in total aid decreased in Austria (-21 points) because of 
the large amount of restructuring aid awarded to BAWAG47 in 2006. In Italy the share fell by 
12 points due to a large case involving aid to cover stranded costs in the energy sector.48 The 
United  Kingdom  also  experienced  a  12  point  decrease,  due  to  the  rescue  aid  for  Northern 
Rock.49 

47 
48 
49 

Case C 50/2006 (NN 68/2006) Restructuring aid to BAWAG (decision 27.6.2007). 
Case N 490/2000. 
See footnote 12 

EN 

33 

   EN 

 
                                                 
4.2.2. 

State aid for research and development and innovation (R&D&I) 

Overall R&D spending 

Investment  in  research  and  development  (R&D)  is  a  crucial  factor  to  strengthen  the 
competitiveness  of  the  EU  economy  and  to  ensure  sustainable  growth.  The  Barcelona 
European Council in 2002 recognised this by setting the objective for expenditure on R&D to 
3% of GDP by 2010. Two thirds of this expenditure should be funded by the private sector 
and the other third by public funding. Figures for 2007 show that investment in R&D is not 
sufficient to meet the Barcelona objectives: for the EU as a whole, overall R&D investment 
stood at 1.84% of GDP, with public R&D funding amounting to 0.63 % of GDP. Sweden and 
Finland are the only Member States to reach the 3% level with 3.73% and 3.37% respectively. 
Public R&D funding is highest in Denmark, Germany, France, Austria, Finland and Sweden, 
with  all  six  Member  States  above  the  EU  average.  Drawing  conclusions  from  the  so  far 
sluggish development of R&D investment, it is clear that with growth remaining at the current 
level, the European economy will not achieve the Barcelona targets by 2010. Rather, growth 
needs to be accelerated and new impetus given to investment in R&D. 

State aid for research, development and innovation (R&D&I) 

National  governments  have  a  range  of  measures  to  choose  from  to  fund  and  consequently 
trigger  R&D&I,  the  exact  range  and  balance  of  which  depend  on  the  national  context  and 
form  the  policy  mix.  These  public  measures  might  contain  State  aid  that  could  distort 
competition by favouring some enterprises over others. On the other hand, State aid may in 
certain circumstances be the best available option to provide incentives for additional private 
R&D&I investment. The Commission thus tries to strike a balance through the application of 
the framework on R&D&I aid thereby ensuring that R&D&I is furthered to the largest extent 
while minimising distortions of competition. 

EU-wide, state aid expenditure on R&D&I amounted to € 7.2 billion in 2007. This represents 
a  relatively  small  share  in  public  R&D  funding  although  there  are  significant  differences 
between Member States (Figure 10): while State aid to R&D&I represented 0.06% of GDP in 
2007,  overall  public  funding  for  R&D  in  2006  was  0.63%  of  GDP.  In  2007,  five  Member 
States awarded above average levels of R&D&I aid: Czech Republic (0.14% of GDP), France 
(0.11%), Germany (0.09%), Finland (0.09%) and Austria (0.08%). For the Union as a whole, 
the  level  of  R&D&I  aid  remained  rather  stable  between  2001  and  2005  but  rose  slightly  in 
2006 and 2007. 

The  new  Community  Framework  for  State  aid  for  R&D&I50,  which  entered  into  force  on  1 
January 2007, follows the logic of the SAAP by, on the one hand, allowing for new types of 
aid  for  innovation  purposes  whilst,  on  the  other  hand,  introducing  a  more  refined  economic 
approach for large sums of aid. Member States had to adapt their existing aid schemes by the 
end of 2007 in order to make them compatible with the new framework. The framework pays 
great attention to the needs of SMEs, which are most affected by market failures. But it also 
offers  many  possibilities  for  large  enterprises  to  receive  support,  when  duly  needed  and 
justified. 

50 

Community  Framework  for  State  aid  for  Research  and  Development  and  Innovation,  OJ  C  323  of 
30.12.2006, p. 1. 

EN 

34 

   EN 

                                                 
Figure 10: Public expenditure on R&D as % of GDP, 2007 

0,0

0,1

0,2

0,3

0,4

0,5

0,6

0,7

0,8

0,9

1,0

2.55

3.73

3.37

2.09

2.53 

2.43

1.84  

Austria

Sw eden

Finland

France

Germ any

Denm ark

EU 27

Netherlands

Czech Republic

United Kingdom

Italy

Slovenia

Estonia

Spain

Portugal

Belgium

Hungary

Lithuania

Latvia

Ireland

Poland

Bulgaria

Rom ania

Cyprus

Greece

Slovakia

Luxem bourg

Malta

0.54 

1.67

1.54

1.78

1.09

1.59

1.14 

1.20

0.83 

1.83

1.00

0.80

0.70

1.35

0.56

0.48

0.45

0.42 

0.57

0.46 

1.47

R&D&I State aid Other public expenditure on R&D

Note: Figures on R&D public expenditure are not directly comparable with state aid expenditure data as i) the 
source  is  different  and  ii)  for  many  countries,  data  are  not  available  for  2007.  Nevertheless,  the  above  graph 
provides an indication as to the approximate share of state aid in total R&D public expenditure. Reading note: 
While  the  graph  itself  shows  public  expenditure  on  R&D,  the  figure  presented  next  to  each  horizontal  bar 
indicates total R&D expenditure (public and private) as a percentage of GDP. This shows progress towards the 
Barcelona target of 3% of GDP. Source: DG Competition and Eurostat. 

EN 

35 

   EN 

 
All  notifications  pending  on  1  January  2007  and  all  subsequent  notifications  have  been 
assessed  under  the  new  framework.  By  30  June  2008,  the  Commission  had  approved  110 
schemes and ad hoc cases in favour of R&D&I on the basis of the new Framework. Around 
20 of the schemes involved innovation aid, making use of the fresh possibilities provided by 
the new Framework. 

In addition, by 30 June 2008 the Commission had completed a more detailed assessment of 13 
large51  applications  of  approved  R&D&I  aid  schemes  and  adopted  final  decisions  on  each 
case; formal investigations on two other large individual aid cases are ongoing. This detailed 
assessment examines whether a market failure exists and whether the aid can be considered as 
an  appropriate  instrument  to  remedy  the  market  failure;  it  looks  at  whether  the  aid  has  an 
incentive  effect,  is  necessary  to  realise  the  aided  project  and  is  proportionate;  the  distortive 
effects  of  the  aid  and  its  expected  effects  on  trade  are  also scrutinized  and  the  positive  and 
negative  effects  are  then  balanced  against  the  Community  interest.  Such  an  assessment  is 
clearly more demanding, both for the Member State in question and for the Commission, than 
the more summary tests carried out under the previous framework.52 The experience so far has 
shown that the Commission can reach a decision on a notified aid measure within a similar 
timeframe to the previous framework. Almost  half  the notified  aid measures were  approved 
within  6  months.  About  30%  of  the  cases  needed  longer,  largely  due  to  the  need  for  the 
Commission  to  request  additional  information  that  had  not  been  provided  in  the  original 
notification.  In  this  context,  the  Commission  continues  to  work  closely  with  the  Member 
States to streamline and shorten the length of procedures. 

4.2.3. 

State aid for SMEs including risk capital 

The new GBER Regulation constitutes an important and effective complement to the Small 
Business Act53 adopted by the Commission in June 2008. It allows Member States to support 
SMEs  at  different  stages  of  their  development.  All  26  categories  of  aid  covered  in  the 
Regulation  can  be  provided  to  SMEs.  To  the  extent  such  aid  is  also  available  to  large 
companies, SMEs benefit from higher aid intensities. By way of example, the GBER includes 
a  series  of  innovation  measures  such  as  aid  for  young  innovative  enterprises,  aid  for 
innovation  advisory  services  as  well  as  aid  for  hiring  highly  qualified  personnel.  Such  aid 
should  allow  SMEs  to  become  more  competitive  in  the  context  of  heightened  international 
competition  and  to  grow  by  means  of  increased  emphasis  on  innovative  products  and 
processes. 

From the entry into force of the Community Guidelines on State aid to promote Risk Capital 
investments  in  SMEs54  and  up  to  30  June  2008,  the  Commission  approved  30  measures  in 
favour  of  risk  capital.  The  measures  consisted  of  funds,  schemes  or  tax  measures  to  bring 
equity to SMEs. Two thirds of the measures had a budget of less than € 50 million to be spent 
over  their  duration,  on  average  5-7  years.  Two  measures  had  a  budget  over  € 100  million. 

51 

52 
53 
54 

For  predominantly  fundamental  research  projects:  aid  to  an  undertaking  above  €  20  million,  for 
predominantly industrial research projects: aid to an undertaking above € 10 million, for predominantly 
experimental development projects: aid to an undertaking above € 7.5 million. 
Aid amounts over € 5 million fo r projects exceeding € 25 million. 
IP/08/1003. 
Community  guidelines  on  state  aid  to  promote  risk  capital  investments  in  small  and  medium-sized 
enterprises, OJ C 194 of 18.8.2006, pages 2-22. 

EN 

36 

   EN 

                                                 
Among  the  Member  States,  Germany  notified  10  measures,  followed  by  Italy  (4  measures) 
and the United Kingdom (3 measures). 

4.2.4. 

State aid for environmental protection 

The Commission's Climate Change/Energy Package of January 2008 implemented a series of 
targets for the year 202055: 20% CO2 emissions reduction, 20% share for renewable energy in 
EU  energy  consumption  and  20%  increase  in  energy  efficiency.  The  package  included  a 
policy  mix  of  regulatory  measures,  including  new  Community  Guidelines  on  State  aid  for 
Environmental Protection.56 These have since been complemented by the new GBER adopted 
in July 2008 which included specific provisions for environmental protection. 

During  the  seven  years  (2001-2007)  that  the  previous  environmental  aid  guidelines  were  in 
force,  the  Commission  took  around  350  decisions.  In  the  vast  majority  of  cases  (98%),  the 
Commission  approved  the  measures  without  a  formal  investigation,  concluding  that  the 
examined  aid  was  compatible  with  the  State  aid  rules.  Although  the  number  of  new 
environmental  aid  measures  remained  relatively  stable  for  the  majority  of  Member  States 
during this period, total expenditure for environmental purposes increased from € 7 billion in 
2001 to € 12 billion in 2007. In  relative terms, environmental aid amounted to 0.11 %.of EU-
27  GDP  in  the  period  2005  -  2007  compared  with  0.09 %  in  the  period  2002  –  2004.  This 
average hides significant disparities between Member States. The largest aid grantors in 2005 
- 2007 were Sweden (0.77 % of GDP) and Germany (0.30 %) followed by Denmark, Austria, 
the Netherlands and Finland each of which granted aid above the EU average. Environmental 
aid  expenditure  in  the  United  Kingdom  was  just  over  half  the  EU  average,  while  Belgium, 
Slovenia and Lithuania were slightly less then half. 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  the  largest  aid  grantors,  Germany  and  Sweden,  in  which  tax 
exemptions account for a large share 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 
rose steadily up to 2006 following  the  approval  in  2002  of  measures  that  prolonged  several 
tax  exemptions  from  the  German  energy  taxation  on  electricity  and  mineral  oils.  Following 
modifications to these tax exemptions, environmental aid expenditure fell by € 2.5 billion in 
2007 to stand at € 5.8 billion. 

Any  analysis  of  State  aid  expenditure  for  environmental  purposes  must  take  account  of  the 
fact that a large proportion of aid has, to date, comprised tax exemptions from environmental 
taxes57, 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. 
See special focus on aid for environmental protection in the spring 2008 Scoreboard.58  

55 
56 
57 

58 

Targets set by the March 2007 Council. 
OJ C 82 of 01.04.2008, p. 1. 
Expenditure  data  currently  available  for  this  category  of  aid  measures  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) fell under this 
category. 
COM(2008) 304 final, 21.05.2008. 

EN 

37 

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4.2.5. 

State aid supporting regional development and cohesion 

The  Commission  Guidelines  on  national  regional  aid  for  2007-2013  (RAG  2007)59  which 
codify and clarify the general approach regarding the compatibility of granting regional aid in 
the  EU  apply  to  all  regional  aid  after  31  December  2006.  The  Commission  encourages 
Member  States  to  grant  regional  aid  on  the  basis  of  pluri-sectoral  aid  schemes,  which  form 
part of a national regional policy. These schemes provide the general conditions under which 
a  Member  State  can  grant  regional  aid,  normally  without  the  need  to  notify  their  individual 
cases  of  application  to  the  Commission.  A  number  of  schemes  have  been  notified  and 
approved  by  the  Commission  under  the  RAG  2007.  The  Commission  also  adopted  a  BER 
RAG  which  has  been  superseded  by  the  GBER60  to  exempt  certain  regional  aid  measures 
from  the  notification  requirement.  Its  success  is  clear  with  around  300  measures  block 
exempted by mid-2008. Accordingly, most of the remaining notifications refer to schemes or 
cases that can not be block exempted such as operating aid schemes, schemes concerning the 
new category in the RAG 2007 of newly created small enterprises, ad hoc aid above certain 
thresholds and aid to large investment projects.  

The  RAG  2007  now  also  include  special  rules  for  regional  aid  to  large  investment  projects 
(LIP)  which,  before  31  December  2006,  were  set  out  in  the  2002  Multisectoral  framework 
(MSF).61 After a wave of notifications on large investment projects under the old 2002 MSF 
at the end of 2006 (17 in the last six months of 2006), notifications under the new RAG 2007 
came in more slowly in 2007. By mid 2008, 15 new LIP cases were notified (or pre-notified). 
Germany accounted for nine of those new LIP cases and Poland for three. Sectors concerned 
paper,  LCDs,  cars,  glass  and  most  importantly  photovoltaics.  The  Commission  has  already 
taken a decision in seven of the nine notified cases (of which one to open proceedings) while 
six  cases  remain  in  the  pre-notification  stage.  No  case  has  yet  been  subject  to  an  in-depth 
assessment according to the newly introduced balancing test. 

The  rules  on  large  investment  projects  also  continue  to  include  the  obligation  to  inform  the 
Commission  about  regional  aid  measures  for  projects  with  eligible  costs  above  EUR  50 
million  but  below  the  notification  threshold  (transparency  mechanism).  About  120  such 
transparency cases have been registered by Member States since the start of 2007. 

4.2.6. 

State aid awarded under the block exemption regulations62 

Experience has shown that the objectives of the Enabling Regulation have been largely met63 
with Member States able to introduce more than 3400 block exempted measures since 2001 
under  a  series  of  block  exemption  regulations  (BER)  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 
trend is in line with one of the key objectives in the SAAP, i.e. to facilitate the granting of aid 

59 
60 

61 
62 
63 

OJ C 54/13 of 4.3.2006. 
As  planned,  the  provisions  of  the  BER  RAG  were  included  in  the  recently  approved  General  Block 
Exemption Regulation (Commission Regulation (EC) No 800/2008 of 6 August 2008 describing certain 
categories  of  aid  compatible  with  the  common  market  in  application  of  Articles  87  and  88  of  the 
Treaty). 
Multisectoral Framework on regional aid for large investment projects 
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 21.12.2006. 

EN 

38 

   EN 

                                                 
through block exemptions, thereby reducing the administrative burden on Member States, 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: First, many 
State aid measures are co-financed by EU structural funds. Member States therefore tend to 
introduce a significant number of new state aid block exemption measures at the beginning of 
a structural funds programming period (now 2007 – 2013). Moreover there has been a high 
take-up rate as regards the new possibility to block exempt regional investment aid as well as 
a sharp increase (four-fold compared with 2006) in the number of measures exempted in the 
agricultural sector, following new recent legislation.64 The trend has continued with Member 
States informing the Commission of a further 600 measures in the first six months of 2008.  

As regards expenditure under the BER, Member States awarded an estimated € 6.2 billion in 
2007  under  the  four  block  exemption  regulations  for  SMEs  in  the  industry  and  services 
sectors, for regional investment aid, and for aid to training and employment (Figure 11). This 
compares with only € 3.2 bil lion in 2006. The sharp increase can be explained in part by the 
€ 2.3  billion  awarded  in  2007  under  the  new  BE R  for  regional  investment  aid  which  was 
introduced  in  time  for  the  beginning  of  the  EU  2007-2013  Structural  Funds  programming 
period. This included € 1 billion awarded under  a large German regional investment scheme.65 

The  new  programming  period  also  accounts  for  a  rise  in  expenditure  under  the  BER  for 
SMEs: € 2.5 billion in 2007, a rise of € 0.6 billion on the previous year. A further € 0.6 billion 
was awarded for training aid and €  0.8 billion for aid to employment. 

In  2007,  five  Member  States  accounted  for  more  than  75%  of  the  total  expenditure  (€ 6.2 
billion):  Germany  (29%)  followed  by  Italy  (15%),  Poland  (13%),  Spain  (10%)  and  United 
Kingdom (9%). 

The extent to which block exempted aid has, over time, replaced notified aid can be measured 
by  comparing  total  expenditure  granted  under  a  given  horizontal  objective  with  the 
expenditure  under  the  block  exemption  for  the  same  objective.  Results  show  that  while  a 
number of Member States have made increasing use of the block exemption possibilities there 
are considerable variations between objectives and countries. 

In 2007, more than 80% of all training aid was reported by Member States under the training 
BER.  Bulgaria,  Estonia,  Greece,  Lithuania,  Hungary,  Malta,  Austria,  Poland  and  Slovenia 
awarded  training  aid  exclusively  through  the  BER  while  Portugal,  Germany,  Italy,  Finland 
and the United Kingdom used the BER for the vast majority of their training aid. 

Around 55% of aid to SMEs active in the industry and services sectors was granted under the 
SME  BER.  Estonia,  Greece,  Lithuania,  Hungary  and  Poland  awarded  SME  aid  exclusively 
through the BER while in the Czech Republic, Denmark, Germany, Ireland, Latvia, Slovenia, 
and the United Kingdom used the BER for around 80% or more of their aid to SMEs. 

64 

65 

Commission Regulation (EC) No 1857/2006 of 15 December 2006 on the application of Articles 87 and 
88  of  the  Treaty  to  State  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), 
OJ L 358, 16.12.2006, p. 3 . 
XR 31/2007. 

EN 

39 

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Figure 11: Trend in block exempted state aid expenditure for industry and services, 
2001-2007, EU-27  

7

6

5

4

3

2

1

0

n
o

i
l
l
i

b

€ 

Regional
Investment

Employment

Training

SME

2001

2002

2003

2005

2006

2007

2004

Year

Source: DG Competition 

Around one third of all aid to employment was granted in 2007 under the employment BER. 
Bulgaria, Estonia, Greece, Cyprus, Lithuania, Hungary, Malta, Poland, Slovakia, Sweden and 
the United Kingdom used exclusively block exempted measures.  

The new BER for regional investment aid, in its first year of operation, accounted for around 
24% of total regional aid expenditure. 

Expenditure under the BER for SMEs active in the agriculture sector has also risen with more 
than € 596 million granted in 2007 compared  with around € 231 million in 2006. More than 
75%  of  the  exempted  expenditure  in  2007  was  awarded  by  five  Member  States:  Germany 
(24%), Spain (19%), France (14%), Ireland (12%) and Italy (10%). 

The share of exempted aid in total agriculture aid rose from 2.1% in 2006 to 4.7% in 2007. 
While some Member States awarded a relatively high share of BER aid, Latvia (19% of total 
agriculture  aid),  Spain  (16%),  Ireland  (15%),  Cyprus  (14%),  Slovenia  (11%)  and  Hungary 
(9%), others have not used the block exemption possibility. 

No new block exempted fisheries aid was awarded in 2007 since the BER for fisheries was 
not  applicable  in  that  year.  However,  an  estimated  € 28  million  was  spent  under  BER 
measures already introduced in previous years. 

EN 

40 

   EN 

 
4.3. 

State aid compensating for Services of General Economic Interest (SGEI) 

General overview 

Services  of  general  economic  interest  (SGEI)  are  of  great  importance  for  the  daily  life  of 
citizens  and  are  part  of  Europe's  model  of  society.  Article  16  of  the  Treaty  requires  the 
Community and the Member States to take care that such services operate in such a way as to 
make sure that they fulfil their missions. Within the boundary of the Treaty, public authorities 
and governments at various levels in the Member States, been they local, regional or national 
define which public services should be delivered and by which means. For certain services, in 
order to deliver the appropriated results, financial public support may prove necessary. 

The  task  of  the  Commission  is  to  ensure  that  there  is  no  abuse  as  regards  the  definition  of 
SGEI and that the provision and organisation  of these services comply  with  internal market 
and competition rules, since these activities are economic in nature. However, Article 86(2) of 
the Treaty allows an exception from the rules contained in the Treaty, provided that a number 
of  criteria  are  met.  The  Commission  is  entrusted  in  Art  86(3)  to  specify  the  meaning  and 
extent of that exception by addressing appropriate decisions or directives to Member States. 

In the Altmark66 decision of 2003, the Court of Justice defined the following four conditions 
under which financing of SGEI does not constitute State aid: act of entrustment with a clearly 
defined  public  service  mission,  the  parameters  for  calculating  the  compensation  payments 
must be established in advance in an objective and transparent manner, no overcompensation 
of costs and selection of beneficiary in a public tender or compensation does not exceed the 
costs  of  a  well-run  undertaking  that  is  adequately  equipped  with  the  means  to  provide  the 
public  service.  If  all  four  conditions  are  fulfilled  the  compensation  does  not  constitute  any 
State  aid.  In  the  case  that  one  of  the  conditions  is  not  fulfilled  the  Court  has  ruled  that  the 
compensation constitutes State aid.67 

In  2005,  the  Commission  adopted  a  package  of  measures  to  clarify,  in  the  light  of  the  first 
three  Altmark  principles,  how  the Commission intends to apply  the  state aid rules  to public 
service compensation. 

in  November  2005  specifies 

The  Decision68  adopted 
the  conditions  under  which 
compensation to companies for the provision of public services is compatible with state aid 
rules and does not have to be notified to the Commission in advance. In practice, it has the 
effect of a block exemption regulation. In that respect one should recall that most small-scale 
public  services,  plus  compensation  for  hospitals,  social  housing,  air  and  sea  transport  to 
islands  and  smaller  airports  and  ports  are  exempted  from  the  notification  requirement, 
provided that the compensation for the public service only covers the real cost of providing 
the service. Furthermore, compensation of up to € 30 million per year can be given without 
any obligation to notify to the Commission provided its beneficiaries have an annual turnover 
of less than € 100 million. 

66 
67 

68 

Case C-280/00, ECR I-7747. 
This implies of course that all other conditions of Article 87.1 are fulfilled (State resources, economic 
advantage, selectivity and affectation of trade and competition). 
Commission Decision on the application of Article 86(2) of the EC Treaty to State aid in the form of 
public service compensation granted to certain undertakings entrusted with the operation of services of 
general economic interest, OJ L 312, of 29.11.2005 p. 67-73. 

EN 

41 

   EN 

                                                 
The  Commission  Framework69  establishes  the  conditions  under  which  compensation  not 
covered  by  the  Decision  is  compatible  with  state  aid  rules.  Such  compensation  has  to  be 
notified  to  the  Commission  due  to  the  higher  risk  of  distortion  of  competition.  The 
compatibility criteria remain however essentially those under the Decision. 

the  modified  Transparency  Directive70  ensures 

Finally, 
receiving 
compensation  and  operating  on  both  public  service  and  other  markets  must  have  separate 
accounts  for  their  different  activities,  so  that  the  absence  of  over-compensation  can  be 
checked. 

that  companies 

More  recently  the  Commission  also  issued  a  Communication71,  which  further  reflects  the 
important  role  that  public  services  play,  and  is  accompanied  by  two  documents  containing 
'frequently asked questions' including a useful synthesis of the Court of Justice's case law and 
the  Commission's  practice  with  regard  to  SGEIs72.  An  interactive  information  service  also 
provides more practical information and guidance on the Community rules for SGEI. 

No  data  on  aid  compensating  for  SGEI  are  currently  available  but  the  Commission  will 
undertake an impact assessment by the end of 2009, based on factual information submitted 
by Member States (due by the end of 2008) as well as the results of wider consultations of the 
2005 Decision and Framework. 

The  Commission  has  applied  the  rules  on  SGEI  to  certain  sectors  of  particular  social, 
economic and political relevance including broadcasting, postal services and social housing. 
Further  information  on  these  sectors  is  available  in  a  [forthcoming]  special  edition  of  the 
autumn Competition policy Newsletter.73 

Broadcasting sector 

Public service broadcasting plays a particular role in the promotion of democratic, social and 
cultural  needs  of  each  society.  Increased  competition  in  the  sector  in  recent  years,  together 
with the presence of state-funded operators, has led to growing concerns about a level playing 
field, which has been brought to the Commission's attention by private operators. 

State financing of public service broadcasters is normally regarded as state aid. However, the 
existence  of  state  aid  has  to  be  assessed  on  a  case-by-case  basis  and  depends  also  on  the 
specific nature of the funding.  

69 

70 

71 

72 

73 

Community  framework  for  State  aid  in  the  form  of  public  service  compensation,  OJ  C  297,  of 
29.11.2005 p. 4-7. 
Commission  Directive  on  transparency  of  financial  relations  between  Member  States  and  public 
undertakings as well as on financial transparency within certain undertakings (Codified version), OJ L 
318, of 17.11.2006, p 17 - 25. 
COM(2007)  725  final,  Communication  on  Services  of  general  interest,  including  social  services  of 
general interest: a new European commitment. 
SEC(2007)  1516  final.  Commission  staff  working  document  :"Frequently  asked  questions  in  relation 
with Commission Decision of 28 November 2005 on the application of Article 86(2) of the EC Treaty 
to State aid in the form of public service compensation granted to certain undertakings entrusted with 
the operation of services of general economic interest, and of the Community Framework for State aid 
in the form of public service compensation". 
http://ec.europa.eu/comm/competition/publications/cpn/ 

EN 

42 

   EN 

                                                 
The 2001 Communication on the application of State aid rules to public service broadcasting74 
aimed at making the Commission's policy as transparent as possible. These rules are currently 
under revision.75 

Since  1999,  the  Commission  has  taken  24  state  aid  decisions  related  to  the  broadcasting 
sector. The majority of decisions are based on complaints rather than on notifications. There 
are mainly two types of cases: existing aid cases for the regular financing systems of public 
service  broadcasters  and  new  aid  cases  for  specific  one-off  measures  such  as  restructuring 
programs, re-capitalisation or financing of new TV channels. 

The Commission has already examined existing financing schemes in various Member States 
and proposed measures to ensure full compliance with the state aid rules. In all cases handled 
by the Commission so far, agreement was reached with the Member States who accepted the 
recommendations made by the Commission in order to align their systems to the competition 
rules. 

In  most  cases,  there  were  no  objective  pre-defined  parameters  for  determining  the 
compensation. Furthermore,  public  service broadcasters have not been  selected by way of a 
tender procedure, and the compensation was not determined on the basis of an analysis of the 
costs of a typical well-run undertaking. Information on the most relevant cases in this sector 
can be found on the website. 

Postal services sector 

The  postal  services  sector  is  of  vital  importance  for  commercial  users  and  consumers  alike 
and is considered as a SGEI. In recent years, there has been a progressive opening of national 
postal  markets  to  competition.  Following  the  adoption  of  the  new  postal  directive76  in 
February  2008,  remaining  exclusive  rights  must  be  abolished,  with  certain  exceptions,  by 
2011. The new directive continues to guarantee citizens a universal service, and foresees the 
possibility  of  financing  this,  if  there  are  any  net  costs,  also  through  state  aid.  It  provides  a 
specific methodology to calculate the net cost of the universal postal service. 

Regarding  the  application  of  State  aid  rules  to  the  postal  sector,  the  Chronopost  case  law77 
covers the issue of aid in the relation between a postal operator and its subsidiary operating in 
commercial markets. The Altmark case law and, pending the implementation period of the 3rd 
Postal  Directive  into  national  legislation,  the  Community  Framework  are  applicable  to  this 
sector where Member States compensate financially the costs of universal service provision. 
Information on recent such cases can be found in a table on the website. In analysing these 
cases,  as  well  as  others  where  the  issue  of  the  existence  of  aid  has  been  raised,  the 
Commission  has  analysed  the  accounts  of  universal  service  providers  so  as  to  ensure  the 
absence of overcompensation and of unlawful cross subsidies. In particular, the Commission 

74 

75 

76 

77 

EN 

of 

the 

public 

Communication  from  the  Commission  on  the  application  of  State  aid  rules  to  public  service 
broadcasting. OJ C 320, of 15.11.2001, p 5-11. 
Results 
http://ec.europa.eu/comm/competition/state_aid/reform/reform.cfm. 
Directive  2008/6/EC  of  the  European  Parliament  and  of  the  Council  of  20  February  2008  amending 
Directive 97/67/EC with regard to the full accomplishment of the internal market of Community postal 
services, OJ L 52, p 3. 
Cases T-613/97, C-341/06 and C-342/06. Judgement of the Court (Grand Chamber) of 1 July 2008. 

consultation 

in  March 

available 

2008 

that 

end 

are 

on 

43 

   EN 

                                                 
has examined the methods applied by the postal operators to allocate costs between universal 
services and other services and to calculate the financial burden of the public service tasks. 

4.4. 

State aid earmarked for specific sectors 

4.4.1. 

State aid for rescue and restructuring firms in difficulty 

As  outlined  in  Part  One,  Member  States  have  granted  considerably  less  rescue  and 
restructuring aid during the recent period of economic growth. However, over the period 2002 
– 2007, the extent to which Member States used (or not) State aid to rescue and restructure 
their ailing firms varied considerably. Seven Member States accounted for 95% of the rescue 
and  restructuring  aid.  Germany  made  up  28%  of  the  total  followed  by  the  Czech  Republic 
(20%), the United Kingdom (13%), Romania (12%), France (11%), Poland (7%) and Austria 
(3%).  This  does  not  necessarily  reflect  a  regular  recourse  to  State  aid  for  rescue  and 
restructuring  in  each  of  these  countries  as  one  large  rescue  case  may  be  sufficient  to  place 
them in this group. At the other end of the scale are nine Member States (Denmark, Estonia, 
Ireland, Greece, Cyprus, Latvia, Luxembourg, Hungary and Sweden) who did not award any 
ad  hoc  rescue  and  restructuring  aid  to  ailing  firms  (in  the  industry  and  services  sectors) 
between 2002 and 2007. 

Over this six-year period, the banking sector accounted for, on average, 68% of all rescue and 
restructuring  aid.  In  2007,  however,  around  87%  of  the  € 2.7  billion  of  rescue  and 
restructuring aid awarded by Member States went to the banking sector. 

Part Five includes an overview of the recent rescue and restructuring aid cases in the banking 
sector. 

4.4.2. 

State aid to the shipbuilding sector 

The amount of State aid to the shipbuilding sector fell from an annual average of € 1.0 billion 
for  the  period  2002-2004  to  € 313  million  fo r  the  period  2005-2007.  In  2007,  an  estimated 
€ 354 million was granted to the shipbuilding sector mainly by Spain, Germany and Denmark. 
See also new legislation in Part Six. 

4.4.3. 

State aid to the steel sector 

Since the European Coal and Steel Community Treaty expired on 23 July 2002, the general 
State aid rules have been applied for the steel sector, with the exception that no investment or 
restructuring aid may be granted to steel production unless it is closure aid.78 In 2007, no new 
aid  was  authorised  by  the  Commission  for  the  steel  sector,  however,  ongoing  expenditure 
amounted  to  € 203  million,  which  was  granted  principally  by  the  United  Kingdom  (€ 132 
million  -  climate  change  levy)  as  environmental  aid,  Slovakia  as  employment  aid  (€ 50 
million) and the Czech Republic (€ 16 million)  for different objectives (R&D, environment, 
regional development). There is a clear decreasing trend in the aid to the steel sector from an 
annual average of € 727 million in the peri od 2002-2004 to € 210 million in the period 2005-

78 

Aid under the Commission Regulation (EC) No 800/2008 of 6.August 2008 declaring certain categories 
of aid compatible with the common market in application of Articles 87 and 88 of the Treaty (OJ L 214, 
9.8.2008, p. 3-47) remains possible with the exception of regional aid favouring activities in the steel 
sector (Article 1(3)(e)). 

EN 

44 

   EN 

                                                 
2007. The downward trend can be largely explained by the fact that some Member States such 
as Sweden stopped or reduced considerably (the Czech Republic) granting State aid after the 
year 2003 to companies in the steel sector. 

4.4.4. 

State aid to the coal sector 

The  European  Coal  and  Steel  Community  Treaty  expired  on  23  July  2002.  Thereafter,  a 
Council  Regulation  established  a  new  legal  framework  for  state  aid  to  the  Community  coal 
industry. 

The overall amount of State aid to the coal sector in the Union (EU-27) stood at € 3.4 billion 
in 2007, around the same level as in 2006, while both the absolute amount and the share of aid 
related  to  current  production  continued  to  decline.  More  generally,  as  from  2001,  aid  to 
current production has decreased significantly and steadily in line with the agreement on the 
reduction of volumes of aid to the coal industry. As stipulated by Regulation 1407/2002, the 
total amount of aid to current production to be granted annually shall in any event not exceed 
the  amount  of  aid  authorized  by  the  Commission  for  the  reference  year  2001  (for  new 
Member States – the year of accession to the EU). 

Reduction of the aid to current production was mainly achieved through gradual closure of the 
least  competitive  mines  accompanied  by  considerable  reductions  in  the  number  of  persons 
employed  in  the  EU's  coal  sector.  Nearly  all  the  aid  not  related  to  current  production  was 
directed  at  covering  the  costs  incurred  in  the  process  of  (partial)  mine  closures  and  at 
financing the so-called inherited liabilities. 

Seven Member States granted aid to the coal sector in 2007. Germany and Spain continue to 
account  for  the  bulk  of  it  (more  than  90%).  Broadly-speaking,  coal  mining  in  the  EU-12 
Member States is more competitive than in the EU-15 Member States. For more information 
on the EU's coal sector and coal subsidies, please refer to the Report on State aid to the coal 
industry  published  in  May  200779  as  well  as  to  the  Commission's  web-page  devoted  to  coal 
issues80. Commission decisions on coal-related state aids can also be found on the web.81 

4.4.5. 

State aid to the transport sector 

State  aid  to  the  transport  sector  is  governed  by  special  rules  in  the  Treaty,  as  well  as 
secondary  legislation  and  rules  of  soft  law  (see  box  below).  Member  States  spend 
considerable resources for the provision of services of general economic interest (SGEI) in the 
transport sector and for the construction, management and maintenance of infrastructure. The 
amount  of  State  aid  granted  for  environmental  measures,  such  as  aid  for  the  acquisition  of 
new transport vehicles which go beyond Community standards or which increase the level of 
the  environmental  protection  in  absence  of  Community  standards,  has  increased  in  recent 
years. 

With regard to public resources for the provision of SGEI, Community law foresees a number 
of mechanisms allowing for and encouraging the provision of such services. Member States 

79 
80 
81 

http://ec.europa.eu/dgs/energy_transport/state_aid/energy_en.htm. 
http://ec.europa.eu/energy/coal/index_en.htm. 
http://ec.europa.eu/dgs/energy_transport/state_aid/doc/decisions/decisions_list.xls  (English  or  French 
versions)  and  http://ec.europa.eu/comm/competition/state_aid/register/ii/by_sector_b.html  (authentic 
language versions). 

EN 

45 

   EN 

                                                 
must, however, ensure that the public financing granted complies with the rules laid down and 
in  particular  avoids  overcompensation  in  order  not  to  distort  competition.  Furthermore,  the 
public  financing  of  transport  infrastructure  raises  more  and  more  questions  about  the 
application of the State aid rules, as many infrastructures are operated on a commercial basis 
and either by private undertakings or under public-private-partnerships.82  

Summary of rules for the transport sector 

–  Land transport (road, rail, inland waterways): Article 73 of the EC Treaty contains rules for the 
compatibility of State aid in the area of coordination of transport and public service obligation in 
transport. The Commission considers in its constant practice that Article 73 constitutes lex specialis 
with respect to Article 87(2) and Article 87(3), as it contains special rules for the compatibility of 
State  aid.  In  addition,  Article  73  of  the  EC  Treaty  constitutes  a  lex  specialis  also  with  respect  to 
Article 86(2) of the EC Treaty, and therefore, Article 86(2) of the EC Treaty cannot be applied in 
the area of coordination of transport and public service obligation in the inland transport sector.83 
Until 2 December 2009, Article 73 cannot be applied directly (Altmark), but only through the three 
Council Regulations which have been adopted under it, these are Council Regulations 1191/6984, 
1107/7085  and  1192/6986.  Regulation  1370/0787  will  replace  Regulations  1191/69  and  1107/70  as 
from  3  December  2009.  In  addition  the  Commission  adopted  on  30  April  2008  the  Community 
guidelines on State aid for railway undertakings.88 

–  Aviation: Communication on the Application of Articles 92 and 93 of the EC Treaty and Article 
61  of  the  EEA  agreement  to  State  aids  in  the  aviation  sector89  and  Community  guidelines  on 
financing of airports and start-up aid to airlines departing from regional airports.90 

–  Maritime transport: Community guidelines on State aid to maritime transport.91 

EU-wide, for the transport sector as a whole (excluding railways - see below), around € 2.5 
billion of aid was awarded per year over the period 2005-2007, a 13% increase compared with 
the  annual  average  over  the  period  2002-2004  (€ 2.2  billion).  With   respect  to  the  different 
transport sectors, the following developments can be observed: 

82 

83 

84 

85 

86 

87 

88 
89 
90 
91 

See  for  example  decisions  in  case  N713/1997,  point  39;  Case  N60/2006,  point  39;  Case  N134/2007; 
Case N478/2004, point 26 with further references. 
See recital 17 of the Commission decision of 28 November 2005 on the application of Article 86(2) of  
the EC Treaty to State aid in the form of public service compensation granted to certain undertakings  
entrusted  with  the  operation  of  services  of  general  economic  interest  (OJ  L  312,  29.11.2005,  
page 67 - 73). 
Regulation (EEC) No. 1191/69 of the Council of 26 June 1969 on action by Member States concerning 
the obligations inherent in the concept of a public service in transport by rail, road and inland waterway, 
as amended. 
Regulation (EEC) No. 1107/70 of the Council of 4 June 1970 on the granting of aid for transport by rail, 
road and inland waterway, as amended. 
Regulation  (EEC)  No.  1192/69  on  common  rules  for  the  normalisation  of  accounts  of  railway 
undertakings  is  particularly  important  from  a  State  aid  monitoring perspective  as  it  exempts  from  the 
notification  procedure  a  number  of  different  compensations  from  public  authorities  to  railway 
undertakings, as amended. 
Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 23 October 2007 on 
public  passenger  transport  services  by  rail  and  by  road  and  repealing  Council  Regulations  (EEC) 
Nos 1191/69 and 1107/70 (OJ L 315, 3.12.2007, p. 1–13). 
OJ C 184, 22.7.2008, page 13.  
OJ C 350/1994 of 10.12.1994, p 5-20. 
OJ C 312/2005 of 9.12.2005, p.1-14. 
OJ C 13/2004 of 17.1.2004, p. 3-12.  

EN 

46 

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Maritime transport 

Almost  two-thirds  of  total  transport  aid  (around  € 1.6  billion  per  year)  was  awarded  to  the 
maritime  sector  during  the  period  2005-2007.  The  largest  amounts  were  given  by  Italy, 
France, the United Kingdom, the Netherlands, Spain and Sweden. 

Land transport 

Railways 

A  large  amount  of  public  financing  for  railways  is  not  notified  to  the  Commission,  either 
because the financing, due to the lack of liberalisation of the sector, is not deemed by Member 
States  to  constitute  State  aid  within  the  meaning  of  Article  87(1)  of  the  EC  Treaty,92  or 
because  it  is  exempted  from  notification  in  accordance  with  Regulations  1191/69  and 
1192/69.  Member  States  are  however  required  to  report  to  the  Commission  overall  public 
expenditure  to  this  sector.  Over  € 46  b illion  was  reported  by  Member  States  for  2007. 
Disparities  between  Member  States  may  reflect  different  interpretations  of  the  scope  of  this 
annual reporting exercise (see table on website). 

Public transport by bus 

The Commission is faced with similar problems in the bus transport sector as in the railway 
sector.  Most  public  financing  of  the  bus  transport  services  operated  under  a  public  service 
obligation is not  notified to  the Commission. As a result, the aid amounts  reported  for road 
and combined transport sector are underestimated. Following complaints from competitors in 
this  sector,  the  Commission  initiated  in  2006  –  2008  formal  investigation  procedures  in 
Austria, Germany, Ireland and the Czech Republic; further investigations in these and other 
Member State are ongoing. Within the context of the public service obligation and/or public 
service contracts late 2007 the Commission also noticed that many Member States intend to 
grant subsidies for the purchase of new vehicles used for public transport services. 

Road haulage 

State aid in the area of road haulage is given either in the form of restructuring aid, or in the 
form of State aid for environmental protection.  

Aviation 

The  2005  Community  guidelines  on  financing  of  airports  and  start-up  aid  to  airlines 
departing  from  regional  airport93  add  to  the  Commission's  1994  guidelines94  on  the 
application  of  Articles  87  and  88  of  the  EC  Treaty.  They  are  designed  to  cover  all  aspects 
relating to the financing of airports and start-up aid for new routes. Since the entry into force 
of the 2005 guidelines, the Commission has adopted a number of positive decisions (including 
Germany, Poland, Ireland, Malta, Cyprus and the United Kingdom), relating to the two main 
types of State aid defined by the guidelines – State aid to airports and start-up aid to airlines. 

92 
93 
94 

This should now change since State aid guidelines for railway undertakings were adopted in 2008. 
OJ C 312/2005 of 9.12.2005, p.1-14. 
Community guidelines on the application of Articles 92 and 93 of the EC Treaty and Article 61 of the 
EEA Agreement to State aids in the aviation sector, OJ C350 of 10 December 1994. 

EN 

47 

   EN 

                                                 
The  public  financing  of  airport  infrastructure  aimed  mainly  at  financing  the  construction  of 
new  airports,  the  extension  of  existing  ones  in  order  to  accommodate  in  particular  bigger 
aircrafts  and  related  increase  of  passengers  and  the  purchase  of  equipment  with  the  aim  to 
comply with safety and security standards may constitute State aid. Indeed, as the operation of 
airports constitutes an economic activity, the Commission assessed these measures in view of 
the State aid rules and in particular, it assessed its impact on competing airports. In most cases 
the  Commission  considered  that  the  planned  investments  had  a  positive  impact  on  the 
accessibility of the region, which outweighed the potentially negative impact on competition. 

The Commission is also examining a large number of complaints concerning investment aid 
and start-up aid. In some of these cases, the Commission has opened the formal investigation 
procedure. In dealing with complaints, the Commission can conclude that the public financing 
of airport infrastructure and start-up aid has not been notified to the Commission because it 
was not deemed by Member States to constitute State aid within the meaning of Article 87 (1) 
of  the  EC  Treaty.  With  respect  to  investment  aid  for  airport  infrastructure,  the  difficulty 
encountered relates in particular to the question of the midterm viability of the investment and 
the  impact  on  competing  airports.  In  order  to  assess  these  points,  the  Commission  needs  in 
particular  a  business  plan.  In  relation  to  the  start  up  aid,  most  of  the  identified  difficulties 
relate to the contracts with low cost companies, the non-discriminatory nature of the aid and 
the  appropriate  assessment  of  marketing  aid  and  in  particular  the  calculation  of  "additional 
costs". 

Over  the  period  2005-2007,  an  annual  average  of  € 121  million  of  aid  was  reported  by 
Member States for the air transport sector. 

4.4.6. 

State aid to the agricultural sector 

The total amount of State aid awarded to the agricultural sector (including block exemptions 
and top-ups) was estimated at € 12.8 billion in 2007 compared with € 11.4 billion 95 in 2006. 
Expenditure  increased  especially  in  the  Netherlands,  Italy  and  Ireland.  In  contrast,  thirteen 
countries  spent  less  in  2007  than  in  2006,  in  particular  Poland,  Spain  and  the  United 
Kingdom.96 

ion), Finland (€ 1.4 b illion) and Romania 
In 2007, France (€ 2.4 billion), Germany (€ 1.95 bill
(€ 1.1 billion) reported  the highest figures. The data are based on an annual reporting exercise 
introduced for the first time in 2004. In almost all Member States, the vast majority of aid was 
granted  through  budget  aid  measures  (such  as  grants,  interest  subsidies,  guarantee  fee 
subsidies) or through the tax or social security system (such as bio-fuel tax exemptions, tax 
credits). 

In  total,  186  measures  were  notified  to  and  decided  by  the  Commission  in  2007,  compared 
with 317 measures in 2006. The number of non-notified aid measures also decreased from 27 
to 18. In contrast, Member States submitted 496 block exemption measures in 2007 compared 

95 

96 

The discrepancy between this figure and the total for 2006 (almost € 16 billion) published in the autumn 
2007 Scoreboard is due to corrections made by Member States in their annual reports submitted in June 
2008  for  the  entire  period  2002-2007.  Furthermore,  expenditure  under  the  Rural  Development 
programme has been excluded. 
See tables on the website 
http://ec.europa.eu/comm/competition/state_aid/studies_reports/stat_tables.html for more details. 

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48 

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with 119 in 2006. The 186 new aid measures involve aid schemes and (rather rare) individual 
application of a scheme or ad hoc aid, i.e. individual aid awarded outside of a scheme. These 
new  notifications  frequently  cover  more  than  one  type  of  aid.  For  example,  investment  aid 
may be combined with aid for consultancy costs or technical support with aid for encouraging 
quality  products.  The  most  notified  objectives  (for  cases  on  which  a  decision  was  taken  in 
2007) are to compensate farmers for losses caused by adverse weather conditions followed by 
aid  for  combating  animal  diseases,  and  provision  of  technical  support.  Of  the  new  aid 
measures, 33% were notified by Italy, followed by Spain (16%), France (9%) and the United 
Kingdom  (6%).  The  breakdown  by  country  is  rather  different  when  looking  at  block 
exempted measures: 32% of the 496 measures were communicated by Slovenia, followed by 
Italy (13%), Spain (11%), the United Kingdom (7%), the Netherlands and France each with 
more than 5%. 

4.4.7. 

State aid to the fisheries sector 

The total amount of State aid awarded to the fisheries sector was estimated at around € 418 
million  in  2007.  The  data  are  based  on  the  figures  received  from  Member  States'  annual 
reports on existing aid schemes. Spain (€ 184  million) reported the highest figures, followed 
by  Italy  (€ 82  million),  Ireland  (€ 37  million),  Denmark  (€  33  million)  and  Greece  (€  31 
million). Further breakdown of expenditure figures are not available for the fisheries sector. 
(See also legislative in Part Six.) 

4.5. 

State aid instruments 

In 20 Member States, the most favoured aid instrument is the direct grant 

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. 

During  the  period  2005-2007,  grants  accounted  for  just  over  half  (50%)  of  total  aid  in  the 
manufacturing and service sectors. In addition to aid awarded through the budget, other aid is 
paid through alleviation from the tax or social security system. Tax exemptions made up for 
almost 42% of the total (Figure 12). Luxembourg, Belgium, Denmark, Slovenia and Estonia 
provided  90%  or  more  of  their  aid  in  the  form  of  grants.  In  contrast,  some  other  Member 
States tended to make greater use of tax exemptions: accounting for around 80% or more of 
total aid in Portugal, Sweden and Bulgaria. A similar instrument is a tax deferral which was 
used by ten Member States during the period under review. Tax deferrals accounted for 19% 
in Romania, 13% in Malta and 9% of all aid in Italy compared with an EU average of 1%. 

There are other forms of aid instrument which vary from one Member State to another. One 
such category covers transfers in which the aid element is the interest saved by the recipient 
during  the  period  for  which  the  capital  transferred  is  at  his  disposal.  The  financial  transfer 
takes the form of a soft loan or tax deferral (mentioned already above). The aid elements in 
this  category  are  much  lower  than  the  capital  values  of  the  transfers.  EU-wide,  soft  loans 
represented around 3% of all aid to manufacturing and services. In Spain, France, Austria and 
Finland, the proportion was at least twice the EU average. 

Aid may also be in the form of state equity participation which represented around 1% of all 
aid  to  the  manufacturing  and  service  sectors.  Finally,  aid  may  be  provided  in  the  form  of 
guarantees. The aid elements are generally much lower than the nominal amounts guaranteed, 

EN 

49 

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since  they  correspond  to  the  benefit  which  the  recipient  receives  free  of  charge  or  at  lower 
than market rate if a premium is paid to cover the risk. EU-wide, guarantees made up for 3% 
of total aid. During the period under review, guarantees were used by Austria (22% of total 
aid) and the United Kingdom (13%), mainly due to aid for the banking sectors. 

Figure 12: Share of each aid instrument in total aid for industry and services, EU-27, 
2005-2007 

Tax exem ptions
42%

Equity participation
1%

Soft loans
3%

Tax deferrals
1%

Guarantees
3%

Grants
50%

Source: DG Competition. 

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50 

   EN 

 
5. 

PART FIVE: STATE AID RELATED TO THE FINANCIAL CRISIS 

Since  the  beginning  of  the  current  financial  crisis,  Member  States  have  announced 
unprecedented  support  measures  for  the  financial  sector,  ranging  from  increased  (or  even 
unlimited) deposit guarantees, interbank credit guarantees, direct capital injections and partial 
nationalization  to  individual  rescue  packages.  To  a  considerable  extent,  these  support 
measures are subject to European State aid control, and the Commission has been playing a 
key  role  in  this  situation.  Coordinated  action  by  Member  States  and  the  Commission  has 
ensured  that  large  support  schemes  for  the  financial  sector  could  be  implemented  in 
compliance  with  EC  Treaty  state  aid  rules.  The  current  situation  and  the  large  number  of 
notifications  provide  a  significant  challenge  for  the  Commission  to  deal  with  these  cases 
quickly, but at the same time to continue to ensure that measures are proportionate and do not 
create undue distortions of competition. In fact, the Commission has managed to respond to 
notifications  submitted  by  Member  States  and  to  approve  schemes  in  record  time  -  even 
within 24 hours. 

in  October  2008, 

the  financial  crisis  deepened 

As 
the  Commission  published  a 
Communication97 on how Member States can best support financial institutions in the current 
financial  crisis  whilst  respecting  EU  State  aid  rules.  The  Commission  acknowledges  the 
exceptional circumstances and the systemic risks inherent to a financial crisis and takes them 
into  account  when  dealing  with  support  schemes.98  The  specific  conditions  for  aid  to  be  in 
compliance with the EU State aid rules as set out in the Communication are: 

•  Non-discriminatory  access  in  order  to  protect  the  functioning  of  the  Single  Market  by 

making sure that eligibility for a support scheme is not based on nationality  

•  State commitments to be limited in time in such a way that it is ensured that support can be 
provided as long as it is necessary to cope with the current turmoil in financial markets but 
will  be  reviewed  and  adjusted  or  terminated  as  soon  as  improved  market  conditions  so 
permit  

•  State support to be clearly defined and limited in scope to what is necessary to address the 
acute  crisis  in  financial  markets  while  excluding  unjustified  benefits  for  shareholders  of 
financial institutions at the taxpayer's expense  

•  An appropriate contribution of the private sector by way of an adequate remuneration for 
the introduction of general support schemes (such as a guarantee scheme) and the coverage 
by the private sector of at least a significant part of the cost of assistance granted  

•  Sufficient behavioural rules for beneficiaries that prevent an abuse of state support, like for 

example expansion and aggressive market strategies on the back of a state guarantee  

97 
98 

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:270:0008:0014:EN:PDF 
In  its  Presidency  conclusions  of  16  October  2008,  the  Council  stated  that  'in  the  current  exceptional 
circumstances,  European  rules  must  continue  to  be  implemented  in  a  way  that  meets  the  need  for 
speedy  and  flexible  action.  The  European Council  supports  the  Commission's  implementation,  in  this 
spirit, of the rules on competition policy, particularly State aids, while continuing to apply the principles 
of the single market and the system of State aids.' 

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•  An  appropriate  follow-up  by  structural  adjustment  measures  for  the  financial  sector  as  a 
whole  and/or  by  restructuring  individual  financial  institutions  that  had  to  rely  on  state 
intervention. 

The financial crisis and the State aid context 

The crisis was initially triggered by problems with sub-prime mortgage lending in the US that 
impacted heavily on other financial markets, leading to a loss of confidence between financial 
institutions and in particular to a freeze in interbank lending. Investor confidence in Europe 
was  further  undermined  by  revelations  of  losses  linked  to  collateralised  debt  obligations 
(CDOs),  leading  inter  alia  to  rescue  operations  by  Germany  for  IKB  and  Sachsen  LB  in 
August  2007.  Depending  heavily  on  short-term  funding  and  raising  funds  on  the  financial 
markets  more  generally,  UK  mortgage  lender  Northern  Rock  became  a  victim  of  the  crisis 
in September 2007.  

In  2008  the  situation  deteriorated  further  when  interest  spreads  reached  record  levels  and 
credit squeezed further. European central banks addressed the liquidity crisis by injecting high 
amounts of liquidity into the financial markets. However, more banks had to be rescued by the 
state,  among  others  Bradford  and  Bingley  in  the  United  Kingdom,  Hypo  Real  Estate  in 
Germany, and Fortis and Dexia in Belgium. 

The US and European governments responded to the crises by a number of different support 
schemes,  ranging  from  increased  (or  even  unlimited)  deposit  guarantees,  interbank  credit 
guarantees, direct capital injections and partial nationalization to individual rescue packages. 
Not least, the world's most important central banks cut interest rates in a coordinated action. 

Some of the measures taken by Member States are not State aid within the meaning of Article 
87(1) EC and are therefore outside the State aid rules. A Member State/central bank may react 
to a banking crisis not with selective State aid to individual banks, but with general measures 
open to all actors in the market. Such general measures normally fall outside the scope of the 
State aid rules and do not need to be notified to the Commission.  

However,  most  schemes  currently  implemented  by  Member  States  are  subject  to  European 
State aid rules, and the Commission has therefore seen the number of notifications in this area 
multiply.  

State aid control in the financial sector99 

While a crisis at an individual bank may have the potential to trigger a general banking crisis 
and vice versa, in terms of compatibility with European State aid rules individual rescue cases 
differ considerably from schemes aimed at the entire financial sector.  

Generally and as in any other sector, companies in the financial sector can find themselves in 
difficulties following excessive risk, bad management, defective supervision and/or fraud. In 
such situations unchecked subsidies can significantly distort competition between banks and 
between  Member  States'  economies.  It  is  detrimental  to  the  functioning  of  competitive 
markets  and  creates  moral  hazard  problems  if  every  undertaking  that  gets  into  difficulties 

99 

EN 

For 
on 
http://ec.europa.eu/comm/competition/sectors/financial_services/overview_en.html 

developments 

regular 

update 

recent 

most 

a 

52 

see 

also 

   EN 

                                                 
were to be rescued by the State with the burden ultimately shifted on the tax payer. Moreover, 
the  amounts  of  public  support  to  the  financial  sector  are  often  very  large.  State  aid  can 
undermine the incentives for banks to have a balanced and prudent investment strategy, thus 
further  endangering  financial  stability.  Competitors  inevitably  suffer  from  this  type  of  State 
aid as they can not benefit from their comparatively better performance. 

The  Commission  has  been  tackling  the  individual  rescue  cases  during  the  financial  crisis 
along  the  Commission's  guidelines  on  rescue  and  restructuring  aid.  The  Commission  has 
made  an  important  effort  to  deal  in  a  rapid,  efficient  and  flexible  way  with  the  cases 
submitted:  Northern  Rock100  (notification  on  26  November  2007,  approved  on  5  December 
2007),  West  LB101  (notification  on  27  March  2008,  approved  on  30  April  2008,  Roskilde 
Bank102 (notification  on 22 July 2008, approved on 31 July 2008), and Hypo Real Estate103 
(notification  on  30  September  2008,  approved  on  2  October  2008).  Also  in  more  complex 
cases,  where  a  formal  investigation  procedure  was  inevitable,  such  as  Sachsen  LB104,  the 
Commission  was  able  to  take  a  final  decision  in  the  case  within  three  months  after  the 
initiation of a formal investigation procedure. 

Exceptional circumstances and systemic risk 

The current financial crisis has, however, led to a need for State interventions that differ from 
the traditional rescue or restructuring of a financial institution in difficulties. To a large extent 
the measures currently taken by Member States do not concern specific banks in difficulties, 
but are aimed at the entire banking sector. These measures have been announced in order to 
respond  to  the  systemic  risk  that  is  seen  in  the  banking  sector.  In  its  Communication  the 
Commission acknowledges the exceptional circumstances and the systemic risk in the current 
situation.  The  Commission  can  therefore  apply  Article  87(3)(b)  of  the  EC  Treaty.  This 
exception to the general prohibition of State aid can be invoked in order to 'remedy a serious 
disturbance of the economy'. In October 2008 the Commission approved far-reaching support 
measures  notified  by  Ireland105,  the  UK106  and  Denmark107.  These  schemes  involve  a 
combination  of  increasing  guarantees  for  bank  deposits,  guarantees  for  interbank  loans  and 
capital  injections.  Several  other  countries  have  notified  or  are  expected  to  notify  similar 
schemes.  However,  even  under  exceptional  circumstances 
the  Commission's 
responsibility  to  ensure  compliance  with  European  State  aid  rules  while  at  the  same  time 
respond flexibly and swiftly to the systemic risk posed by the financial crisis. 

is 

it 

State aid in the current economic downturn 

The  current  financial  crisis  and  downturn  in  the  economy  is  already  beginning  to  have  a 
negative  impact  on  jobs  and  on  the  order  books  of  businesses.  There  is  consensus  that 
Member States have to coordinate their response to this crisis. Member States' economies are 
too intertwined and a short-term fix involving a subsidy race between Member States should 

100 
101 
102 
103 
104 
105 
106 
107 

Case NN70/2007 
Case NN25/2008 
Case NN36/2008 
Case NN44/2008 
Case C9/2008 
Case NN48/2008 
Case N507/2008 
Case NN51/2008 

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be avoided. On the contrary, State support for European business will only show results if it is 
sustainable: leading to more innovation, more research, better training and higher quality jobs. 
While  boosting  sustainable  investment  benefits  European  industry  in  general,  particular 
emphasis should be placed on SMEs – the backbone of Europe's economy. In this context, the 
recent Small Business Act adopted by the Commission identified a large number of actions to 
support SMEs. 

In  the  current  financial  crisis,  SMEs  may  face  greater  difficulties  of  access  to  finance  than 
other  companies.  To  alleviate  such  problems  in  the  short  to  medium  term,  Member  States 
could  adopt  a  series  of  general  policy  measures,  applicable  to  all  companies  on  their 
respective  territories  and  consequently  falling  outside  the  State  aid  rules.  For  example, 
payment deadlines for social security contributions or taxes could be extended. 

Moreover, general EU programmes, like the competitiveness and innovation programme and 
the  research  framework  programme,  should  be  used  to  support  SMEs  as  well  as  large 
undertakings.  This  is  fully  in  line  with  other  European  initiatives,  such  as  the  European 
Investment Bank’s decision to mobilise € 30 billion to support European SMEs. 

Finally, a key objective of the Commission's recent modernisation of EU State aid rules has 
been to encourage Member States to support sustainable investment, thus contributing to the 
Lisbon strategy for growth, jobs and competitiveness. In this context, particular emphasis has 
been put on support for SMEs. In addition, State aid rules have been significantly simplified 
in the recently adopted General Block Exemption Regulation (GBER) and now offer Member 
States a wide range of aid measures with a much reduced administrative burden. 

In  conclusion,  the  wide  range  of  available  support  measures  enables  Member  States  to 
facilitate  access  to  finance  particularly  for  SMEs,  and  so  tackle  the  current  financial  and 
economic  crisis  effectively.  State  aid  should  be  used  where  necessary  and  should  be 
sustainable,  in  line  with  the  Commission's  guidelines  directing  State  aids  towards  common 
horizontal  objectives  such  as  research,  development,  innovation,  training  and  a  low-carbon 
economy. 

EN 

54 

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6. 

PART SIX: LEGISLATIVE AND POLICY DEVELOPMENTS 

Communication  on  the  application  of  State  aid  rules  to  measures  taken  in  relation  to 
financial institutions in the context of the current global financial crisis 

In October 2008, the Commission published a Communication108 providing guidance on how 
Member  States  can  best  support  financial  institutions  in  the  current  financial  crisis  whilst 
respecting EU state  aid rules and so  avoiding excessive distortions of competition. See Part 
Five. 

Prolongation of the Framework on State aid Rules for Shipbuilding 

In July 2008, the European Commission decided to prolong the Framework on State aid rules 
for shipbuilding for three more years, until 31 December 2011.109 The Commission concluded 
that  the  Framework,  which  came  into  effect  on  1  January  2004110  and  had  already  been 
prolonged in 2006111, had been applied without any problems and did not need to be revised at 
present.  A  public  consultation  conducted  by  the  Commission  confirmed  general  support  for 
the prolongation. 

General Block Exemption Regulation (GBER) 

On  7  July  2008,  the  Commission  adopted  a  new  General  Block  Exemption  Regulation 
(GBER), which became effective on 29 August 2008 and since then gives automatic approval 
for  a  range  of  aid  measures  and  so  allows  Member  States  to  grant  such  aid  without  first 
notifying  the  Commission.112  As  well  as  encouraging  Member  States  to  focus  their  state 
resources on aid that will be of real benefit to job creation and Europe's competitiveness, the 
regulation reduces the administrative burden for public authorities, the beneficiaries and the 
Commission who will be able to focus its attention on other, more distortive types of aid. 

The GBER consolidates into one text the rules previously existing in several separate block 
exemption  regulations:  aid  to  SMEs,  R&D  aid  in  favour  of  SMEs,  aid  for  employment, 
training  aid  and  regional  aid.113  In  addition,  the  GBER  enlarges  the  categories  of  State  aid 
covered  by  the  exemption  and  now  authorises  26  different  aid  measures,  among  them 
environmental aid, innovation aid, research and development aid for large companies, aid in 
the form of risk capital and aid for enterprises newly created by female entrepreneurs. 

In line with the Commission's "Better Regulation" agenda, the GBER also harmonises, as far 
as possible, all horizontal aspects applying to the different aid areas concerned. Moreover, for 
a  series  of  aid  measures  covered  by  existing  instruments,  the  new  regulation  substantially 

108 
109 
110 
111 
112 

113 

http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2008:270:0008:0014:EN:PDF 
OJ C 173, 8.7.2008, p. 3; see also press release IP/08/1097. 
OJ C 317, 30.12.2003, p. 11. 
OJ C 260, 28.10.2006, p. 7. 
Commission Regulation (EC) No 800/2008 of 6 August 2008 on the application of Articles 87 and 88 
of  the  Treaty  declaring  certain  categories  of  aid  compatible  with  the  common  market,  OJ  L  214, 
9.8.2008, p. 3. 
http://ec.europa.eu/comm/competition/state_aid/legislation/block.cfm. 

EN 

55 

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increases  the  permitted  aid  intensities  and  the  notification  ceilings.  This  means  that  higher 
amounts  of  SME  investment  aid,  training  aid,  and  employment  aid,  amongst  others,  can  be 
granted as compared to the past. 

Community Guidelines on State aid to railway undertakings 

The Commission adopted on 30 April 2008 the Community guidelines on State aid to railway 
undertakings.114 With this document, which pays due account to the specific features of rail 
while ensuring convergence of the sector-based rules with the general rules on State aid, the 
Commission  wants  to  help  promote  the  liberalisation  of  the  sector,  improving  its 
competitiveness  and  capitalising  on  its  strengths,  especially  from  the  environmental  angle. 
The guidelines complement the PSO Regulation which deals in particular with aid in the form 
of compensation for discharging public service obligations. 

The guidelines makes henceforward possible, under certain conditions, to grant regional aid 
for  the  purchase  and  renewal  of  passenger  rolling  stock,  lifting  thereby  a  prohibition 
contained  in  the  regional  aid  guidelines.  The  guidelines  also  specify  the  conditions  for 
applying  Article  73  of  the  EC  Treaty,  which  provides  that  aid  which  meets  the  needs  of 
coordination  of  transport  is  compatible  with  the  common  market.  These  guidelines  at  the 
same  time  indicate  to  Member  States  how  to  reconcile  with  the  Treaty's  State  aid  rules  the 
requirement  imposed  on  them  by  Community  legislation  to  assume  the  debts  of  railway 
undertakings  in  order  to  allow  them  to  rectify  their  financial  situation.  Finally,  the 
Commission is in addition adapting the rules on restructuring firms in difficulty to be able to 
respond to situations where the freight division of a railway undertaking has serious economic 
problems but cannot be restructured by the railway undertaking as a whole. 

Block Exemption Regulation for Fisheries 

In July 2008, the Commission adopted a  new  Block  Exemption Regulation  for  the fisheries 
sector,  which  is  not  covered  by  the  GBER.115  The  Regulation  declares  certain  types  of  aid 
compatible with the common market without prior notification, on condition that they comply 
with  the  relevant  conditions  established  under  the  European  Fisheries  Fund  (EFF)  and 
provided that they do not exceed the threshold of a total amount of aid of € 1 million or a total 
amount of eligible costs per project of € 2 m illion. The Regulation includes all categories of 
aid  covered  by  the  EFF,  with  the  exception  of  aid  for  investments  in  the  fleet  and  aid  for 
sustainable development of fisheries areas. As a result, Member States that wish to grant State 
aid  in  the  eligible  areas  may  do  so  by  submitting  the  relevant  summary  information  to  the 
Commission for publication. 

114 
115 

OJ C 184 of 22.07.2008, p. 13. 
Commission Regulation (EC) No 736/2008 of 22 July 2008 on the application of Articles 87 and 88 of 
the Treaty to State aid to small and medium-sized enterprises active in the production, processing and 
marketing of fisheries products, OJ L 201, 30.7.2008, p. 16; see also press release IP/08/1088. 

EN 

56 

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Council  Regulation  (EC)  No  744/2008  of  24  July  2008  instituting  a  temporary  specific 
action  aiming  to  promote  the  restructuring  of  the  European  Community  fishing  fleets 
affected by the economic crisis 

Also in July, the Council adopted a regulation instituting a temporary specific action aiming 
to  promote  the  restructuring  of  the  European  Community  fishing  fleets  affected  by  the 
economic  crisis.116  This  specific  action  provides  for  additional  measures  within  the 
framework of the EFF until the end of 2010.  

Council  Regulation  (EC)  No  1198/2006  on  the  EFF  specifies  that,  as  a  general  rule, 
competition rules on State aid set out in Articles 87-89 of the EC Treaty apply to enterprises 
in the fisheries sector.117 However, these rules shall not apply to financial contributions from 
Member States to operations provided that they are co-financed by the EFF and implemented 
as part of an operational programme.118 In view of the urgency and the temporary nature of 
the measures included in this specific action, the scope of the exemption from State aid rules 
has been widened to certain aids that, while not being co-financed from Community financial 
instruments,  are  granted  pursuant  to  and  in  conformity  with  the  new  regulation.  In  order  to 
limit  possible  distortions  of  competition  and  adverse  effects  on  the  internal  market,  the 
exemption  is  subject  to  enhanced  reporting  obligations  and  applies  only  to  projects  with 
eligible expenses of up to € 2 million or a to tal amount of aid of up to € 1 million. State aid 
granted  by  Member  States  with  no  financing  from  Community  financial  instruments  and 
exceeding these limits shall be fully subject to the State aid rules. 

116 
117 
118 

OJ L 202, 31.7.2008, p. 1; see also press release IP/08/1120 and MEMO/08/493. 
Article 7(1) of the Council Regulation (EC) No 1198/2006, OJ L 223, 15.8.2006, p. 1. 
Article 7(2) of the Council Regulation (EC) No 1198/2006, OJ L 223, 15.8.2006, p. 1. 

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ADDITIONAL INFORMATION ON STATE AID AVAILABLE ON THE WEBSITE 

Previous State aid Scoreboards, statistics and indicators available online 

This  Scoreboard  and  previous  editions  can  be  consulted  on  the  Competition  Directorate 
General’s  website.  Also  available  are  a  series  of  key  indicators  and  a  range  of  statistical 
information for all EU Member States: 

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

Any  queries  or  requests  for  data  should  be  sent  to  the  scoreboard  mailbox  at  Stateaid-
Scoreboard@ec.europa.eu 

State aid Register – a second transparency tool 

The  Commission’s  State  aid  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 
recent  State  aid  decisions. 
http://ec.europa.eu/comm/competition/state_aid/register/ 

the  public  has 

timely  access 

the  most 

to 

Annual Report on Competition Policy 

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

State aid Weekly e-News 

The  State  aid  Weekly  e-News,  launched  in  2006,  is  distributed  free  of  charge  to  more  than 
3500  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 

EFTA State aid Scoreboard 

The EFTA Surveillance Authority (ESA) publishes an annual scoreboard on the volume of 
state aid granted in Iceland, Liechtenstein and Norway. 
http://www.eftasurv.int/information/pressreleases/2008pr/dbaFile14074.html 

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METHODOLOGICAL NOTES 

The  Scoreboard  covers  State  aid  as  defined  under  Article  87(1)  of  the  EC  Treaty  that  was 
granted  by  the  Member  States  up  to  the  end  of  2007.  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 generally 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 2007. Community funds and instruments are 
excluded. 

See also box on “State aid as defined under Article 87 of the EC Treaty” on page 12.  

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 

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ANNEX: STATISTICAL TABLES 

Table 1: Less and better targeted aid: key figures 

State aid in million EUR, 
2007

State aid as % of GDP, 2007

Trend in the share of aid to 
GDP, 2002 - 2007 in % points 
(1)

Total State 
Aid less 
railways

Total State 
Aid for 
industry and 
services (i.e. 
less 
agriculture, 
fisheries and 
transport)

Total State 
Aid less 
railways 

Total State 
Aid for 
industry and 
services (i.e. 
less 
agriculture, 
fisheries and 
transport) 

Total aid less 
railways

Total state aid 
for industry 
and services

Share of aid to 
horizontal 
objectives as 
% of total aid 
for industry 
and services, 
2007

Trend in the 
share of aid to 
horizontal 
objectives as a 
% of total aid, 
2002 - 2007 in 
% points (1)

64816

57694

7123

1077

391

938

1405

16229

37

1093

729

5371

9798

5096

107

204

177

72

1434

99

2316

1006

1849

2138

1426

188

273

2079

3100

6185

1819
17
1

49214

45406

3808

883

27

767

1166

14148

10

603

551

4336

6889

3860

63

42

50

46

879

74

1355

815

1261

2119

296

115

223

629

2932

5075

1368
17
1

0,53

0,51

0,81

0,33

1,35

0,73

0,62

0,67

0,24

0,59

0,32

0,51

0,52

0,33

0,40

1,02

0,63

0,20

1,42

0,79

0,41

0,37

0,60

1,31

1,17

0,56

0,50

1,16

0,93

0,31

0,64
0,12
0,03

0,40

0,40

0,43

0,27

0,09

0,60

0,51

0,58

0,07

0,32

0,24

0,41

0,37

0,25

0,24

0,21

0,18

0,13

0,87

0,59

0,24

0,30

0,41

1,30

0,24

0,34

0,41

0,35

0,88

0,25

0,48
0,12
0,03

-0,07

-0,04

-0,65

0,00

0,07

-1,76

-0,10

-0,13

0,08

0,01

-0,03

-0,05

-0,01

-0,08

-1,68

0,66

0,13

-0,14

0,34

-0,35

-0,08

0,10

-0,85

0,17

-0,95

-0,01

0,02

0,00

0,44

-0,03

n.a.
n.a.
n.a.

-0,08

-0,03

-0,85

-0,01

-0,32

-1,83

-0,09

-0,15

-0,01

-0,01

0,01

-0,09

0,00

-0,06

-1,41

0,06

-0,10

-0,07

-0,03

-0,50

0,03

0,12

-1,04

0,19

-1,24

-0,11

-0,05

0,02

0,44

0,00

n.a.
n.a.
n.a.

80

80

77

100

92

100

92

79

100

77

98

74

95

89

95

100

96

100

53

4

96

98

89

10

36

84

76

96

99

62

100
87
65

14,0

7,4

44,5

-0,7

33,7

84,2

3,4

15,9

0,8

17,8

3,4

3,6

22,4

-11,9

38,2

17,1

73,7

0,0

1,7

-2,9

2,3

-21,0

62,8

-9,0

15,5

8,9

13,9

-0,4

-0,6

-12,0

n.a.
n.a.
n.a.

EU 27

EU 15

EU 12

Belgium

Bulgaria

Czech Republic

Denmark

Germany

Estonia

Ireland

Greece

Spain

France

Italy

Cyprus

Latvia

Lithuania

Luxembourg

Hungary

Malta

Netherlands

Austria

Poland

Portugal

Romania

Slovenia

Slovakia

Finland

Sweden

United Kingdom

Norway
Iceland
Liechtenstein

Note: Data cover all State aid measures as defined under Article 87(1) of the EC Treaty that have been awarded by Member 
States and examined by the Commission. The Community rules on agricultural and fisheries policies are not covered by the 
EEA Agreement. Therefore, aid to these sectors is not included for the 3 above-mentioned EFTA countries. (1) Change in 
percentage points between the annual average for 2002-2004 and that for 2005-2007. Source: DG Competition, DG Energy 
and  Transport,  DG  Agriculture,  DG  Maritime  Affairs  and  Fisheries  and  EFTA  Surveillance  Authority.

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Table 2: Main set of rules adopted since the launch of the State Aid Action Plan in 2005 

As outlined in the SAAP roadmap in 2005, the Commission has revised a large number of its guidelines, 
frameworks and communications. The following table shows the main legislative acts adopted to date. 

2005 

SGEI Package 

Commission  Decision  of  28  November  2005  on  the  application  of  Article  86(2)  of  the  EC 
Treaty to State aid in the form of public service compensation granted to certain undertakings 
entrusted with the operation of services of general economic interest. OJ L 312, 29.11.2005, 
p. 67; press release IP/05/937 

Community  framework  for  State  aid  in  the  form  of  public  service  compensation
OJ C 297, 29.11.2005, p. 4; press release IP/05/937 

Commission  Directive  No  2005/81  of  28  November  2005  amending  Directive  80/723/EEC 
on the transparency of financial relations between Member States and public undertakings as 
well as on financial transparency within certain undertakings. OJ L 312, 29.11.2005, p. 47; 
press release IP/05/937; cf. codified version of 16 November 2006, OJ L 318, 17.11.2006, p. 
17 

Short-term export-
credit insurance 

Communication of the Commission to Member States amending the communication pursuant 
to  Article  93(1)  of  the  EC  Treaty  applying  Articles  92  and  93  of  the  Treaty  to  short-term 
export-credit insurance. OJ C 325, 22.12.2005, p. 22  

Regional aid 
guidelines 

Guidelines on national regional aid for 2007-2013. OJ C 54, 4.03.2006, p. 13; press release 
IP/05/1653 

2006 

Risk capital 
guidelines 

Community guidelines on state aid to promote risk capital investments in small and medium-
sized enterprises. OJ C 194, 18.08.2006, p. 2; press release IP/06/1015 

Block exemption 
regulation for 
regional aid 

Commission  Regulation  (EC)  No  1628/2006  of  24  October  2006  on  the  application  of 
Articles 87 and 88 of the Treaty to national regional investment aid. OJ L 302, 01.11.2006, p. 
29; press release IP/06/1453 

RDI Framework 

Community  Framework  for  State  aid  for  Research  and  Development  and  Innovation.  OJ  C 
323, 30.12.2006, p. 1; press release IP/06/1600 

De minimis 
regulation 

Commission  Regulation  (EC)  No  1998/2006  of  15  December  2006  on  the  application  of 
Articles 87 and 88 of the Treaty to de minimis aid. OJ L 379, 28.12.2006, p. 5, press release 
IP/06/1765 

2007 

Recovery Notice 

Notice  from  the  Commission  –  Towards  an  effective  implementation  of  Commission 
decisions ordering Member States to recover unlawful and incompatible State aid. OJ C 272, 
15.11.2007, p. 4; press release IP/07/1609 

Communication on 
interest rates 

Communication from the Commission on the revision of the method for setting the reference 
and discount rates. OJ C 14, 19.01.2008, p. 6; press release IP/07/1912 

2008 

Amendment of 
procedural 

Commission  Regulation  (EC)  No  271/2008  of  30  January  2008  amending  Regulation  (EC) 
No  794/2004  implementing  Council  Regulation  (EC)  No  659/1999  laying  down  detailed 

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regulation 

rules for the application of Article 93 of the EC Treaty. OJ L 82, 25.03.2008, p.1 

Environmental 
guidelines 

Community guidelines on state aid for environmental protection. OJ C 82, 01.04.2008, p. 1; 
press release IP/08/80 

Guarantee notice 

Commission Notice on the application of Articles 87 and 88 of the EC Treaty to State aid in 
the form of guarantees. OJ C 155, 20.06.2008, p. 10; press release IP/08/764 

General block 
exemption 
regulation 

Commission Regulation (EC) No 800/2008 of 6 August 2008 on the application of Articles 
87  and  88  of  the  Treaty  declaring  certain  categories  of  aid  compatible  with  the  common 
market. OJ L 214, 09.08.2008, p. 3; press release IP/08/1110 

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Table 3: Trend in the number of recovery decisions and amounts to be recovered (1) 2000- 2008 
(state of play – 30.06.2008) 

2000 

2001 

2002 

2003 

Date of Decision 
2004 

2005 

2006 

2007 

16 

20 

23 

10 

23 

12 

6 

9 

2008 
(as of 
30 
June) 
7 

Total 

126 

239.0  1146.8  1272.8  1015.0  4862.3 

29.2 

270.3 

270.6 

27.7 

9133.7 

217.7  1125.4  1576.0  1230.3  6372.4 

21.2 

151.8 

90.7 

28.1 

10813.5 

16.7 

962.1  1093.3 

894.6  3963.4 

14.2 

94.5 

78.5 

27.4 

7144.7 

201.0 

76.3 

63.3 

0.7 

870.9 

0.0 

45.0 

2.0 

87.0 

16.9 

419.4 

335.0  1538.1 

0.0 

133.8 

0.0 

7.0 

7.5 

12.3 

0.0 

10.2 

0.0 

15.6 

21.3 

108.4 

116.2 

119.7 

28.0 

15.0 

130.8 

190.1 

0.0 

0.7 

0.0 

0.3 

1259.2 

2409.6 

173.8 

729.8 

8.9% 

9.5% 

9.1% 

11.8% 

0.6% 

51.4% 

48% 

70% 

1% 

8.0% 

Number 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 
(2) 
% still pending to be 
recovered (2) 

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

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