Communication from the Commission — Temporary Community framework for State aid measures to support access to finance in the current financial and economic crisis
Date: 2009-01-22
Institutions: European Commission
Subjects: State aid, bank, control of State aid, financial market, international finance, monetary crisis

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(Information)

INFORMATION FROM EUROPEAN UNION INSTITUTIONS AND BODIES

COMMISSION

Communication from the Commission — Temporary Community framework for State aid measures
to support access to finance in the current financial and economic crisis

(2009/C 16/01)

1. THE FINANCIAL CRISIS,

ITS IMPACT ON THE REAL

ECONOMY AND THE NEED FOR TEMPORARY MEASURES

1.1. The financial crisis and its impact on the real economy

to drive Europe's recovery from the current

On 26 November 2008, the Commission adopted the Commu-
nication ‘A European Economic Recovery Plan’ (1) (‘the Recovery
financial
Plan’)
crisis. The Recovery Plan is based on two mutually reinforcing
main elements. Firstly, short-term measures to boost demand,
save jobs and help restore confidence and, secondly,
‘smart
investment’ to yield higher growth and sustainable prosperity in
the longer term. The Recovery Plan will intensify and accelerate
reforms already underway under the Lisbon Strategy.

In this context, the challenge for the Community is avoiding
public intervention which would undermine the objective of
less and better targeted State aid. Nevertheless, under certain
conditions, there is a need for new temporary State aid.

The Recovery Plan also includes further initiatives to apply State
aid rules in a way that achieves maximum flexibility for tackling
the crisis while maintaining a level playing field and avoiding
undue restrictions of competition. This Communication gives
details of a number of additional
temporary openings for
Member States to grant State aid.

First, the financial crisis has a hard impact on the banking
stressed that,
sector

in the Community. The Council has

although public intervention has to be decided at national level,
this needs to be done within a coordinated framework and on
the basis of a number of common Community principles (2).
The Commission reacted immediately with various measures
including the adoption of the Communication on the applica-
tion of State aid rules to measures taken in relation to financial
financial
institutions
crisis (3) and of a number of decisions authorising rescue aid to
financial institutions.

the current global

in the context of

Sufficient and affordable access to finance is a precondition for
investment, growth and job creation by the private sector.
Member States need to use the leverage they have acquired as a
result of providing substantial financial support to the banking
sector to ensure that this support does not lead merely to an
improvement in the financial situation of the banks without any
benefit to the economy at large. Support for the financial sector
targeted to guarantee that banks
should therefore be well
resume their normal
lending activities. The Commission will
take this into account when reviewing State aid to banks.

to be
While the situation on financial markets appears
improving, the full
impact of the financial crisis on the real
economy is now being felt. A very serious downturn is affecting
the wider economy and hitting households, businesses and jobs.
In particular, as a consequence of
the crisis on financial
markets, banks are deleveraging and becoming much more risk-
averse than in previous years, leading to a credit squeeze. This
financial crisis could trigger credit rationing, a drop in demand
and recession.

(1) Communication from the Commission to the European Council,

COM(2008) 800.

(2) Conclusions of the ECOFIN Council of 7 October 2008.
(3) OJ C 270, 25.10.2008, p. 8.

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Such difficulties could affect not only weak companies without
solvency buffers, but also healthy companies which will find
themselves facing a sudden shortage or even unavailability of
credit. This will be particularly true for small and medium-sized
undertakings (‘SMEs’), which in any event face greater difficulties
with access to finance than larger companies. This situation
could not only seriously affect the economic situation of many
healthy companies and their employees in the short and
medium term but also have longer-lasting negative effects since
all Community investments in the future — in particular,
towards sustainable growth and other objectives of the Lisbon
Strategy — could be delayed or even abandoned.

1.2. The need for close European coordination of national

aid measures

In the current
financial situation, Member States could be
tempted to go it alone and, in particular, to wage a subsidy race
to support their companies. Past experience shows that indivi-
dual action of this kind cannot be effective and could seriously
damage the internal market. When granting support, taking
fully into consideration the current specific economic situation,
it is crucial to ensure a level playing field for European compa-
nies and to avoid Member States engaging in subsidy races
which would be unsustainable and detrimental to the Com-
munity as a whole. Competition policy is there to ensure this.

1.3. The need for temporary State aid measures

While State aid is no miracle cure to the current difficulties, well
targeted public support
for companies could be a helpful
component in the overall effort both to unblock lending to
companies and to encourage
in a
low-carbon future.

continued investment

to

temporary additional measures provided for

The
in this
Communication pursue two objectives: first, in the light of the
exceptional and transitory financing problems linked to the
to unblock bank lending to companies and
banking crisis,
thereby guarantee continuity in their access to finance. As borne
out by the recently adopted Communication from the Commis-
sion
the
European Economic and Social Committee and the Committee
of the Regions ‘Think Small First’ — A ‘Small Business Act’ for
Europe of 25 June 2008 (4), SMEs are particularly important for
the whole economy in Europe and improving their financial
situation will also have positive effects for large companies,
thereby supporting overall economic growth and modernisation
in the longer term.

the Council,

Parliament,

European

the

The second objective is to encourage companies to continue
in particular in a sustainable growth
investing in the future,
economy. There could indeed possibly be dramatic conse-
quences if, as a result of
the significant
progress that has been achieved in the environmental field were
to be halted or even reversed. For this reason, it is necessary to
provide temporary support to companies for investing in envir-
onmental projects (which could, inter alia, give a technological

the current crisis,

(4) COM(2008) 394 final.

edge to Community industry), thereby combining urgent and
necessary financial support with long-term benefits for Europe.

This Communication first recalls the manifold opportunities for
public support which are already at the disposal of Member
States under existing State aid rules, before setting out additional
State aid measures that Member States may grant temporarily in
order to remedy the difficulties which some companies are
currently encountering with access to finance and to promote
investment pursuing environmental objectives.

The Commission considers that the proposed aid instruments
are the most appropriate ones to achieve those objectives.

2. GENERAL ECONOMIC POLICY MEASURES

The Recovery Plan was adopted in response to the current
the crisis, the Com-
economic situation. Given the scale of
munity needs a coordinated approach, big enough and bold
enough to restore consumer and business confidence.

The strategic aims of the Recovery Plan are to:

— swiftly stimulate demand and boost consumer confidence,

— lessen the human cost of the economic downturn and its
impact on the most vulnerable. Many workers and their
families are or will be hit by the crisis. Action can be taken
to help stem the loss of jobs and then to help people return
rapidly to the labour market, rather than face long-term
unemployment,

— help Europe to prepare to capitalise when growth returns, so
that the European economy is in tune with the demands for
competitiveness and sustainability and the needs of
the
future, as outlined in the Lisbon Strategy. That means
supporting innovation, building a knowledge economy and
speeding up the shift towards a low-carbon and resource-
efficient economy.

To achieve those objectives, Member States already have at their
disposal a number of instruments which are not considered
State aid. For instance, some companies may be experiencing
even more acute difficulties with access to finance than others,
thereby delaying or even scuppering the financing necessary for
their growth and for seeing through investments envisaged. For
this purpose, Member States could adopt a series of general
policy measures, applicable to all companies on their territories
and, consequently, falling outside the State aid rules, with the
aim of temporarily alleviating financing problems in the short
and medium term. For example, payment deadlines for social
security and similar charges, or even taxes could be extended or
measures for employees could be introduced. If such measures
are open to all undertakings, in principle they do not constitute
State aid.

for

financial support directly to
Member States may also grant
instance for scrapping old products and/or
consumers,
buying green products. If such aid is granted without discrimi-
nation based on the origin of the product, it does not constitute
State aid.

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Moreover, general Community programmes, like the Competi-
tiveness and Innovation Framework Programme (2007 to 2013)
established by Decision No 1639/2006/EC of
the European
Parliament and of the Council of 24 October 2006 (5) and
the Seventh Framework Programme of
the European Com-
munity for research, technological development and demonstra-
Decision
tion
activities
No 1982/2006/EC of
the
Council of 18 December 2006 (6) may be used to best effect to
deliver support to SMEs, but also to large undertakings. This is
fully in line with other European initiatives, such as the
European Investment Bank's decision to mobilise EUR 30 billion
to support European SMEs and its commitment to step up its
ability to intervene in infrastructure projects.

established
the European Parliament and of

(2007-2013)

by

3. STATE AID POSSIBLE UNDER EXISTING INSTRUMENTS

the last

few years,

Over
the Commission has significantly
modernised the State aid rules in order to encourage Member
States to target public support better on sustainable investments,
thus contributing to the Lisbon Strategy. In this context, particu-
lar emphasis has been given to SMEs, accompanied by more
openings for granting State aid. In addition, the State aid rules
have been greatly simplified and streamlined by 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 (General
block exemption Regulation) (7) (‘the GBER’) which now offers
Member States a wide panoply of aid measures with minimum
administrative burden. In the current economic situation, the
following existing State aid instruments are of particular
importance:

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 (8)
(‘the de minimis Regulation’) specifies that
support measures worth up to EUR 200 000 per company over
any three-year period do not constitute State aid within the
meaning of the Treaty. The same Regulation also states that
guarantees of up to EUR 1,5 million do not exceed the
de minimis threshold and therefore do not constitute aid. Conse-
quently, Member States can grant such guarantees without calcu-
lation of the corresponding aid equivalent and without adminis-
trative burdens.

The GBER forms a central element of the State aid rules by
simplifying the State aid procedure for certain important aid
measures and fostering redirection of State aid to priority Com-
munity objectives. All previously existing block exemptions,
along with new areas (innovation, environment, research and
development for large companies and risk capital measures for
SMEs), have been brought under a single instrument. In all the
cases covered by the GBER, Member States can grant aid
without prior notification to the Commission. Therefore, the
speed of the process lies fully in the hands of Member States.

(5) OJ L 310, 9.11.2006, p. 15.
(6) OJ L 412, 30.12.2006, p. 1.
(7) OJ L 214, 9.8.2008, p. 3.
(8) OJ L 379, 28.12.2006, p. 5.

The GBER is particularly important for SMEs, in that it provides
for special rules on investment and employment aid exclusively
for SMEs. In addition, all the 26 measures covered are open to
SMEs, allowing Member States to accompany SMEs during the
different stages in their development, assisting them in areas
ranging from access to finance to research and development,
innovation, training, employment, environmental measures, etc.

New Community guidelines on State aid for environmental
protection (9) were adopted as part of the Energy and Climate
Change Package at the beginning of 2008. Under those guide-
lines, Member States may grant State aid, inter alia, as follows:

— aid for companies which improve their environmental
performance beyond Community standards, or
in the
absence of Community standards, of up to 70 % of the
extra investment costs (up to 80 % in the field of eco-inno-
vation) for small undertakings and of up to 100 % of the
extra investment costs if the aid is granted following a genu-
inely competitive bidding process, even for large companies;
aid for early adaptation to future Community standards and
aid for environmental studies is also allowed,

— in the field of renewable energies and cogeneration, Member
States may grant operating aid to cover all extra production
costs,

— in order to attain environmental targets for energy saving
and for reductions in greenhouse gas emissions, Member
States may grant aid enabling undertakings to achieve
energy savings and aid for renewable energy sources and
cogeneration of up to 80 % of the extra investment costs for
small undertakings and of up to 100 % of the extra invest-
ment costs if
the aid is granted following a genuinely
competitive bidding process.

In December 2006, the Commission adopted a new Community
framework for State aid for research and development and inno-
vation (10). That text contains new provisions on innovation,
specially targeted at SMEs and also corresponding to better
targeting of aid on job and growth creation along the lines set
out in the Lisbon Strategy. In particular Member States may
grant State aid, inter alia, as follows:

— aid for R & D projects,

in particular aid for fundamental
research, of up to 100 % of the eligible costs and aid for
industrial research of up to 80 % for small enterprises,

— aid for young innovative enterprises of up to EUR 1 million
and even more in assisted regions, aid for innovation clus-
ters, aid for innovation advisory services and aid for innova-
tion support services,

— aid for the loan of highly qualified personnel, aid for tech-
nical feasibility studies, aid for process and organisational
innovation in services and aid for industrial property rights
costs for SMEs.

(9) OJ C 82, 1.4.2008, p. 1.
(10) OJ C 323, 30.12.2006, p. 1.

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Training is another key element for competitiveness. It is criti-
cally important to maintain investment in training, even at a
time of rising unemployment, in order to develop new skills.
Under the GBER, Member States may grant both general and
specific training aid to companies totalling up to 80 % of the
eligible costs.

4. APPLICABILITY OF ARTICLE 87(3)(b)

4.1. General principles

In 2008, the Commission adopted a new Notice on the applica-
tion of Articles 87 and 88 of the EC Treaty to State aid in the
form of guarantees (11), which specifies the conditions under
which public guarantees for loans do not constitute State aid. In
accordance with that Notice, guarantees are not considered State
aid, in particular, when a market price is paid for them. Besides
clarifying the conditions which determine whether or not aid in
the form of guarantees is present, the Notice also introduces, for
the first time, specific safe-harbour premiums for SMEs, allowing
easier but safe use of guarantees in order to foster the financing
of SMEs.

New Community guidelines on State aid to promote risk capital
investments in small and medium-sized enterprises (12) were
adopted by the Commission in July 2006. They are aimed at
innovative and fast-growing SMEs — a key focus of the Lisbon
Strategy. The Commission put
in place a new safe-harbour
threshold of EUR 1,5 million per target SME, a 50 % increase.
Beneath that ceiling the Commission accepts that, as a rule,
alternative means of funding from financial markets are lacking
(that is to say, that a market failure exists). In addition, aid for
risk capital has been included in the GBER.

In disadvantaged regions, Member States can grant investment
aid for setting up a new establishment, extending an existing
establishment or diversifying into new products under
the
Guidelines on national regional aid for 2007-2013 (13), which
have applied since January 2007.

Pursuant to Article 87(3)(b) of the Treaty the Commission may
declare compatible with the common market aid ‘to remedy a
serious disturbance in the economy of a Member State’. In this
context, the Court of First Instance of the European Commu-
nities has ruled that the disturbance must affect the whole of
the economy of the Member State concerned, and not merely
that of one of its regions or parts of its territory. This, moreover,
is in line with the need to interpret strictly any derogating provi-
sion such as Article 87(3)(b) of the Treaty (15).

This strict interpretation has been consistently applied by the
Commission (16) in its decision-making.

In this context, the Commission considers that, beyond emer-
gency support for the financial system, the current global crisis
requires exceptional policy responses.

in
All Member States will be affected by this crisis, albeit
different ways and to different degrees, and it is likely that
unemployment will
increase, demand fall and fiscal positions
deteriorate.

In the light of the seriousness of the current financial crisis and
its impact on the overall economy of the Member States, the
Commission considers that certain categories of State aid are
justified, for a limited period, to remedy those difficulties and
that they may be declared compatible with the common market
on the basis of Article 87(3)(b) of the Treaty.

The Guidelines on national regional aid for 2007-2013 also
introduce a new form of aid to provide incentives to support
business start-ups and the early-stage development of small
enterprises in assisted areas.

4.2.1. Existing framework

4.2. Compatible limited amount of aid

Under the existing Community guidelines on State aid for
rescuing and restructuring firms in difficulty (14), Member States
can also grant aid to companies requiring public support. For
that purpose, Member States may notify rescue and/or restruc-
turing aid schemes for SMEs.

On the basis of the existing State aid possible, the Commission
has already authorised a large number of schemes that Member
States may use to respond to the current financial situation.

(11) OJ C 155, 20.6.2008, p. 10.
(12) OJ C 194, 18.8.2006, p. 2.
(13) OJ C 54, 4.3.2006, p. 13.
(14) OJ C 244, 1.10.2004, p. 2.

Article 2 of the de minimis Regulation, states that:

‘Aid measures shall be deemed not to meet all the criteria of
Article 87(1) of the Treaty and shall therefore be exempt
from the notification requirement of Article 88(3) of the
Treaty, if they fulfil the conditions laid down in paragraphs 2
to 5 of this Article.

(15) Joined Cases T-132/96 and T-143/96 Freistaat Sachsen and Volkswagen

AG v Commission [1999] ECR II-3663, paragraph 167.

(16) Commission Decision 98/490/EC in Case C 47/96 Crédit Lyonnais
(OJ L 221, 8.8.1998, p. 28), point 10.1; Commission Decision
2005/345/EC in Case C 28/02 Bankgesellschaft Berlin (OJ L 116,
4.5.2005, p. 1), points 153 et seq.; and Commission Decision
2008/263/EC in Case C 50/06 BAWAG (OJ L 83, 26.3.2008, p. 7),
point 166. See Commission Decision in Case NN 70/07 Northern Rock
(OJ C 43, 16.2.2008, p. 1), Commission Decision in Case NN 25/08
Rescue aid to WestLB (OJ C 189, 26.7.2008, p. 3) and Commission
Decision of 4 June 2008 in Case C 9/08 SachsenLB, not yet published.

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The total de minimis aid granted to any one undertaking
shall not exceed EUR 200 000 over any period of three
fiscal years. The total de minimis aid granted to any one
undertaking active in the road transport sector shall not
exceed EUR 100 000 over any period of three fiscal years.
These ceilings shall apply irrespective of the form of the
de minimis aid or the objective pursued and regardless of
whether the aid granted by the Member State is financed
entirely or partly by resources of Community origin. The
period shall be determined by reference to the fiscal years
used by the undertaking in the Member State concerned.’

4.2.2. New measure

The financial crisis is affecting not only structurally weak
companies but also companies which will find themselves facing
a sudden shortage or even unavailability of credit. An improve-
ment in the financial situation of those companies will have
positive effects for the whole European economy.

in view of

the current economic situation,

Therefore,
is
considered necessary to temporarily allow the granting of a
limited amount of aid that will nevertheless fall within the scope
of Article 87(1) of the Treaty, since it exceeds the threshold indi-
cated in the de minimis Regulation.

it

The Commission will consider such State aid compatible with
the common market on the basis of Article 87(3)(b) of the
Treaty, provided all the following conditions are met:

(g) prior to granting the aid,

the Member State obtains a
declaration from the undertaking concerned, in written or
electronic form, about any other de minimis aid and aid
pursuant to this measure received during the current fiscal
year and checks that the aid will not raise the total amount
of aid received by the undertaking during the period from
1 January 2008 to 31 December 2010, to a level above the
ceiling of EUR 500 000;

(h) the aid scheme does not apply to undertakings active in the
primary production of agricultural products (18);
it may
apply to undertakings
in the processing and
active
marketing of agricultural products (19) unless the amount of
the aid is fixed on the basis of the price or quantity of such
products purchased from primary producers or put on the
market by the undertakings concerned, or the aid is condi-
tional on being partly or entirely passed on to primary
producers.

4.3. Aid in the form of guarantees

4.3.1. Existing framework

The Commission Notice on the application of Articles 87
and 88 of the EC Treaty to State aid in the form of guarantees is
intended to give Member States detailed guidance about the
principles on which the Commission intends to base its inter-
pretation of Articles 87 and 88 and application thereof to State
guarantees.
the Notice specifies the conditions
under which State aid can be considered not to be present. It
does not provide compatibility criteria for assessment of
guarantees.

In particular,

(a) the aid does not exceed a cash grant of EUR 500 000 per
undertaking; all figures used must be gross, that is, before
any deduction of tax or other charge; where aid is awarded
in a form other than a grant, the aid amount is the gross
grant equivalent of the aid;

4.3.2. New measure

(b) the aid is granted in the form of a scheme;

(c) the aid is granted to firms which were not in difficulty (17)
on 1 July 2008; it may be granted to firms that were not in
difficulty at that date but entered in difficulty thereafter as a
result of the global financial and economic crisis;

(d) the aid scheme does not apply to firms active in the fisheries

sector;

(e) the aid is not export aid or aid favouring domestic over

imported products;

(f) the aid is granted no later than 31 December 2010;

(17) For the purposes of this Communication ‘firm in difficulty’ means:

— for large companies, a firm in difficulty as defined in point 2.1
the Community guidelines on State aid for rescuing and

of
restructuring firms in difficulty,

— for SMEs, a firm in difficulty as defined in Article 1(7) of the

GBER.

In order further to encourage access to finance and to reduce
the current high risk aversion on the part of banks, subsidised
loan guarantees for a limited period can be an appropriate and
well targeted solution to give firms easier access to finance.

The Commission will consider such State aid compatible with
the common market on the basis of Article 87(3)(b) of the
Treaty, provided all the following conditions are met:

(a) for SMEs, Member States grant a reduction of up to 25 % of
the annual premium to be paid for new guarantees granted
the
in accordance with the safe-harbour provisions of
Commission Notice on the application of Articles 87 and 88
of the EC Treaty to State aid in the form of guarantees (20);

(18) As defined in Article 2(2) of 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 small and medium-sized enterprises
active in the production of agricultural products and amending Regu-
lation (EC) No 70/2001 (OJ L 358, 16.12.2006, p. 3).

(19) As defined in Article 2(3) and 2(4) of Regulation (EC) No 1857/2006.
(20) This includes the possibility that for SMEs which do not have a credit
history or a rating based on a balance sheet approach, such as certain
special purpose companies or start-up companies, Member States
grant a reduction up to 25 % on the specific safe-harbour premium set
at 3,8 % in the Notice.

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(b) for large companies, Member States also grant a reduction
of up to 15 % of the annual premium for new guarantees
calculated on the basis of the same safe-harbour provisions;

(c) when the aid element in guarantee schemes is calculated
through methodologies already accepted by the Commission
following their notification under a regulation adopted by
the Commission in the field of State aid (21), Member States
may also grant a similar reduction of up to 25 % of the
annual premium to be paid for new guarantees for SMEs
and up to 15 % for large companies;

(d) the maximum loan does not exceed the total annual wage
bill of the beneficiary (including social charges as well as the
cost of personnel working on the company site but formally
in the payroll of subcontractors) for 2008. In the case of
companies created on or after 1 January 2008,
the
maximum loan must not exceed the estimated annual wage
bill for the first two years in operation;

(e) guarantees are granted until 31 December 2010 at

the

latest;

(f) the guarantee does not exceed 90 % of the loan;

(g) the guarantee may relate to both investment and working

capital loans;

(h) the reduction of the guarantee premium is applied during a
maximum period of 2 years following the granting of the
guarantee;

(i) the aid is granted to firms which were not in difficulty (22)
on 1 July 2008; it may be granted to firms that were not in
difficulty at that date but entered in difficulty thereafter as a
result of the global financial and economic crisis

4.4. Aid in the form of subsidised interest rate

4.4.1. Existing framework

The Commission Communication on the revision of
the
method for setting the reference and discount rates (23) estab-
lishes a method for calculation of the reference rate, based on
the one-year inter-bank offered rate (IBOR) increased by margins
ranging from 60 to 1 000 base points, depending on the credit-
worthiness of the company and the level of collateral offered. If
Member States apply that method, the interest rate does not
contain State aid.

4.4.2. New measure

Companies may have difficulties in finding finance in the
current market circumstances. Therefore the Commission will
accept that public or private loans are granted at an interest rate
which is at least equal to the central bank overnight rate plus a
premium equal to the difference between the average one year

(21) Such as the GBER or Regulation (EC) No 1628/2006 or Regulation
(EC) No 1857/2006, provided that the approved methodology expli-
citly addresses the type of guarantees and the type of underlying trans-
actions at stake.
(22) See footnote 17.
(23) OJ C 14, 19.1.2008, p. 6.

interbank rate and the average of the central bank overnight rate
over the period from 1 January 2007 to 30 June 2008, plus the
credit risk premium corresponding to the risk profile of the
recipient, as stipulated by the Commission Communication on
the revision of the method for setting the reference and discount
rates.

The aid element contained in the difference between this interest
rate and the reference rate defined by the Commission Commu-
nication on the revision of the method for setting the reference
and discount rates will be considered, on a temporary basis, to
be compatible with the Treaty on the basis of Article 87(3)(b),
provided the following conditions are met:

(a) this method applies

to all

contracts

concluded on
31 December 2010 at the latest; it may cover loans of any
the reduced interest rates may be applied for
duration;
interest payments before 31 December 2012 (24); an interest
rate at least equal to the rate defined in the reference and
discount rate Communication must apply to loans after that
date;

(b) the aid is granted to firms which were not in difficulty on
1 July 2008 (22); it may be granted to firms that were not in
difficulty at that date but entered in difficulty thereafter as a
result of the global financial and economic crisis.

4.5. Aid for the production of green products

4.5.1. Existing framework

The Commission Communication on the revision of
the
method for setting the reference and discount rates establishes a
method for calculation of
the reference rate, based on the
one-year inter-bank offered rate (IBOR) increased by margins
ranging from 60 to 1 000 base points, depending on the credit-
worthiness of the company and the level of collateral offered. If
Member States apply that method, the interest rate does not
contain State aid.

4.5.2. New measure

the current

Because of
financial crisis, companies are also
finding it more difficult to gain access to finance for production
of more environmentally friendly products. Aid in the form of
guarantees may not be sufficient
to finance costly projects
increasing environmental protection by adapting
aiming at
earlier to future standards not yet in force or by going beyond
such standards.

The Commission considers that environmental goals should
remain a priority despite the financial crisis. Production of more
environmentally friendly, including energy-efficient, products, is
in the Community's interest and it is important that the finan-
cial crisis should not impede that objective.

(24) Member States who want to use this facility have to publish the daily
overnight rates online and have to make them available to the
Commission.

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Therefore, additional measures in the form of subsidised loans
could encourage production of ‘green products’. However, subsi-
dised loans may cause serious distortions of competition and
should be strictly limited to specific situations and targeted
investment.

(i) the reduction in the interest rate may be applied to loans
granted by the State or public finance institutions and to
loans granted by private financial institutions. Non-discrimi-
should be
nation between public and private entities
ensured;

The Commission considers that, for a limited period, Member
States should be given the possibility of granting aid in the form
of an interest-rate reduction.

On the basis of Article 87(3)(b) of the Treaty, the Commission
will consider compatible with the common market any interest-
rate subsidy for investment loans that meets all the following
conditions:

(a) the aid relates to investment loans for financing projects
consisting of production of new products which signifi-
cantly improve environmental protection;

(b) the aid is necessary for launching a new project; in the case
of existing projects, aid may be granted if it becomes neces-
sary, due to the new economic situation, in order to pursue
the project;

(c) the aid is granted only for projects consisting of production
of products involving early adaptation to or going beyond
future Community product standards (25) which increase the
level of environmental protection and are not yet in force;

(d) for products involving early adaptation to or going beyond
future Community environmental standards, the investment
starts on 31 December 2010 at the latest with the objective
of putting the product on the market at least two years
before the standard enters into force;

(e) loans may cover the costs of investment in tangible and
intangible assets (26) with the exception of loans for invest-
ments which account for production capacities of more
than 3 % on product markets (27) where the average annual
growth rate, over the last five years before the start of the
investment, of
the apparent consumption on the EEA
market, measured in value data, remained below the average
annual growth rate of the European Economic Area's GDP
over the same five year reference period;

(f) the loans are granted on 31 December 2010 at the latest;

(g) for calculation of the aid, the starting point should be the
individual rate of the beneficiary as calculated on the basis
this
the methodology contained in point 4.4.2 of
of
Communication. On the basis of
the
that methodology,
company may benefit from an interest-rate reduction of:

— 25 % for large companies,

— 50 % for SMEs;

(h) the subsidised interest

rate applies during a maximum

period of 2 years following the granting of loan;

(25) Future Community product standard means a mandatory Community
standard setting environmental levels to be attained for products sold
in the Community which has been adopted but is not yet in force.
(26) As defined in point 70 of the Community guidelines on State aid for

environmental protection.

(27) As defined in point 69 of the Guidelines on national regional aid for

2007-2013.

(j) the aid is granted to firms which were not in difficulty (28)
on 1 July 2008; it may be granted to firms that were not in
difficulty at that date but entered in difficulty thereafter as a
result of the global financial and economic crisis;

(k) Member States ensure that the aid is not directly or indir-

ectly transferred to financial entities.

4.6. Risk capital measures

4.6.1. Existing framework

The Community guidelines on State aid to promote risk capital
investments in small and medium-sized enterprises set out the
conditions under which State aid supporting risk capital invest-
ment may be considered compatible with the common market
in accordance with Article 87(3) of the Treaty.

Based on the experience gained from applying the guidelines on
State aid to promote risk capital
investments in small and
medium-sized enterprises, the Commission considers that there
is no general risk capital market failure in the Community. It
does, however, accept that there are market gaps for some types
of
investment at certain stages of enterprises' development
which are the result of imperfect matching of supply of and
demand for risk capital and can generally be described as an
equity gap.

Point 4.3 of the guidelines states that for tranches of finance
not exceeding EUR 1,5 million per target SME over each period
of twelve months, under certain conditions market failure is
presumed and does not need to be demonstrated by Member
States.

Point 5.1(a) of the same guidelines states that ‘The Commission is
aware of the constant fluctuation of the risk capital market and of the
equity gap over time, as well as of the different degree by which enter-
prises are affected by the market failure depending on their size, on
their stage of business development, and on their economic sector.
Therefore, the Commission is prepared to consider declaring risk capital
measures providing for investment tranches exceeding the threshold of
EUR 1,5 million per enterprise per year compatible with the common
market, provided the necessary evidence of
failure is
submitted.’

the market

4.6.2. Temporary adaptation of the existing rules

The turmoil on the financial market has had a negative effect on
the risk capital market for early growth SMEs by tightening the
availability of risk capital. Due to the currently greatly increased
risk perception associated with risk capital linked with uncer-
tainties resulting from possibly lower yield expectations, inves-
tors are currently tending to invest in safer assets the risks of
which are easier to assess as compared to those associated with

(28) See footnote 17.

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risk capital investments. Furthermore the illiquid nature of risk
capital investments has proven to be a further disincentive for
investors. There is evidence that the resulting restricted liquidity
under current market circumstances has widened the equity gap
for SMEs. It is therefore considered appropriate to temporarily
raise the safe-harbour threshold for risk capital investments to
meet the increased equity gap and to temporarily lower the
percentage of minimum private investor participation to 30 %
also in the case of measures targeting SMEs in non-assisted
areas.

Accordingly, on the basis of Article 87(3)(b) of
the Treaty,
certain limits set out in the Community guidelines on State aid
to promote risk capital investments in small and medium-sized
enterprises are temporarily adapted until 31 December 2010 as
follows:

(a) for the purposes of point 4.3.1, the maximum permitted
tranches of finance are increased to EUR 2,5 million, from
EUR 1,5 million per target SME over each period of twelve
months;

(b) for the purposes of point 4.3.4, the minimum amount of
funding to be provided by private investors is 30 % both in
and outside assisted areas;

(c) other conditions

laid down in the guidelines

remain

applicable;

(d) this temporary adaptation of the guidelines does not apply

to risk capital measures covered by the GBER;

(e) Member States may adapt approved schemes to reflect the

temporary adaptation of the guidelines.

4.7. Cumulation

The aid ceilings fixed under this Communication will be applied
regardless of whether the support
is
financed entirely from State resources or partly financed by the
Community.

for the aided project

The temporary aid measures foreseen by this Communication
may not be cumulated with aid falling within the scope of the
de minimis Regulation for the same eligible costs. If the under-
taking has already received de minimis aid prior to the entry into
force of this temporary framework the sum of the aid received
under the measures covered by point 4.2 of this Communica-
tion and the de minimis aid received must not exceed
EUR 500 000 between 1 January 2008 and 31 December
2010. The amount of de minimis aid received from 1 January
2008 must be deducted from the amount of compatible aid
granted for the same purpose under points 4.3, 4.4, 4.5 or 4.6.

The temporary aid measures may be cumulated with other
compatible aid or with other forms of Community financing
provided that the maximum aid intensities indicated in the rele-
vant guidelines or block exemptions Regulations are respected.

cannot be

that marketable

and 93 of the Treaty to short-term export-credit insurance (29)
stipulates
covered by
risks
export-credit
insurance with the support of Member States.
Marketable risks are commercial and political risks on public
and non-public debtors established in countries listed in the
Annex to that Communication, with a maximum risk period of
less than two years. Risks concerning debtors established in the
Member States and eight further members of the Organisation
for Economic Co-operation and Development are considered
marketable.

The Commission considers that, as a consequence of the current
financial crisis, a lack of insurance or reinsurance capacity does
not exist in every Member State, but it cannot be excluded that,
in certain countries cover
for marketable risks could be
temporarily unavailable.

Point 4.4 of the Communication states that:
‘In such circum-
stances, those temporarily non-marketable risks may be taken on to the
account of a public or publicly supported export-credit
insurer for
non-marketable risks insured for the account of or with the guarantee
of the State. The insurer should, as far as possible, align its premium
rates for such risks with the rates charged elsewhere by private export-
credit insurers for the type of risk in question.

Any Member State intending to use that escape clause should immedi-
its draft decision. That notification
ately notify the Commission of
should contain a market report demonstrating the unavailability of
the risks in the private insurance market by producing
cover
for
evidence thereof
from two large, well-known international private
export-credit insurers as well as a national credit insurer, thus justifying
the use of the escape clause. It should, moreover, contain a description
of the conditions which the public or publicly supported export-credit
insurer intends to apply in respect of such risks.

Within two months of the receipt of such notification, the Commission
will examine whether the use of the escape clause is in conformity with
the above conditions and compatible with the Treaty.

If the Commission finds that the conditions for the use of the escape
clause are fulfilled, its decision on compatibility is limited to two years
from the date of the decision, provided that the market conditions justi-
fying the use of the escape clause do not change during that period.

the Commission may,

in consultation with the other
Furthermore,
Member States, revise the conditions for the use of the escape clause; it
may also decide to discontinue it or replace it with another appropriate
system.’

5. SIMPLIFICATION MEASURES

5.1. Short-term export credit insurance

Those provisions, applicable to large companies and SMEs, are
an appropriate instrument in the current economic situation if
Member States consider that cover is unavailable on the private
insurance market for certain marketable credit risks and/or for
certain buyers of risk protection.

The Communication from the Commission to Member States
pursuant to Article 93(1) of the EC Treaty applying Articles 92

(29) OJ C 281, 17.9.1997, p. 4.

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C 16/9

In this context, in order to speed up the procedure for Member
States,
the Commission considers that, until 31 December
2010, Member States may demonstrate the lack of market by
providing sufficient evidence of the unavailability of cover for
the risk in the private insurance market. Use of the escape
clause will in any case be considered justified if:

— a large well-known international private export credits
insurer and a national credit insurer produce evidence of the
unavailability of such cover, or

— at least four well-established exporters in the Member State
produce evidence of refusal of cover from insurers for
specific operations.

The Commission, in close cooperation with the Member States
concerned, will ensure swift adoption of decisions concerning
the application of the escape clause.

5.2. Simplification of procedures

State aid measures referred to in this Communication must be
notified to the Commission. Beyond the substantive measures
set out in this Communication, the Commission is committed
to ensuring the swift authorisation of aid measures that address
the current crisis in accordance with this Communication
provided close cooperation and full information is provided by
the Member States concerned.

the on-going process,
This commitment will complement
whereby the Commission is currently drafting a number of
improvements to its general State aid procedures, particularly to
allow quicker and more effective decision-making in close coop-
eration with Member States. This general simplification package
in particular, enshrine joint commitments by the
should,
Commission and Member States to more streamlined and
predictable procedures at each step of a State aid investigation
and allow faster approval of straightforward cases.

6. MONITORING AND REPORTING

EC

Treaty (30)

Council Regulation (EC) No 659/1999 of 22 March 1999
laying down detailed rules for the application of Article 93 of
the
(EC)
No 794/2004 of 21 April 2004 implementing Council Regu-
lation (EC) No 659/1999 laying down detailed rules for the
application of Article 93 of the EC Treaty (31) require Member
States to submit annual reports to the Commission.

Commission

Regulation

and

By 31 July 2009, Member States must provide the Commission
with a list of schemes put
this
Communication.

in place on the basis of

Member States must ensure that detailed records regarding the
granting of aid provided for by this Communication are main-
tained. Such records, which must contain all information neces-
sary to establish that
the necessary conditions have been
observed, must be maintained for 10 years and be provided to
In particular, Member States
the Commission upon request.

must have obtained information demonstrating that
the aid
beneficiaries under the measures provided for in points 4.2, 4.3,
4.4 and 4.5 were not companies in difficulty on 1 July 2008.

In addition, a report on the measures put in place on the basis
of this Communication should be provided to the Commission
by Member States by 31 October 2009. In particular, the report
should provide elements indicating the need for the Commis-
sion to maintain the measures provided for by this Communica-
tion after 31 December 2009, as well as detailed information
on the environmental benefits of the subsidised loans. Member
States must provide this information for any subsequent year
during which this Communication is applied, before 31 October
of each year.

The Commission may request additional information regarding
the aid granted, to check whether the conditions laid down in
the Commission decision approving the aid measure have been
met.

7. FINAL PROVISIONS

this

applies

current

Commission

Communication

The
from
17 December 2008, the date on which it agreed in principle its
content, having regard to the financial and economic context
which required immediate action. This Communication is justi-
fied by the
exceptional and transitory financing
problems related to the banking crisis and will not be applied
after 31 December 2010. After consulting Member States, the
Commission may review it before that date on the basis of
important competition policy or economic considerations.
Where this would be helpful, the Commission may also provide
further clarifications of its approach to particular issues.

The Commission applies the provisions of this Communication
to all notified risk capital measures on which it must take a
decision after 17 December 2008, even if the measures were
notified prior to that date.

In accordance with the Commission notice on the determin-
ation of the applicable rules for the assessment of unlawful
State aid (32), the Commission applies the following in respect of
non-notified aid:

(a) this Communication,
17 December 2008;

if

the

aid was

granted

after

(b) the guidelines applicable when the aid was granted in all

other cases.

The Commission, in close cooperation with the Member States
concerned, ensures swift adoption of decisions upon complete
notification of measures covered by this Communication.
Member States should inform the Commission of their inten-
tions and notify plans to introduce such measures as early and
comprehensively as possible.

The Commission wishes to recall that any procedural improve-
ment depends entirely on submission of clear and complete
notifications.

(30) OJ L 83, 27.3.1999, p. 1.
(31) OJ L 140, 30.4.2004, p. 1.

(32) OJ C 119, 22.5.2002, p. 22.