Het actieplan voor staatssteun: een stappenplan voor hervorming en terugwinning (en)

Neelie Kroes

European Commissioner for Competition Policy

The State Aid Action Plan: a roadmap for reform and recovery

Conference on "The new approach to state aids - Recent reforms under the State Aid Action Plan and next steps"

Brussels, 21st November 2008

Ladies and gentlemen,

When we first planned this conference, it was, economically, a rather calmer time. The crisis on the financial markets over the last few months has put many rules and regulations into the spotlight. I am proud to say that so far state aid control has withstood the glare rather well.

Financial Crisis

The state aid rules have provided a baseline against which national interventions to stave off the financial crisis can be judged, a sound floor on which all national governments can stand, knowing that all the others are standing there with them. By ensuring minimum standards, the state aid rules have been part of the solution to these problems, ensuring that government intervention did not make the problems worse.

My teams have worked hard, including at nights and weekends. Within days, we issued guidance to Member States on the measures they could take to shore up the banks. And when we have had good co-operation from Member States we have reacted quickly – including within 24 hours – to help get the measures in place.

But this has been no rubber stamping exercise. We continue to insist on restructuring plans following any rescue measures, and we have challenged provisions in several schemes that fell foul of the state aid rules. When – for example - the Irish government announced a bank guarantee scheme that supported only banks in Ireland with Irish parent companies, we saw a flight of capital towards those banks at the expense of banks in Ireland with foreign parent companies. In discussions with the Irish Government it became clear that neither side wanted this outcome, and the scheme was reformed. Ireland knew that it could amend the scheme, safe in the knowledge that the same rules would be applied to all other Member States.

Many measures are now in place and many banks have benefited significantly from recapitalisation paid for by taxpayers. It remains to be seen whether one of the objectives of this recapitalisation – help to the real economy – is achieved by the banks passing on the benefits that they have received.

Of course, cases for state aid intervention to ensure a level playing field are not always so clear cut; the decision whether or not to intervene is not always so easy to make.

State Aid Action Plan

That is why we established the State Aid Action Plan. We needed a roadmap that shows where we want to go, and the best way to get there. A roadmap not only for the European Commission, but for the Member States as well. It was designed to be a roadmap for reform; it is now also a roadmap for recovery, a roadmap for rebuilding our economy.

In the last four years, we have carried out a full examination of state aid policy. We found that the principles underlying the state aid rules are fundamentally sound, but that the implementation of those principles in some areas needed to be brought up to date.

First, we needed to improve our economic analysis. More is still to be done, but the refined economic approach has already proven valuable in helping us to better balance the positive and negative effects of aid.

The cases assessing schemes to support broadband infrastructure in various parts of Europe really show the benefits of this economic analysis. By looking at market failures and the economic need for government support, by looking at what the private sector can do without taxpayers' money, the Commission and the Member State can take the politics out of the discussion. We both look at whether the schemes will deliver real benefits or whether they are a waste of taxpayers' money.

Economic assessment is not only useful in individual cases: the refined economic approach is at the heart of more than dozen new state aid instruments. This brings me to the second pillar of the Action Plan. We have issued a range of measures implementing our rules, and in all of these areas we have a consistent framework to weigh up the costs and benefits of the intervention.

Later today you will hear in more detail about the various measures that have been introduced. The list is impressive: guidelines including services of general interest, regional aid, and environmental protection; communications on innovation, and guarantees; plus three block exemptions, including the General Block Exemption.

Looking at this last measure, the General Block Exemption is not only a good example of the refined economic approach mentioned above: even more importantly it is a great example of the Commission clarifying what we mean by “the right type of aid”.

Everyone agrees that aid needs to be better targeted, but what does that mean in practice? The GBER gives automatic approval for 26 categories of aid measures including aid to SMEs, research, innovation, regional development, training, employment and risk capital. So we have not only cut the red tape involved in granting this aid, we have given Member States yet more guidance on what the right type of aid, fully compliant with the rules, really is.

We adopted the GBER in July this year so it is as yet too early to see its impact: but the precedent of earlier block exemptions is encouraging: block exempted aid measures accounted for 65% of all aid measures in 2007, compared with 40% in 2002. We have also seen an increase in the value of block exempted aid - 13% of total aid was covered by block exemptions in 2007, compared with 6% in 2006. There is tremendous scope for Member States to give more aid under the existing rules. I want to see that scope used.

Individual aid in favour of training, employment and regional development above certain thresholds needs to be notified so the Commission can check that the positive effects of the aid outweigh any distortions of competition. My services have prepared draft guidelines which specify the criteria that we will apply to conduct these in depth assessments, giving the necessary predictability and transparency for Member States and undertakings. Drafts have been published and will be discussed in January with Member States before adoption by the Commission. Comments from third parties are of course welcome.

And finally under the action plan, we want to improve our procedures. Both the Commission and Member States need to get better at handling state aid cases. In particular, we want to make things easier for Member States who are proposing aids which, though outside the block exemption – and there will always be such cases - do not raise competition problems.

This is why we are putting together a Simplification Package – to simplify procedures across the board.

Simplification Package

This would contain the following components:

First, a Best Practices Code to establish more streamlined and predictable procedures at each step of a state aid investigation, as a joint commitment of both the Commission and Member States.

What do I mean in practice? Well, we can become more efficient through better pre-notification contacts, or offering incentives for complete notifications. These and other measures would be enshrined in the Code as the example to follow. Everyone would know what is expected of them.

Second, we are thinking about a simplified procedure to swiftly approve cases where the notification is complete and which merely confirm precedents or squarely fall into the 'safe-harbours' of existing rules. Transparency could be increased by enabling third party comments on cases before decisions are taken.

Of course, all sides would need to get used to this new way of working. Initially, the simplified procedure would cover only about 15% of our notified cases. But over time, and if it works well, we would want that to increase to all straightforward cases.

We still need to fine-tune these ideas internally, and discuss them with Member States and stakeholders. But if all goes well, the new texts could be in place by mid 2009.

Finally, we have the Notice on the Enforcement of state aid law by national courts. National private enforcement is key to procedural efficiency. National judges can very quickly remedy bad aid – provided they know the European rules. This is why we want to ensure that all courts know what options they have, be it as regards the remedies available, legal standing, interim measures or the conditions for claiming damages.

A draft notice has already been published, and received a warm welcome from the vast majority of stakeholders. This should enable the Commission to adopt the Notice in early 2009.

Completion of the State Aid Action Plan

These last measures will complete the major pillars of the State Aid Action Plan. We will have made the rules more economically accurate, we will have helped Member States direct aid towards measures that work for the economy and do not distort competition, and we will have improved procedures both in terms of notified cases and in terms of national enforcement.

Conclusion

Member States now have an extraordinary range of measures at their disposal that will allow them to grant the right type of aid quickly, and without administrative fuss.

To finish where I started, we are facing a difficult economy. People and companies are going to feel a lot more pressure than they are used to, and politicians will increasingly feel pressure to help them out. With the aid rules that I have described, there are many, many ways in which governments can spend taxpayers' money to help the economy, to kickstart growth and to boost jobs.

Any recession will be shorter and shallower if we make sure that the Single Market continues to function properly. A competitive Single Market and the competition rules that underpin it, delivers jobs and prosperity and protects people's interests. The competition rules work, and are all the more important at times of economic difficulties. The temptation may be greater now for Member States to give subsidies that can result in their economic problems being exported to their neighbours, but that would only worsen the economic difficulties.

All governments have to resist that. We have all heard calls, particularly in France, Germany and the United States, for support to be given to the car industry. It is indeed an important industry and in Europe there is already plenty of scope in the current rules to do just that. R&D aid or environment aid, for example, would have the double benefit of helping the industry and helping address the problem of climate change.

The people of Europe are facing a difficult time, and they deserve solutions. They deserve solutions that do not look to the past, but rebuild the economy stronger for the future. We have to keep a cool head, reflect hard on what our priorities are and what new challenges are facing us. We have to look at the economy and find where current conditions are causing problems, and we have to direct aid towards resolving those problems. We have to rebuild the economy for the future.

But I ask all governments to avoid the costly trap of a subsidy race. I have seen comments on both sides of the Atlantic that “they” are going to give aid, so “we” should too. The car industry might want politicians to take that road, but the European economy and European taxpayers will be better off if politicians choose another, more effective, route.

We are also looking at what else needs to be done to adjust our rules in light of the financial crisis and the looming recession. Small and medium sized businesses are the lifeblood of our economy, and they clearly need more help; many of them are failing not through any fault of their own and we have to do something more to address that. The Commission will announce a package of proposals on 26 November, and I will make sure that greater support for SMEs is an important part of that.

Our objective must be to not only survive the coming recession, but to come out of it more prosperous, with stronger companies and better jobs than before.

The State Aid Action Plan has already provided a clear roadmap for state aid. And as with any good map, the boundaries are clearly drawn - as are the dead ends. There are roads that governments cannot take, roads that lead nowhere and will provide no benefit to the economy. Road that will only lead to beggar thy neighbour policies that will make everyone worse off.

For the sake of all of us, I hope that Member States avoid these dead ends, and instead stick to the highway.