Minimum fuss

Connection iStock 000002499687XSmall 146x219Elizabeth Gibson examines the new EU Regulation on de minimis aid for the provision of services of general economic interest.

In December 2011, the European Commission (the "Commission") adopted measures for the reform of the State aid rules in respect of services of general economic interest as governed by Article 106(2) of the Treaty on the Functioning of the European Union ("TFEU") and the ECJ's decision in Altmark [1]. As part of the reform package, the Commission consulted on a draft regulation on de minimis aid for the provision of services of general economic interest (the "Regulation") [2]. The Regulation was adopted on 25 April 2012. 


The Regulation provides an exemption from the State aid rules for the grant of aid up to €500,000 per undertaking, which is granted as compensation for the provision of services of general economic interest over a rolling three year period. Such aid will be deemed by the Commission not to affect trade between Member States and/or distort competition. 



The Regulation only applies to aid which is transparent; that is, aid for which it is possible to calculate precisely the gross grant equivalent without the need to undertake a risk assessment. This may include:

  • Loans where the gross grant equivalent has been calculated on the basis of market interest rates prevailing at the time of the grant;
  • Capital injections, providing the total amount does not exceed the de minimis ceiling;
  • Risk capital measures provided the risk capital scheme only provides capital up to the de minimis ceiling; and
  • Individual aid provided under a guarantee scheme, so long as the guaranteed scheme does not exceed €3.75 million per undertaking and the guarantee does not exceed 80% of the underlying loan.

The Regulation does not apply to certain types of aid, for example, aid granted to undertakings active in the fishery and aquaculture sectors or aid granted to undertakings in difficulty [3]. The new exemption should not be confused with the existing de minimis provisions which provide that aid, totalling up to €200,000 per undertaking over a rolling three year period, will be exempt on the grounds that it does not distort competition. These provisions [4] remain in full force and effect. Rather, the Regulation provides an additional exemption specifically for undertakings entrusted with carrying out services of general economic interest under Article 106(2) of the TFEU.

In addition, it is not possible to cumulate de minimis aid under the Regulation with other existing State aid exemptions, most particularly, the €200,000 de minimis exemption under Commission Regulation 1998/2006. Accordingly, undertakings will only benefit from the new de minimis exemption for services of general economic interest if the total amount of aid granted stays within the €500,000 threshold, and the exemption will not apply if the aid granted exceeds the ceiling even by a fraction. 

 

Elizabeth Gibson is a partner at Ashfords. She can be contacted on 01392 333802 or by This email address is being protected from spambots. You need JavaScript enabled to view it..

[1] Case C-280/00 Altmark Trans and Regierungspräsidium Magdeburg [2003] I-7747. 


[2] Commission Regulation (EU) No 360/2012. 


[3] See Article 1(2) of the Regulation for a full list of exclusions. 
 

[4] as set out in Commission Regulation (EU) 1998/2006.