Brussels kicks off review of general block exemption regulation

The European Commission has launched a review of the general block exemption regulation (GBER) as part of its state aid modernisation (SAM) initiative.

Brussels has kicked off the review with a consultation on the regulation, which came into force in 2008 and exempts certain categories of aid from the obligation of prior notification to the Commission.

Lucy Carlile and David Kilduff of law firm Walker Morris said GBER was one of the few potential reliefs that businesses and local authorities could rely on to avoid falling foul of state aid regulations.

They added: “Any widening or restriction of GBER is likely to have a direct effect on smaller enterprises, local authorities and central government. Any changes made to GBER should be informed and based on actual experiences on application of and reliance on GBER.”

Many of the questions contained in the consultation related to public authorities, they pointed out. These open and closed questions include:

• the perceived effect of block exemptions and their potential distortion of competition;
• the effect of the financial and economic crisis on grants made under GBER; and
• the validity of the 'incentive effect' argument used to justify exemptions given in respect of SMEs.

The Commission expects to propose a revised draft regulation in 2013, "with a view to contributing to the objectives of the modernisation initiative".

Launching the consultation, the EC said: “After almost four years of applying the GBER, it is time to take stock of stakeholders' experiences and review its functioning. Moreover, the Commission will examine how the GBER can support the SAM project, designed to foster growth as well as speed up, simplify and focus the state aid review.

“In particular, the GBER will be reviewed with a view to best channelling public resources towards well-established objectives of common interest. Thus the GBER will play a role in enhancing growth, employment and competitiveness. Finally, the review aims at simplifying the treatment of measures with relatively low amounts of aid.”

The Commission said the review of the GBER was closely linked to an upcoming review of the guidelines on environmental aid, R&D&I, regional and risk capital aid in the context of state aid modernisation.

The consultation and the questionnaire are available here. The closing date for submissions is 12 September 2012.

Philip Hoult