The EU Commission adopts an extension of the scope of the General Block Exemption Regulation to include State aid measures which support economic recovery from COVID-19 in a sustainable way

On 23 July 2021, the European Commission (“Commission”) adopted an extension of the scope of the General Block Exemption Regulation (“GBER”).

The revised rules concern:

  • Aid for projects funded via certain EU centrally managed programs under the new Multiannual Financial Framework; and
  • Certain State aid measures that support the green and digital transition and are also relevant for the recovery from the economic effects of the coronavirus pandemic.

Background

Article 107(1) TFEU sets out the criteria for any public support which is considered to be State aid. Member States are required to notify all their State aid plans to the Commission. Only after the Commission’s approval are they allowed to enact these measures (Article 108(3) TFEU).

Implemented in 2014, the GBER allows Member States to set up State aid measures without prior notification to the Commission, as long as all the GBER criteria are fulfilled. It applies to different sectors such as research and development, innovation, environmental protection, support to SMEs, etc. These categories are exempted from the requirement of prior notification and approval from the Commission, as they are unlikely to affect trade and distort competition. State aid measures that do not meet the GBER criteria are not necessarily incompatible with EU State aid rules, but must be notified to the Commission prior to their implementation. Failure to comply with these rules bears the risk of fines and possible recovery of the aid, if the measure is considered not compatible.

The GBER proved to be quite effective as the Commission reported that, since 2015, more than 96% of State aid measures did not require notification to the Commission.

Aid for projects under Multiannual Financial Framework

One pillar of the extension of the GBER is to coordinate EU funding rules under the new Framework and EU State aid rules in specific sectors. This is geared towards avoiding unnecessary complexities while preserving competition within the EU Single Market. As such, assessment of projects already carried out at the EU-program level will be used as the yardstick for national State aid measures or shared management programs.

The national funds that are covered by the extension of the GBER relate to the following areas:

  • Market deficiencies: the amended GBER supports measures aimed at rapidly addressing market deficiencies in certain markets benefitting from State aid (energy, transport, broadband infrastructure etc.) within the InvestEU program;
  • Research, Development and Innovation (RD&I) projects under the interstate cooperative Horizon 2020 and Horizon Europe programs;
  • The European Territorial Cooperation (“ETC”) or otherwise known as “Interreg”: the GBER expands the ETC further to larger companies and inserts a minimum threshold for the notification; and
  • The European Innovation Partnership ”Agricultural Productivity and Sustainability (“EIP-AGRI”), and Operational Group projects or community-led local development (“CLLD”) projects.

In summary, the extended GBER means national measures that implement these European schemes no longer need to be notified prior to their application.

More possibilities to support the twin transition and the economic recovery from the coronavirus pandemic

The other pillar of the extension of the GBER is the ability of Member States to provide State aid to support the economic recovery of the coronavirus pandemic in a sustainable and resilient way without prior notification. The relevant categories of aid now exempted from prior notification to the Commission are:

  • Aid for energy efficiency projects in buildings;
  • Aid for recharging and refuelling infrastructure for low emission road vehicles; and
  • Aid for fixed broadband networks, 4G and 5G mobile networks, certain trans-European digital connectivity infrastructure projects and certain vouchers.

Such aid categories fall under policy areas that are top priorities for Europe’s twin transition: to a green and digital economy. In this respect, the GBER extension covers areas that are key for the EU’s new growth strategy to develop digital structures in line with its objective to become climate neutral by 2050. By increasing the flexibility for granting State aid in such areas, the Commission intends to support the economic recovery from of the coronavirus crisis, while ensuring that this will effectively contribute to the transition to a green and digital economy.

Concluding remarks

The expansion of the GBER is geared towards several objectives:

  • Consistency across the European Union;
  • Obtain a better overview of national projects related to EU projects;
  • Speed up delivery of public support while reducing administrative burdens;
  • Enhance cooperation under the EU Cohesion policy umbrella;
  • Ensure a practical application of the Green Deal’s twin digital and green transition; and
  • Relieve the Commission of some matters so as to focus on more complex and important State aid issues.

This is not the first time the Commission has adopted measures that seek to facilitate the application of State aid rules during the ongoing coronavirus pandemic. The Commission’s Temporary Framework for State aid measures supporting the economy during the pandemic is already proving to be a success (see our previous article Johan Ysewyn, Sophie Bertin, The EU Commission publishes an extension of the Temporary Framework for State aid measures to support the economy during the COVID-19 outbreak, 28 January 2021, e-Competitions January 2021, Art. N° 99659). The Commission also adopted measures aimed at supporting the agricultural and food sectors, which are severely affected by the pandemic (see our previous article Rolf Ali, Johan Ysewyn, The EU Commission adopts measures aimed at mitigating the effects of COVID-19 in the agri-food sector, 4 May 2020, e-Competitions May 2020, Art. N° 95060).

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Authors

  • Covington & Burling (Brussels)
  • Covington & Burling (Brussels)

Quotation

Johan Ysewyn, Laura van Kruijsdijk, The EU Commission adopts an extension of the scope of the General Block Exemption Regulation to include State aid measures which support economic recovery from COVID-19 in a sustainable way, 23 July 2021, e-Competitions July 2021, Art. N° 102192

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