Another generation in Competition policy control of Regional development policy

Cite as: Wishlade, F., (2015) Another generation in Competition policy control of Regional development policy. European Policy Research Paper, No 89, European Policies Research Centre, University of Strathclyde, Glasgow

The last pieces of the new regulatory framework for regional aid are finally coming together: following the adoption of the new regional aid guidelines last year, Member States have been engaged in devising assisted area maps, the last of which were approved on 16 September 2014; and, with the adoption of the general block exemption regulation this year, new instruments are being designed and implemented. More generally, over the last year or so, the European Commission has largely completed the reform programme set out in the 2012 State aid modernisation initiative.
The reach of the reforms has been considerable: almost every substantive State aid text has been subject to review and revision, and there have been important procedural changes, notably in relation to transparency and new requirements for evaluation. Overall, there has been a significant recalibration of policy. In some areas, the scope of compatible aid has been enlarged. By contrast, in the area of regional aid, there has been a significant tightening of some aspects of policy – notably regarding support for large firms in ‘c’ areas and the treatment of large cases of aid in all assisted areas.
The cornerstone of the recent reforms is the General Block Exemption Regulation, GBER 2014-20, under which the Commission estimates that around three-quarters of aid measures and two-thirds of aid expenditure will be exempted from notification. Most regional aid measures will be based on the GBER, subject to the assisted area maps determined on the basis of RAG 2014-20. At the domestic level, the focus of activity in the latter half of 2013 and early 2014 was on the preparation of new assisted area maps and associated policy instruments in line with RAG 2014-20.
There is an important interface between the RAG and the GBER. The purpose of the RAG is twofold: it defines the criteria for the assisted area maps; and it has a residual role as the basis for assessment of aid measures (whether schemes or individual aids) that do not fall within the GBER. However, some aspects of the interface between RAG and GBER lack clarity. A major change in the new framework is the treatment of aid to large firms in ‘c’ areas. The aim of the Commission was essentially to exclude expansion investment from eligibility, but it remains to be seen exactly what types of investment can be supported through regional aid in ‘c’ areas. Also important, all notifiable aid will be subject to the compatibility assessment in the RAG, potentially increasing the number of case subject to detailed scrutiny.
Among other new developments is an emphasis on evaluation. The provision of an evaluation plan can now, in effect be a precondition for the approval of a regional aid schemes, and has already been required in one published decision, though it will generally apply only to particularly large or novel measures.
An important issue that goes beyond regional aid concerns the definition of State aid. In the wake of the Leipzig-Halle case, considerable uncertainty surrounds the State aid relevance of public spending on infrastructure. Recent decisions on several German infrastructure-related regional development schemes have cleared some forms of intervention, but required others to be amended or to be notified on a case-by-case basis.

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