Regional State Aid Control: Does it need rebooting or re-routing?

Cite as: Wishlade, F. (2020) Regional State Aid Control: Does it need rebooting or re-routing? European Policy Research Paper, No. 114, European Policies Research Centre, University of Strathclyde, Glasgow.

This review of Competition policy control of regional aid takes place in something of an interregnum. There is currently no ‘grand plan’ for State aid reform but the Commission has published a consultation strategy on the State aid rules and has begun its appraisal of a large body of rules. The cornerstone of State aid control, the General Block Exemption Regulation (GBER) should expire at the end of 2020 necessitating a ‘fitness check’ of the GBER itself and of a number of other Regulations and guidelines adopted as part of the 2012 State Aid Modernisation package. This in turn has resulted in Commission proposals to prolong the GBER since the fitness check was started too late to enable a revised Regulation to enter into force from 1 January 2021. The Commission also proposes to prolong the Regional Aid Guidelines (RAG). Current data suggests this would change ‘a’ region coverage though, under the Commission proposals, no existing ‘a’ regions would lose that status. The use of EU27 (excluding the UK) rather than EU28 averages may also affect coverage.

Consultation on the RAG prolongation elicited comparatively little response, but there were three main concerns: the bureaucracy involved in notifying prolongations of maps and aid schemes; the mismatch between the timeframes for Cohesion policy and the State aid rules; and the limited time available to review assisted areas. A targeted consultation on the RAG has also been conducted. Responses have not yet been published, but initial indications show concerns at future spatial coverage and at the complexity of some aspects of the rules – notably those relating to large firms and sectoral restrictions. One justification for extending the RAG is to enable the Commission to assess the implementation of regional aid. The transparency requirement under the GBER has resulted in an extensive dataset that might be used to this end, though analysis is complicated by definitional issues and differences in approach between countries. Among the new developments in both RAG 2014-20 and GBER 2014-20 was the scope for the Commission to make aid authorisation conditional on its approval of an evaluation plan. Some 14 regional aid schemes have been subject to such plans, but the evaluation of the Norwegian regionally-discriminating social security concession is the only one to have been finalised. Given the time lags involved in the outstanding studies, it remains to be seen what impact they might have on future aid approvals.

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