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Competition policy

Cohesion and regional policy financing must respect state aid rules where relevant. Article 107 of the Treaty on the functioning of the EU  prohibits state aid measures which:

  1. involve a transfer of state resource
  2. entail an economic advantage for businesses
  3. distort competition by selectively favouring certain beneficiaries and not others
  4. affect trade between EU countries.

Exemption clauses of relevance to the operation of the Structural Funds are:

  • Article 87(3)(a) - aid to promote the economic development of areas where the standard of living is abnormally low or where there is serious underemployment
  • Article 87(3)(c) - aid to facilitate the development of certain economic activities, where this does not adversely affect trading conditions to an extent contrary to the common interest.
  • The above exemptions are fleshed out in the regional state aid guidelines, which set out the maximum permitted grant rates for certain specifically-designated regions. For more detail, see the regional aid guidelines for 2007-13.

In the context of the current financial and economic crisis, the European economic recovery plan includes a temporary framework that simplifies the rules governing state aid schemes co-financed by cohesion policy. This means that, in some cases, advances to state aid schemes could be reimbursed up to 100%.

There are also temporary arrangements (until the end of 2010) under the state aid rules to help countries tackle the effects of the credit squeeze on the real economy until 2010. This means that, under certain conditions:

  • companies can receive a lump sum of aid up to €500 000 for the next two years to relieve them from current difficulties
  • state guarantees are available for loans at a reduced premium
  • subsidised loans are available, in particular for the production of green products
  • small businesses can receive risk capital aid up to €2.5m each per year (instead of the current €1.5 million), provided at least 30% (instead of the current 50%) of the investment cost comes from private investors.

DG Regional Policy has no role in interpreting the state aid rules, national and regional authorities seeking guidance in this area should consult the competent Commission department: i.e. DG Competition, DG Energy, DG Mobility and Transport, or DG Agriculture and Rural Development.