State Aid Voyeurism

“State aid”? Aaah . . . I do wish it was something remotely sexy (sorry, nothing like “marriage aids”) – but alas. It’s namely when an EU member state government provides assistance – usually €€€ – to a domestic company. And it’s a no-no under EU rules, since we’re all supposed to be in a great big unified Euro-area where all companies can compete on equal terms, and a helping hand from your government distorts those terms.

Well, State aid usually is a no-no, but sometimes it’s allowed. And the Belgian French-language business newspaper L’Echo has grabbed a bit of a scoop with its discovery that the EU Commission’s DG Competition is now shooting for “total exposure.”


Here’s journalist Frédéric Rohart’s first paragraph:

Does the whole world need to know which company receives which State aid (loan, subsidy, tax advantage . . . ) and for what amount? The European Commission thinks so, and intends to require that by 2014.

How does “the whole world” get to know? From a website, silly! Or rather, “websites”: the idea is that each member state would be required to set up its own State aid website, presumably under “guidance” from the Commission. We already know from L’Echo that, at a minimum, the information to be posted would have to include name of company, its VAT ID number, and the amount of the aid.

This new requirement is in fact probably the most eye-catching element of a new “Block Exemption Regulation” for State aid that the Commission is bringing forth as part of its self-described campaign to “modernize State aid, which is set to be submitted for member state consultation in September and, if all goes well, to go into effect by July of next year. It’s the function of such “Block Exemption Regulations” to lay out clearly and ahead of time those types of State aid which are automatically OK, so that the Commission doesn’t have to be continuously occupied with inquiries about them. These generally concern State aid to regions, to small business, in the cause of protecting the environment, of assisting disadvantaged workers (e.g. the handicapped), and the like, and Rohart writes that such “automatically OK” aid currently makes up 2/3 of that taking place.

Fine, so what about the rest? Here we find some interesting stuff, namely what is not subject to this new regulation and therefore not required to be listed on those new websites:

  1. So-called de minimis aid (de minimis being the Latin for “chickenshit”) of less than €200K in aid over three years or less – not worth bothering about.
  2. But then there is also State aid which does not fall under any block exemption, which therefore did have to get the Commission’s explicit permission! Perhaps we could call that “dodgy aid” – after all, it doesn’t follow the rules to be automatically OK, it requires the laying-on of DG Competition’s holy signet ring.

Wouldn’t you think that the public would in fact be most interested in reading about those instances of “dodgy” State aid that the Commission nonetheless approved? But then you would be under the delusion that the Commission is as devoted to the principle of “transparency” as it claims to be in its press releases. Putting “dodgy” aid on-line would mean giving the public a chance to second-guess such Commission judgments – can’t have that!

Indeed, look closer at precisely what we have here, namely on-line publication by each member state of their “automatically OK” State aid. The point is: how do we know this is always “automatically OK”? That the member state in question is not trying to pull a fast one by pushing through aid that it disingenuously labels as “automatically OK” when in fact it is really “dodgy”? Now that it has to be on-line, that means anyone can take a look (a company’s competitors, for instance) and alert the Commission when they think something is not quite right. Yes – with this website idea the Commission is aiming not necessarily for transparency, but in effect for out-sourcing its detection function to interested outside parties (in a time when, as everyone knows, it has to fulfill its usual assigned functions and more with ever-decreasing resources).

So don’t let the Commission’s press flacks dazzle you with that magic word “transparency.” What we rather have here is the old green-eyeshade accountant’s mentality – as we can see in another of M. Rohart’s discoveries, namely the new requirement that member states set up a register recording all cases of de minimus State aid. After all, member states might be tempted to fiddle with that, too, so maybe it is worth bothering about! Only this de minimus register won’t be publicly-viewable – for now.

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